National Treasury mulls deepening Islamic products

PHOTO:COURTESY

The National Treasury wants to spread Islamic financial products to saccos and pension schemes to bring them at par with banks and insurance firms.

Principal Secretary Kamau Thugge said yesterday that Treasury will propose amendments to Parliament this Thursday to help fast-track the growth of sharia-compliant products in all financial sectors.

"We will be proposing broad-based amendments this week in the 2017-18 budget. Last year, we introduced Takaful for insurance and now we want to basically cover other areas so that we have sharia-compliant pensions and saccos," said Dr Thugge during the launch of the first Exchange Traded Market in the country in Nairobi.

The PS said by making Kenya a hub of Islamic products, the country will enjoy comparative advantage over her regional peers.

If the proposal goes through, it will be a big boost to the growth of Islamic products in Kenya given the large pool of savings and cooperative societies (saccos).

Kenya's sacco sub-sector is ranked first on the continent and seventh globally. It has more than 6,000 active registered cooperatives, which have mobilised deposits to the tune of over Sh600 billion with an asset base of Sh878 billion.

Sacco Societies Regulatory Authority acting Chief Executive John Mwaka told The Standard on the phone that the agency is working on a framework that will lead to amendments to the Sacco Act to help grow Islamic-based saccos.

"What we are doing currently is amending our law and we will take it through the Finance Bill to ensure that it is anchored in the Sacco Act," he said.

Thugge said deepening of such financial products will also give the Government additional options of borrowing.