NAIROBI, Kenya, Jul 10 – An expert in sharia banking has called for the establishment of a sharia regulatory department at the Central Bank of Kenya.
Ali Mohammed, a Sharia Auditor at the largest Islamic investment bank in Qatar, Qinvest, said on Friday that the creation of such a department would allow better management of sharia banking in the country.
Mr Mohammed said the kind of sharia banking being practiced in the country is susceptible to a number of risks especially for customers.
“For instance, unlike the best practice in other countries where licensing is provided to banks after awareness and education is given to the Central Bank and the public, in Kenya licenses were issued before,”Mr Mohammed said.
He said his investigations indicate that Islamic banks in Kenya are not providing full disclosure on the loans they are giving thus negating on the fundamentals of Islam.
“The Sharia persistently underlines the importance of integrity in commerce and the handling of other people’s wealth and as the Quaran states if one of you deposits in trust a thing with another let the trustee faithfully discharge his trust, and let him fear his Lord,” he said.
Mr Mohammed questioned what he defined as Islamic banks’ reluctance to lend to its customers due to what he translated as the banks ‘being short of something’.
The auditor is proposing the creation of a sharia compliant investment policy, an investors protection fund, better disclosure and transparency, and a corporate governance framework as other interventions in ensuring better practice of sharia banking in the country.
He is warning that Kenyan sharia compliant customers need not get too comfortable because unless issues of governance and regulation are addressed they would be the biggest losers.
About 20 to 25 percent of the Kenyan population consists of practicing Muslims.