Zimbabwe is set to introduce Islamic banking, which has certain rules on profits and excess, as it seeks to attract its Muslim community, which says it wants to contribute to the country’s economic revival.
Talks between the central bank, the Finance ministry and the Islamic community have started, with an official from the Muslim community, Ashirai Mawere saying their members are eager to boost the southern African country’s economy through Islamic funds.
This comes as international Islamic finance sector is expected to be worth $2,6 trillion in four years.
More than 50 countries, including the United States of America, the United Kingdom, France, Japan, Singapore, Saudi Arabia, Germany, China and Malaysia have recognised Islamic banking and finance.
Mawere said Islamic banking will, among other things, help ease liquidity challenges in the country and boost Zimbabwe’s status in the world of financial services.
A majority of people in Zimbabwe’s Muslim community, estimated to be 1% of the country’s 12 million population, do not use banks and are prone to robberies.
Islamic banking is based on the principles of Islamic law (Sharia).
Two basic principles behind such a banking system are the sharing of profit and loss and it prohibits the collection of interest, which is not permitted under Islamic law.
Once set up, the bank will not be exclusive and will be open to all irrespective of religion and caste.
“Muslims have a traceable record in the development of health and general science, education, sports, literature and economics and we need to participate in all this success,” Mawere said.
Market experts believe that in order to tap the immense investment potential of the oil-rich Middle East, it was in Zimbabwe’s interest to introduce Islamic banking.
Major international corporate banks such as Citigroup, HSBC, Deutsche Bank and Standard Chartered have Islamic banking windows.
Innocent Mugore an independent economist said it will provide the opportunity to bring a large section of the Muslim population into the mainstream.
“And if Zimbabwe were to introduce the system, the concept is likely to boost the economy of the country as well as the entire southern African region,” he said.
Zimbabwe will for the first time host Orischart Islamic Expo to be held in Harare, between November Wednesday and Sunday.
Terrence Mhlope, one of the event organisers, said the Expo will firmly establish its position as a pre-eminent platform for leaders in the Islamic finance and investments industry in Zimbabwe to engage in discussions that provide a deeper insight into what the future holds for the Islamic banking and finance industry on the continent.
Mhlope noted that a key outcome of the discussions at last year’s Islamic Finance Forum event was that Zimbabwe is becoming an increasingly attractive destination for investments that are Sharia compliant.
“Africa has now been re-positioned as the third fastest growing region in the world, after the Middle East and Asia.
“Over the last decade, trade between African countries and the rest of the world has grown significantly, with economic linkages with, the Middle East, in particular, strengthening further,” he said.
The Islamic Expo comes after Sheikh Mohammed bin Saud bin Saqr Al Qasimi, Crown Prince of Ras Al Khaimah visited Zimbabwe early this year and explored possible investment opportunities in mining, engineering and agriculture.
Source: The Africa Report