National Bank’s Almasi Enhances Financial Inclusion

By Catherine Kuria

Tailored made to respond to the needs of women clientele, unique product is fast gaining traction in a market that is highly competitive

Islamic banking is a financing activity that complies with Shariah (Islamic law) and its practical application through the development of Islamic economics. Sharia prohibits interest paid on all loans issued by Shariah compliant financial institutions. As part of the revival of Islamic identity, a number of Islamic banks were formed in the late twentieth century to apply the principles of Shariah to private commercial institutions within the Muslim community.

In recent times, we have witnessed a remarkable growth in that line of business, both locally and internationally. The business had a global asset base of over 2 trillion USD by 2014. There is also a thriving Islamic capital market with issuances of Shariah compliant asset-based securities (Sukuk) reaching 98 billion USD in 2017.

National Amanah

The National Amanah, the Islamic banking window of National Bank offers Shariah compliant banking to its customers. The bank first introduced Al-mumin, in 2009 which was rebranded in April 2013 to National Amanah to offer a wider range of banking products and services that are Shariah compliant.

“As a bank, we saw a niche in the market which was a great opportunity for us. The National Amanah started out as a deposit and transaction product for our customers. After we rebranded in 2013, we introduced variety of unique banking, savings and investment solutions,” says Mr. Salat Mohammed, the head of retail, micro and SMEs banking at National Bank.

The line between Islamic and convectional banking is very thin – the only differentiator is the lending aspect. There are no variations in terms of loan payment in so far as Islamic banking is concerned. “In normal banking, the interest rates fluctuate which leads to adjustments on the amount of loan being serviced, while in Islamic banking, that does not happen at all,” notes Mr. Mohammed.

The other key attribute of Islamic banking is that it ensures that customers work in order to earn their money. Customers for instance are not financed directly to purchase assets. On the contrary, the bank purchases such assets on their behalf and they use them in their respective businesses to earn money. In terms of working capital – for example a customer who has a shop that needs stocking – the bank buys such stock on his or her behalf as opposed to facilitating a loan. Moreover, Islamic banking does not finance businesses trading in goods and services whose consumption is prohibited by the teachings of Koran. They include businesses selling pork and alcoholic beverages.

Almasi Lady Account

Almasi is a product open to all women, Muslim or non-Muslim. However, the product was initially developed in order to address the banking needs of Muslim women. “Muslim men work and provide money to their wives to meet the domestic budget. Instead of keeping such money in the house, Almasi gives them an opportunity to grow it through formal banking and entrepreneurship,” Mr. Mohammed observes adding that the innovative product has gone a long way in enhancing financial inclusion among women in Kenya.

The bank is empowering these ladies by training them on finance management, investments and entrepreneurship. The product is aligned to the government’s aspirations of empowering women economically.

Mrs. Qamar F. Sheikh, the sales manager, Islamic banking division of National Bank adds: “One of the reasons that informed our decision to launch Almasi was that similar products in the market were targeting career women as opposed to self-employed women and housewives seeking opportunities to grow economically.”

As value add, the product offers custodial services for the expensive and precious items (for instance jewelries) that are owned by ladies.

Open to all

Almasi targets all ladies looking for an ethical banking solution. The requirement to open this account is very minimal and the bank has endeavoured to make it affordable for all “As long as you are aged eighteen years and above and you are a female, you just need a thousand shillings to open the account,” says Mrs. Sheikh.

Almasi has been in the market for a year now and given its unique benefits, it is fast attracting customers. In view of this, the bank has held training sessions for women in different towns across the country in order to drive the product’s uptake.

The future of Islamic banking in Kenya

Islamic banking has reached new levels of maturity in the past fifty years. It is forecast to be worth 3 trillion USD by 2021 with Malaysia, Saudi Arabia and the UAE currently leading the market.

Kenya is positioning itself to become a regional hub for Islamic finance products. Islamic finance is based on profit-sharing, and prohibits the collection and payment of interest, or usury. The two-trillion dollar global Islamic finance industry has grown as a mechanism for financing development even in non- Muslim countries.

Kenya is a regional leader in Islamic banking. The country has two fully-operating Islamic banks, with a third one set to enter the market soon. There is also one takaful Islamic insurance company, a Shariah-compliant mutual fund, and two cooperatives.