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Financial literacy will boost Islamic finance industry : The Standard

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The Islamic financial (IF)institutions in Kenya continue to grow in numbers and outreach. The banking sector is relatively well developed considering the three fully-fledged banks offering Shariah-compliant banking services and a number of other conventional banks offering Shariah banking windows.

First Community Bank, Gulf African Bank, and the Dubai Islamic Bank’s subsidiary are the three fully-fledged banks while the conventional banks such as KCB, National Bank of Kenya, Barclays Bank and Standard Chartered Bank offer Shariah-compliant financial services as part of their product offerings.
We are also witnessing a gradual growth in the Islamic microfinance sector. Any financial institution that can innovate and use technology to efficiently serve customers while remaining true to the objectives of Shariah-compliant finance shall command a huge market share
Taqwa Sacco and Takaful Sacco are some of the visible Shariah compliant micro-finance service providers.
There is a huge untapped potential in the takaful industry and just like conventional insurance, it requires a sustained focus in consumer education and other incentives to improve the penetration rates.
It is noteworthy that Takaful Insurance Africa, the only Takaful operator in Kenya cannot meet all the takaful needs in the market.
Full disclosure
Islamic financial service providers have a duty to empower both existing and potential consumers of their products with adequate information and facilitate full disclosure to enable them to make informed choices.
What counts is not the amount of information shared with the consumers by the IF institutions but the quality of the same information.
Competition and regulations to protect the interests of consumers can help in the provisions of fair pricing; promote innovation while enhancing the quality of solutions and choice for consumers.
IF institutions should not compete on the basis of Shariah compliance since customers expect them to have Shariah as part of their DNA. It is unethical and morally reprehensible for any institution meant to offer Shariah-compliant services to fail to meet Shariah standards in its business operations.
These institutions should instead compete on the basis of consumer education, service excellence, transparency, competitive pricing, professionalism, innovation, and effective business relationship management.
The IF institutions in Kenya can proactively work with consumer groups, the media, regulators and other stakeholders to promote consumer awareness about their offerings and enhance consumer protection.
We should have well co-ordinated IF awareness creation initiatives to inform and educate consumers about their rights while giving them access to free educational materials. Consumers whether those of the IF institutions or otherwise deserve fair treatment and nothing should undermine their rights.
Indeed the consumers should be encouraged to know their rights as well as their responsibilities and have the ability to complain and seek redress in the event of fraud and abuse.
Reasonable quality
While we have no explicit references to Shariah in the Kenyan financial laws, the consumers of the IF services can draw comfort from Article 46 of the Constitution of Kenya 2010 that affords them the right to goods and services of reasonable quality.
Consumers have the right to compensation for loss or injury arising from defects in goods and services. In fact, the consumers of the IF products may enlist the services of the Consumer Federation of Kenya (Cofek)  to get value for money and their interests safeguarded.
To safeguard the integrity of the IF industry and promote transparency as well as accountability in consumer transactions, the Shariah Scholars and consumer interest groups need to partner to offer Shariah-compliant clinics for consumers on a regular basis
Such clinics can help consumers with complaints and misgivings about the nature of IF transactions offered by the institutions to get guidance and clarity. All the institutions offering Shariah-compliant services should strive to satisfy their customers and use them as their business references.
Satisfied customers tell three friends, while angry customers tell 3,000 as rightly captured by Pete Blackshaw in his book entitled ‘’Running a Business in Today’s Consumer-Driven World’
 -Mr Jaafar is the Managing Director of Aqeel Consulting Ltd

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First Community BankGulf African BankDubai Islamic BankIslamic Finance



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World Bank pushes G-20 to extend debt relief to 2021

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World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.

“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.

He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.

The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.

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People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.

For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.

Debt burdens, already unsustainable for many countries, are rising to crisis levels.

“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.

“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”

According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.

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Tighter Reins on Platforms for Mobile Loans

The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.

Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.

Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options. 

This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.

The Scope Markets app offers clients over 500 investment opportunities across global financial markets.

The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.

The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).

The platform also offers an enhanced client interface including catering for those who trade at night.

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The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour;  Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).

The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.

Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”

He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.

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