Gulf banks set sights on Kenya

Gulf conventional and Islamic banks are looking to set up operations in Kenya to capitalise on the huge untapped Muslim population in the Africa region, said a senior Kenyan central bank official.

“We are getting a lot of inquiries from Gulf banks, some of them from the UAE, which are keen to open up branches in Kenya,” Central Bank of Kenya Governor Prof Njuguna Ndung’u told Emirates Business. He didn’t identify the regional banks. “We are keen to make Kenya the region’s banking hub. Nairobi’s strategic location makes it an ideal place for Islamic banks to easily access the Muslim-populated Eastern and Central African regions,” he said.

The Governor visited the UAE over the past two days to attract investment into the banking and financial sector. He will also visit Oman and Bahrain.

“I see strong growth in the Kenyan banking sector – particularly Islamic banking. There is a huge market niche in Islamic banking that needs to be filled… and it provides great opportunity for the Gulf banks to fill that gap,” said Ndung’u.

Kenya’s first Islamic bank – Gulf African Bank – was launched last month by Middle Eastern investors with a capital base of $27 million (Dh99m). UAE-based investment firm GulfCap, Dubai-based private equity firm Istithmar World, BankMuscat International, PTA Bank and other Kenyan and foreign investors are the major shareholders of the Islamic bank.

Gulf African plans to offer corporate banking, housing finance, car finance, retail banking products as well as other services that conform with the tenets of Islam.

The Kenyan Central Bank has also approved a second licence for an Islamic bank that will launch operations soon. Ndung’u said Kenyan banks lack innovative and diverse Shariah-compliant products and the entry of foreign banks will expand this segment.

 

“Gulf banks are very matured compared to their Kenyan counterparts. The entry of Gulf Islamic banks into Kenya will see new innovative products.”

In fact, the banking sector was the largest contributor to the GDP growth in Kenya last year.