By Abdullahi Jamaa
Kenya is planning to introduce Sukuk (Islamic Bonds) to help boost the country’s local economy that is reeling under huge amounts of domestic and foreign debts.
The Cabinet Secretary for National Treasury Mr. Henry Rotich proposed an introduction of Sukuk during his presentation of the country’s budget statement for the years 2017/2018.
“I intend to amend the Public Finance Management Act to provide for issuance of Sukuk bond (Islamic bond) as an alternative source of financing our development projects” The CS said while addressing the parliament.
The CS said Islamic financing arrangement is becoming a major source of funding development expenditures worldwide.
“This financial arrangement is getting integrated within the global financial system and has the potential to boost prosperity and raise the standard of living of our people” he said
He proposed amendments to Kenya’s Capital Market Acts in a bid to introduce shariah compliant financial models that he said will help position the country as a regional hub for Islamic finance products.
“In order to attract foreign direct investment, I will therefore, propose legislative amendments to the Capital Markets Act, the Cooperatives Societies Act and Sacco Societies Act to facilitate for shariah compliant finance products” he said
If the proposal to introduce Sukuk bonds is ratified by the national assembly, Kenya will be part of a handful of countries that trade on Islamic bonds. Saudi Arabia, Malaysia, UAE and Kuwait are among the leading players in this financial market.
Islamic finance is the provision of financial services that are compliant with Sharia law. Sharia does not allow the payment or receipt of interest (riba), gambling (maysir) or excessive uncertainty (gharar).
Read the budget-statement-2017-18
