Tanzania Ministry of Finance Eyes Development of Islamic Banking

The AlHuda Centre of Islamic Banking and Economics (CIBE) held the 7th African Islamic Finance Summit in Dar es Salam on 08th July 2021.

The main objectives of the summit were recognizing the significant developments in the Islamic Financial Infrastructure of Africa, linking the African Islamic Finance industry with the international financial market, demonstrating the flexibility of Islamic Financial markets during the recent financial crisis, sharing the best practices of the international Islamic banking market with African Islamic finance Industry, and assessing innovations in Islamic Financial markets through the growth of newly developed research-based products.

While addressing the Summit, Mr. Zubair Mughal, CEO of CIBE), stressed that Islamic Finance has key financial instruments that can play a key role in alleviating poverty and attracting Foreign Direct Investments (FDIs) to Tanzania and Muslim economies globally.

For his part, Dr. Mwigulu Lameck Nchemba, Minister of Finance and Planning Tanzania, recognized the importance of Islamic Finance in poverty alleviation and attracting FDIs. He further expressed the government’s ambition to make Tanzania the hub of Islamic Banking and Finance by making the reforms needed.

Islamic Baking in Tanzania

Tanzania currently has one fully-fledged Islamic bank-Amana bank-which primarily offers Shariah-compliant financial products and which started its operations in 2011.

Since then, a few other commercial banks have started offering Islamic financial services, namely Azania, CRDB, KCB, NBC, and PBZ.

The main concern with respect to Islamic banking in Tanzania is that there is currently no specific legal framework to cater for it as well as resolution of legal disputes arising from it.

In 2021, Imaan Finance issued the first Sukuk sharia-compliant bond in Tanzania. The bond was oversubscribed by 36%, showing the country’s appetite for this product.