International Finance Corporation dabbles in Islamic finance (By IFN)

International Finance Corporation dabbles in Islamic finance

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KENYA: Kenya-based Shariah compliant lender Gulf African Bank (GAB) and global-based development institution International Finance Corporation (IFC) signed into a strategic partnership yesterday, which saw IFC, a member of the World Bank Group becoming an equity stake partner in GAB with a 15% shareholding stake. The partnership will see IFC injecting up to US$5 million worth of equity into the country’s SME sector thus making the financing package IFC’s first Islamic investment into the African region. IFC will also inject another US$3 million into GAB under its Global Trade Finance Program. The Kenyan lender is expected to put proceeds from the financing towards its retail and corporate operations, as well as its SME portfolio; while developing more programs for its female only branches called the Annissa center. Kenya, like many other countries within the African region, has massive potential in Islamic finance but faces difficulties in terms of lack of funding, political instability and a lack of a regulatory framework for Islamic finance. However, IFC’s foray into the nascent African Islamic finance market might just breathe new life into the sector.