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KAZAKHSTAN: The Islamic
microfinance and SME financing segment of Kazakhstan is anticipated to
receive a boost as local player New Finance plans to support the industry
with new Shariah compliant products.
The Islamic microfinance company has engaged Bahrain-based Shariyah Review
Bureau (SRB) to advise and certify the firm’s Islamic product suite, as it
looks forward to rolling out Ijarah, Murabahah and Musharakah solutions.
“In the near future, we expect to be generating richer experiences with our
Shariah compliant offerings and more opportunities for engagement and
participation in our Islamic products,” shared Timur Alim, the founder and
CEO of New Finance, in a statement.
Since the introduction of Islamic banking and finance in the country six
years ago, there has been a steady rise in demand for Shariah compliant
financial products from the Muslim-majority nation. This growing interest
which is simultaneously encouraging and being fuelled by the government’s
proactive Islamic finance stance has materialized into a string of concrete
steps to position Almaty as the Islamic finance center for the CIS and
Central Asian region.
However, despite the positive developments including the 2015 Islamic
Finance Amendments which came into effect last month and a host of regional
expansion efforts (See IFN Report Vol 12 Issue 20: ‘Kazakhstan means
serious business — looking outwards for expansion’), there is still much to
be done to spur activities in the microfinance area.
The IDB is a major force in driving the Islamic microfinance proposition in
Kazakhstan, initiating a tripartite MoU in 2009 with the Fund for Financial
Support of Agriculture and KazAgro to develop Shariah microcredit. This led
to the disbursement of the first line of Islamic microfinancing facilities
in 2011 and the eventual development of Salam, Murabahah and Ijarah
microfinance products. Experts have, however, noted that the Ijarah and
Salam facilities are not yet suited for the country due to its unfavorable
tax environment, suggesting the need for a more comprehensive and enabling
tax infrastructure.
Nonetheless, the prospective expansion of Islamic microfinance solutions in
the Central Asian country by a private player – who is also targeting the
SME community – promises further developments in the segment and wider
industry. Mansoor M Ahmed, the assistant general manager at SRB, echoes
this sentiment: “Our assignment as Shariah advisor by New Finance is part
of a major initiative that is expected to significantly improve interest in
Kazakhstan’s financial market.”
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