The absence of specific legislation on Islamic finance is being seen as a hindrance to the realisation of the potential financial benefits of this unique form of financing in Kenya.
The Central Bank of Kenya (CBK) and other players in the Kenyan banking and finance sector have been asked to enact a specific legislation tailored for Islamic finance sector to monitor and regulate such transactions in the country.
CBK has made significant steps in ensuring and recognising the influence and positive market reception of Islamic finance since its inception, but an Islamic Financing Act is urgently required to boost the impact of Islamic finance in Kenya, according to local newswire Agence de Presse Africaine.
Jacqueline Wangui, Partner at MMC Africa Law, said that Islamic financing cannot be properly regulated, administered and managed under the same Act as conventional commercial banks (CCBs).
The principles of Islamic finance are rooted in Shari’ah law which prohibits charging or receiving of Riba-interests on loans, however, Riba continues to be a murky area in