More Islamic finance jobs are coming in Africa

Islamic banking is growing fast in many countries in Africa and banks are strengthening their departments and seeking to take advantage of the rise in demand for sharia-compliant financial services, which prohibit the payment or acceptance of interest payments.

"Islamic banking, or interest-free banking as it is sometimes known, is now enjoying encouraging growth in South Africa and neighbouring states," says Ebi Patel, Islamic Finance Ceo at First National Bank (FNB). "Our product offering has grown to include a range of vehicle and asset finance, commercial products including retail and merchant banking, commercial and residential property and a private banking facility."

Internationally Islamic finance has grown at a 10 to 15% annual rate, while FNB has experienced a 25% year-on-year growth since its launch seven years ago.

Absa Bank, which introduced Islamic banking in 2006, claims to have the biggest market share in South Africa and this year received the World's Best Islamic Financial Institution for the non-Gulf Middle East and Africa region award from Global Finance magazine for the third consecutive time.

Only 2% of South Africa's population are Muslim, but the demand is coming from non-Muslims as well, says Absa Islamic Banking managing director Amman Muhammad, on moral as well as faith grounds. The SA Treasury is proposing tax amendments that will put Islamic banks on an equal footing with conventional finance and this should help the industry grow further There is also a programme to introduce Islamic banking into schools and communities, which Absa is participating to.

South Africa's big banks are also expanding to other African countries. Last year Absa launched Islamic banking in Tanzania, where half of the population are Muslim, and is now a big player in partnership with the National Bank of Commerce, of which it owns a 55% stake.

This year Absa is planning to expand to neighbouring Mozambique: "Preparations have reached an advanced stage and we should be able to launch," says Muhammad.

In Nigeria Lamido Sanusi, the central bank governor who is reforming and diversifying the financial system, has said he wants the country to be a "hub of Islamic finance" for the whole region. Mr Sanusi, who is a Muslim, is planning to sell the first 'sukuk', or Islamic bond, before the end of 2012 and is working on a regulatory framework based on Malaysia's system.

Nigeria, Africa's most populous nation with some 75m Muslims, is the continent's big prize. Therefore it was a big coup for Stanbic IBTC Bank, a division of South Africa's Standard Bank, to get approval this week from the Nigerian Central Bank to provide Islamic banking services.

Last week Stanbic became the very first commercial bank to be awarded a preliminary licence to start operating Islamic banking branches within six months. The Central Bank has also awarded a licence to open the first Islamic bank to Jaiz International Bank, a local lender with international investors, and says many more banks are interested in applying for licences.

South African banks face competition not just from local lenders with international investors but also from Middle Eastern banks that have spotted the opportunity.

Uganda for example, which is changing its banking rules to allow Islamic banking and looking to Indonesia for advice, has already received application from three banks in the Middle East to offer Sharia-compliant financial services in the country.

"We have been studying amendments to the current banking rules to allow Islamic banks to own assets and are looking at refining tax laws for Islamic banks to operate," says Titus Mulindwa, deputy legal counsel at Bank of Uganda. "The interest in Islamic financial services is driven by the people: we are facilitating their needs."