NAIROBI (Xinhua) – Kenya’s capital markets regulator, Capital Markets Authority (CMA) today outlined plans to facilitate the introduction of ethical funds as part of its efforts to deepen capital market products.
CMA Chief Executive Officer Stella Kilonzo licensed the first Ethical Fund, First Ethical Opportunities Fund, sponsored by FCB Capital, and has through engagement with Islamic Finance stakeholders, identified key focus areas touching on broad market education, tax harmonization and formulation of policy and legal frameworks to help accelerate the growth of such new capital markets products.
“As an Authority we are keen to promote new capital markets products which will help us achieve the objective of deepening our capital markets by facilitating growth of areas such as Islamic capital market products,” Kilonzo said when she launched FCB Capital Limited, the first Shariah Compliant Investment bank in Kenya in Nairobi.
Kilonzo disclosed that the financial market regulator is keen to promote new capital market products such as Islamic Capital markets products. Launched as a fully owned subsidiary of First Community Bank, FCB Capital becomes the first intermediary to tap into a Collective Investment Scheme geared towards ethical investing under Islamic capital markets product range.
“Kenya has ambitions of becoming the Islamic finance hub of East Africa as part of our wider aspiration to become an international financial center,” she said. To accelerate growth, in the Islamic financial markets, Kilonzo challenged the Islamic finance institutions to work with CMA and the joint financial sector regulators in Kenya towards the establishment of a full-fledged single Shariah Advisory Council/ Board to enhance the consistent application of Shariah rulings.
The proposed Council, Kilonzo explained will be mandated to provide guidance on product authenticity within the entire Islamic finance industry in Kenya. Kilonzo stressed CMA will continue to encourage stakeholders in Islamic finance to explore opportunities available for structuring, issuance and investment under Shariah compliance of such conventional products such as Real Estate Investment Trusts (REITs) and bonds among other financial instruments.
The CMA chief lauded Shariah banking institutions such as First Community Bank, for participating in Shariah-compliant components of infrastructure bonds, issued by the Government of Kenya from 2009. In Kenya, FCB Capital has in recent months managed to introduce the Islamic Unit Trust, the First Ethical Opportunities fund, joining other major ethical funds globally including Norwich Union Ethical Fund, Old Mutual Ethical Fund, Aberdeen Ethical World Fund, and Aviva UK Ethical Fund.
“This is a solid testimony of the vast potential of Islamic finance in Kenya and confirms the viability of developing a vibrant Islamic capital markets segment aligned to Vision 2030 ideals,” Kilonzo said. During the launch, Kilonzo also challenged Islamic finance stakeholders to ensure strong collaboration towards the development of suitable professionals with expertise in Islamic financial advisory services and investment to facilitate knowledge transfer.(Xinhua)
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