According to an article published on the IFC site, when IFC first invested in Kenya’s Gulf African Bank in 2013, Islamic finance was a growing phenomenon in Sub-Saharan Africa. Gulf African Bank was among only a handful of financial institutions in East Africa to offer sharia-compliant financial products. IFC supported Gulf African Bank’s new model by providing $5 million equity and a $3 million trade finance line.

A year later, Islamic financial institutions have gained a firmer foothold on the continent.  Nigeria, now Africa’s largest economy, and Sudan, have joined the $ 100 billion annual market for sukuk, or Islamic bonds; while Senegal and South Africa are set to follow soon.

In Kenya, where 11 percent of the population is Muslim, Gulf African Bank’s sharia-compliant products are reaching a large number of individuals who may not have access to other banks. The bank now has q14 branches in Kenya, with a rising portfolio of small and medium enterprises.  In 2014, Gulf African Bank became the newest member of IFC’s Africa Micro, Small, and Medium Enterprise Finance Program, which works with banks in 13 African countries to increase lending to small-scale entrepreneurs.

“Gulf African Bank and IFC are playing a catalytic role in providing sharia compliant finance in Sub-Saharan Africa”, said Abdalla Abdulkhalik, Gulf African Bank CEO and Board Member. “Kenya is expected to introduce a regulatory framework for Islamic Financial Services, which should see increased investment from Gulf countries.” 

When introduced, the framework will help diversify funding in Kenya and will make the country friendlier to investors from the Middle East, many of whom seek sharia-compliant products.

IFC estimates that 39 percent of Kenya’s formal small and medium enterprises are owned by women.  As in most developing countries, women in Kenya have more difficulty gaining access to finance than men. Gulf African Bank is addressing the problem through its Annisaa product - a women-only transaction account.  Annisaa makes banking easier for women by offering them dedicated tellers and banking centers, as well as discounts at partner outlets.  To help Gulf African Bank better serve entrepreneurs, IFC will work with the bank on improving customer relationship management, accessibility and speed of service. 

Globally, Islamic finance is one of the fastest growing financial segments.  The African Development Bank estimates that by 2020, the value of Islamic financial assets should surpass the $4 trillion mark. 

IFC has invested in three Islamic financial institutions to date; Gulf African Bank, Al Kuraimi Bank in Yemen and Al Rajahi Bank of Saudi Arabia.

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