The Exchange sat down with Zubair Mughal, Managing Director of Alhuda CIBE, a center for Islamic Banking and Economics based in Dubai, UAE. The Center is focused on promoting Islamic finance across the globe. Mr. Mughal shared his thoughts on the significance of Islamic finance in attracting investment from the Gulf to Africa.

Tell us about Alhuda CIBE and its role in Africa?

Alhuda CIBE is an organisation working for the development of Islamic banking and finance around the world. We have four licenses- one in Dubai, one in Pakistan, one in Uganda and one in South Africa. Our major focus in Africa is the development of Islamic banking and finance. We are working in more than 25 African countries including Tanzania, Kenya, Uganda, Ethiopia, South Africa, Nigeria, Senegal, Mauritania, Mali, and so on. We also liaise with governments for regulatory development of Islamic banking, Islamic insurance (Takaful), Islamic bonds (Sukuk), Islamic microfinance, Islamic stock markets, Islamic indices and many more. So the basic aim in Africa, because the continent has limited resources for the development of banking and financial industry, is to bring foreign debt investment in African countries in the field of Islamic banking and finance and provide such financial products which are usable for the people of Africa in poverty alleviation, social development and economic empowerment.

How do you assess the adoption of Islamic finance in East Africa?

In East Africa there is a misconception whereby people perceive that Islamic finance is only for Muslims. This is a misconception due to lack of awareness. Islamic banking and finance is a product that can be utilized by Muslims and non-Muslims. It is a solution for all. There is a lot of Muslim population living in East Africa, especially in Tanzania about 35-40 percent are Muslim, yet most of them do not utilize such banking products.  Islamic finance in East Africa can be utilized in many forms- one is poverty alleviation, two for government infrastructure development through sukuk. Sukuk is an instrument which is being utilized by governments and mega enterprises to generate billions of funds. So for East Africa sukuk would be a good tool for governments to raise funds for mega infrastructure development.

What challenges are there among governments and institutions in implementing Islamic finance?

Regulatory reform is very important in order to allow Islamic banking and finance to develop. When you look at Kenya for example it has a lesser number of Muslims compared to Tanzania but Kenya is in the forefront of Islamic finance in the region. This is because of good regulatory framework. In Tanzania more has to be done in facilitating and promoting Islamic banking and finance. Also the awareness in Tanzania is still low. So there is a need to increase the awareness, improve the regulatory framework and remove the misconception surrounding Islamic banking and finance. These are things needed to address the Tanzanian market and, by the way, Tanzania is a very good market for Islamic banking and finance because there is huge demand of Islamic finance especially in Zanzibar where there is a Muslim majority.

What success has Alhuda CIBE achieved in Tanzania through promoting Islamic Finance?

Our office based in Dubai, UAE, entered into Tanzania five years ago and so far we have conducted more than seven assignments in this market to establish a full-fledged takaful company which is in the process of licensing to be registered as an insurance company. We are also working with one of the banks in Zanzibar to establish Islamic microfinance program. We are also working in the capacity building assignment with a couple of banks in Tanzania who are doing Islamic banking and finance. We are conducting an assignment with Yetu Microfinance which will be the first microfinance to conduct Islamic finance. We have organized seminars and every year we hold the Islamic finance forum which this year will be held in October.

Zubair Sb_Tanzania

You have been hosting annual Islamic finance conferences in Tanzania. Do you have plans of opening a center of Islamic banking here in Tanzania?

Yes, we had a couple of communications with the universities in Tanzania to have a proper center to provide continuing education not just for training and workshops but have a programme for bachelor level  Islamic banking and finance and even at a Master’s level. The aim is to fill the gap of human resource requirement for Islamic banking and finance in the country which is still a shortfall.

What advice do you have for financial institutions and governments who have not adopted Islamic finance?

My number one recommendation would be that Tanzania needs proper regulations for Islamic banking. If the country has proper regulation it has an opportunity to attract a lot foreign debt investment in the country. For example in Kenya and South Africa, they have a full-fledged Islamic bank and bring in a lot of investment from the Gulf. But apart from regulation it is important to have awareness towards Islamic finance: what is Islamic banking, how does it work, what are the benefits?

Interview by Athanasius Lupatu