By Mbarak Abucheri, Kakamega.
Islamic finance sector must address the current lack of focus in social welfare by including Shariah-based charity principles of ‘waqf’ and ‘sadaqah’ as priority areas in their services.
Speaking to Nepjournal, Kakamega based businessman Abdalla Ismail Wanyama said Islamic banking and finance sector has come a long way since the first Islamic bank was established in the country seven years ago.
However, he said despite considerable growth in the sector, development of the Islamic banking sector is still incomplete without including the principles of waqf and sadaqah.
“There are areas where more could be done to make Islamic banking sector more aligned to Islamic principles. In particular, Islamic banks need to address the gap in social welfare by prioritizing ‘sadaqah’ as a key area,” said Abdalla.
Abdalla urged banks to collect ‘sadaqah’ from private sector and utilize the funds for investments. Profits derived from such investments must be channeled towards charity, he explained.
“Investment and fund management is the work of banks, and therefore Islamic banks should step up efforts to integrate management of ‘sadaqah’ funds as a focal area in order to supplement the efforts of the Muslim community in assisting and supporting the poor and needy,” he said.
Allaying concerns over lack of standardization, stemming from differences in Sharia interpretation, Abdalla said active harmonization efforts should be put in progress in the Islamic finance sector, so that many services provided by the sector are accepted in the country and globally.
Abdalla said while Islamic banking initially aimed at addressing the banking requirements of the Muslim community, its current wider acceptance across the world is encouraging. However, he stressed the importance of evolving concrete mechanisms to ensure that funds are used in Sharia-compliant manner around the world.
Admitting that over exposure by some Islamic banks has been a recent concern, Abdalla called upon Islamic financial institutions to guard against such maneuvers, and instead remain aligned to asset based financing.