Ethiopia: Zamzam-First Full-Fledged Non-Interest Bank Goes Operational

ZamZam Bank, the nation’s first fully-fledged, interest-free bank (IFB) to obtain operating license from the National Bank of Ethiopia (NBE), officially launched its main branch that makes the firm the pioneer to operate under Sharia compliance, barred all forms of interest.

The bank opened its main branch dubbed Alif (the first letter of the Arabic alphabet) located at Wollo Sefer, a district in Addis Ababa in the presence of high-level government officials, religious fathers and shareholders.

In his opening remark at the event, NBE Governor Yinager Dessie (PhD) said that the opening of ZamZam Bank is a manifestation of the government’s commitment to build the economy through a concerted action of people from multi-religious backgrounds. Due to the incumbent’s tireless efforts of the past three years, full-fledged interest-free banks including Hijra, Zad, Kush, Huda and others are in different levels of establishment.

Yinager further stated that financial inclusiveness is one of the key areas of the current economic reform program and the government has taken Islamic finance as a major tool to attract people barred from conventional banking back to the service. Accordingly, the opening of ZamZam Bank will enable it to be financially inclusive of the society who has been seeking for full-fledged interest free financing.

Noting the government’s desire to the mushrooming of strong and competitive banks, the governor affirmed the central bank’s support to new firms which are in a good position to meet the recent directive to raise their paid-up capitals to five billion Birr within seven years.

Minister of Finance Ahmed Shide said on his part that the functioning of ZamZam and other banks would have a paramount importance to provide a seamless service for Ethiopia’s ever- expanding IFB customers. The minister called to access more customers in all corners of the country and attract non-Muslim community into the service.

By the same token, ZamZam CEO Melika Bedri stated that they have carried out meticulous strategies and employ viable approaches to remain the leading player in non-interest banking and overcoming the stiff competition in the emerging sector.

The CEO highlighted that the bank has been capitalized on the commitment and active support of Prime Minister Abiy’s leadership and it has been engaged in equipping the services with up-to-date technologies and robust branch expansion thereby enhancing the society’s culture of saving and investment. ZamZam has also been enhancing its capacity with competent professionals with the required skill and experience.

As to Chairperson of ZamZam Bank Board of Directors Nassir Dino (PhD), IFB windows in conventional banks have been primarily offering the murabaha (cost-plus financing) service. Accordingly, the coming of ZamZam to the scene would enable customers to obtain many non-interest banking products and services which have not been common to operations of traditional banking to date.

Interest-free banking provides an alternative by financing halal business and investment ventures and creating huge employment in Ethiopia and ZamZam will be engaging in partnerships with relevant actors to supplement the country’s vision to prosper, the chairperson remarked. Ethiopian Islamic Affairs Supreme Council President Mufti Haji Omar Idris and the Deputy President Sheikh Jeylan Kedir (PhD) applauded government’s role in satisfying the Muslim community’s age-long quest to interest-free banking.