Tanzania: Mwinyi sees more Financial Inclusion as CRDB Launches Islamic Banking

Tanzanians now have a new option in fulfilling their banking needs in a manner that aligns with Muslims’ religious beliefs – thanks to the recent launch of CRDB Bank’s Islamic Banking services in Zanzibar.

President Hussein Ali Mwinyi graced the launch of “CRDB Al Barakah Banking”, and hailed the move which, he said, would up the government’s financial inclusion agenda.

“I know there are some people who stay away from formal banking services due to lack of access to financial services that align with their religious beliefs. This CRDB Al Barakah comes as a response to such a stand,” said Dr Mwinyi, urging Zanzibaris to take advantage of the service.

Basically, Islamic banking is the provision of financial services based on the ethical principles of Shari’ah, the latter being principles and jurisprudence that govern social, political and economic relationships and actions of Muslims and Islamic institutions.

Islamic banking generally results in the Islamic financial service provider becoming a co-owner of the underlying assets – thereby assuming risks and sharing in losses and profits.

Under Islamic banking principles, investment in illicit, “Haram,” activities – such as alcohol or gambling – is prohibited.

The same applies to “Riba” – transactions on a risk-free basis such as conventional loans and bonds – and “Gharar:” excessively speculative transactions such as future sales or swaps.

According to Dr Mwinyi, the CRDB Al Barakah Banking assures Muslims that their money will be invested in activities that are compliant with Islamic principles.

“The good thing is that, through this service, you will be assured that your money will not be invested in areas that do not conform to your religious beliefs,” he said.

The Zanzibar Minister of State in the President’s Office (Finance and Planning), Jamali Kassim, said the CRDB Al Barakah will stimulate access to financial services – thus playing an integral role in the realisation of the country’s 10-year Financial Sector Development Master Plan for the period 2020 to 2030.

“Available data show that it is only 15 percent of Zanzibaris who have access to banking services.

“This service, which is in line with Islamic principles, will attract many people – and, thus, stimulate the availability of loans to the private sector, thereby fueling economic development,” he said.

Speaking at the event, the CRDB Bank managing director, Mr Abdulmajid Nsekela, said the bank decided to come up with the services following views from clients and the general public.

He said CRDB Al Barakah products and services would be offered to Muslims and non-Muslims who want such banking services.

The service will be available at all of CRDB Bank’s 268 branches across the country.

The CRDB Bank’s head of Islamic Banking, Mr Rashid Rashid, said clients will get savings account services under the CRDB Al Barakah arrangement. So far, the lender has already designed over 15 savings account products that target various groups of clients.

To ensure that Islamic banking principles are being followed at all times, the bank has formed a special team of experts on the subject matter. These have been selected from within Tanzania, East Africa and beyond, and are entrusted with the task of advising and managing “product execution.”

Dr Mwinyi also praised CRDB Bank’s role in the economic development of the Isles, especially the government’s Blue Economic aspirations.

This year alone, the bank has already issued Sh150 billion in loans to various sectors of Zanzibar’s economy, including tourism, agriculture, fisheries, energy, communication, infrastructure, education and health.

Earlier this month, the bank unveiled a $200 million (about Sh460 billion) facility to finance climate-resilient and adaptation projects in the country – thanks to its winning the accreditation of the United Nations Green Climate Fund (GCF) as the financial intermediary for the implementation of green financing in Tanzania.

Dr Mwinyi said that, under the arrangements, the Isles will benefit from loans that are linked to its Blue Economy model, including marine transport and modern deep sea fishing, among others.