Ethiopia's First Full-Fledged Interest-Free Bank Goes Operational

zamzam-bank-logoZamZam Bank, the first full-fledged interest-free bank in Ethiopia has been officially launched, following its obtaining of operational license from the National Bank of Ethiopia (NBE). The bank is poised to operate under Sharia compliance, barring all forms of interest.

The bank has opened its main branch "Alif", named after the first letter of the Arabic alphabet, around Wollo Sefer, in Addis Ababa. Various high-ranking government officials, religious leaders, as well as shareholders of the bank were present during the official launching of the bank's operations and the opening of the main branch.

Yinager Dessie (Ph.D.), Governor of NBE, speaking during the event, said the opening of ZamZam Bank testifies to the government's commitment to building the economy through a concerted action of people from multi-religious backgrounds. 

The NBE Governor mentioned other full-fledged interest-free banks, namely Hijra, Zad, Kush, Huda and others are undergoing the process of establishment. He further reiterated that the current economic reform program has financial inclusiveness as one key area to address, and the government has taken Islamic finance as an important mechanism of attracting people thence excluded from the conventional banking service.  

NBE remains committed to supporting newcomers into the banking industry as long as they are in a position to meet the criterion of raising paid-up capital of five million birr bare minimum in seven years, the Governor noted.

Ahmed Shide, Ethiopia's Minister of Finance, for his part, said the operations of ZamZam and other banks play a "paramount" role in providing much-needed service to the ever-expanding community seeking interest-free banking.

Melika Bedri, CEO of ZamZam, said the bank has devised "meticulous" strategies to be at the helm of interest-free banking in Ethiopia, despite anticipation of fierce competition in the sector. She praised the commitment and active support of Prime Minister Abiy Ahmed.

Nassir Dino (Ph.D.), Chairperson of the bank's Board of Directors, mentioning that interest-free service windows at conventional banks have essentially been offering cost-plus financing (Murabaha), said ZamZam will avail to customers various non-interest banking products and services which are not common at conventional banks.

Mufti Haji Omar Idris, President of Ethiopian Islamic Affairs Supreme Council, and Sheikh Jeylan Kedir (Ph.D.), Deputy President of the Council, lauded the establishment of the interest-free bank.

Interest-free banking provides an alternative banking mechanism by financing "halal" business and investment ventures.

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Source: The Ethiopian Herald

 

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