The investment in Gulf African Bank marks IFC’s first engagement with an Islamic finance institution in Sub-Saharan Africa.
Gulf African Bank, one of Kenya’s only two Islamic banks, has fourteen branches in Kenya, offering a range of Sharia-compliant banking products and services. The bank will use IFC’s financing to increase finance for retail and corporate customers, develop programs for women entrepreneurs and extend more services to small and medium businesses.
Jamal Al Hazeem, Chairman of Gulf African Bank, said, “We are delighted by IFC’s decision to take up a 15% shareholding stake in Gulf African Bank.
This is a clear indication of their belief not only in our Bank’s future but the future of Islamic Banking in the region. In addition to the IFC partnership, the Bank is undertaking a rights issue simultaneously to increase its capital base by an additional Kshs 850M. We feel priviledged that this is the first investment by IFC in an Islamic financial Institution in Sub_saharan Africa. IFC’s involvement will open up more opportunties for Gulf African Bank’s growth and expansion and enhance our processes.”
Gulf African Bank, which was established in 2007, has in the past five years greatly raised awareness in Kenya about Islamic banking. The bank’s shareholders are institutional investors from the Middle East and North Africa.
Oumar Seydi, IFC Director for East and Southern Africa, said, “IFC is committed to helping expand access to financial services in Africa. In Kenya, new financial market segments like Islamic banks enhance competition and can help reach a greater number of small businesses and women entrepreneurs, who are often excluded from banking services. IFC looks forward to working with Gulf African Bank to extend services and offer clients a more diverse range of financial products.”
In addition to the equity investment, a further $3 million trade line will be made available to Gulf African Bank under IFC’s Global Trade Finance Program. The Program complements the capacity of banks to deliver trade financing by mitigating risk in new or challenging markets where trade lines may be constrained.
To date, IFC’s investment and advisory services have partnered with 11 banks and one microfinance institution in Kenya, to help them sustainably increase business with small and medium enterprises.