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interview
Egypt has four large Islamic banks. Shariah compliant banking
has extended into some other countries, such as Morocco,
Kenya, Nigeria, Tanzania and South Africa but the vast majority of
African countries still lack a Shariah compliant banking offering.
The fact that most African countries are not governed according
to Shariah is one of the challenges in establishing Islamic
banking and in the development of Shariah compliant financial
products and services. Having to comply with Shariah, as well as
local statutory legislation and banking regulations makes product
development challenging. The South African National Treasury
has amended the Income Tax Act with the intention of creating a
level playing field in South Africa for the growth of Islamic banking.
These amendments to the legislation are a demonstration of
South Africa’s commitment to becoming a financial hub on the
African continent. Any African country that wishes to attract
Middle Eastern investment or become known as a financial hub,
must offer Shariah compliant investment vehicles in order to
fulfil these ambitions. Without Islamic banking they immediately
limit their attractiveness to Muslim audiences. A number of other
African countries are starting to discuss the regulatory changes
required in order to become ‘Islamic banking friendly.’
Afzal Seedat
Head of Absa Islamic
Banking
Afzal has more than
16 years experience in
private, corporate and
investment banking. He
was involved with Islamic
banking early in his career
at Standard Bank. His
immense knowledge of the
banking sector spans his
position as a transactor
in structured finance;
and as the director of the
corporate bank and director of the private clients business
at Standard Bank. Prior to joining the Islamic banking
industry Afzal was the executive director of Absa Trust. He
holds a B. Comm, LLB and Higher Diploma in Tax.
The growth of Islamic
banking in Egypt and Kenya
are good examples of how the
relevance of the offering to its
target audiences drives growth.
Islamic banking has only been
available on the continent since
the late 1960s, so it is still a
relatively new concept in banking,
but indications to date are
that the potential is great
How have Muslim communities in African countries
responded to the availability of Islamic banking products?
The growth of Islamic banking in Egypt and Kenya are good
examples of how the relevance of the offering to its target
audiences drives growth. Islamic banking has only been available
on the continent since the late 1960s, so it is still a relatively new
concept in banking, but indications to date are that the potential
is great. Word of mouth is the key driver of information about
Islamic banking in Muslim communities and, as each new happy
customer talks about the peace of mind he finds in banking
according to his faith, the potential grows.
What changes do you expect to the availability of Islamic
banking products during 2013?
I am confident that the number of countries in which Islamic
banking is available will significantly increase during 2013. As
part of the Barclays Group, we plan to launch an Islamic banking
offering in these Barclays African territories where there is a
demand for Shariah compliant financial products and services.
We will play our part in supporting the Barclays strategy of
becoming the ‘Go-To Bank’.
What regulatory changes would you expect in order for
Islamic banking to grow on the continent?
The key issue for the spread of Islamic banking at this stage
is central bank approval. Naturally, central bank officials in
countries not yet offering Shariah compliant banking offerings
are not familiar with this form of banking and this requires a
period of knowledge transfer until they reach a point at which
they feel confident to regulate the offering. Once the regulation
is in place, the natural next step is to examine local tax and other
financial laws to ensure that they don’t disadvantage anyone
who chooses Islamic banking. For example, in South Africa
profit share is currently treated in the same way as interest for
tax purposes.
As you take over as head of Absa Islamic Banking, what is
your vision for the delivery of Shariah compliant products
and services on the continent?
Africa is currently the continent which the rest of the world sees as
having great potential. Our riches in minerals, energy resources,
fertile land and large consumer markets are attracting the
attention of international investors looking for new opportunities.
South Africa is a member of the BRICS countries, a select group
of five large, developing countries (Brazil, Russia, India, China
and South Africa ). The BRICS countries are distinguished from
a host of other promising emerging markets by their demographic
and economic potential to rank among the world’s largest and
most influential economies in the 21 st century (and by having a
reasonable chance of realizing that potential).
As we move from the relative safety of Islamic banking in South
Africa towards the vastness of the African continent, there is
the excitement of the potential available to us. This comes
with the risks inherent in delivering a new offering to the wide
range of cultures on the continent. People living on other
continents are often tempted to see Africa as a homogeneous
mass. In fact each country has a very distinct culture and we
must understand and be sensitive to those cultures as we
humbly enter their territories to offer Islamic banking, in most
instances as a completely new concept. If my team and I can
be instruments for ensuring that our fellow African Muslims are
offered the choice of banking according to their faith, I believe
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we will have fulfilled my destiny.
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14 February 2013
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