continued... - Islamic Finance News

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Islamic Finance news Guide 2008
Challenges for Islamic Banking in Africa (continued...)
risk environment as many risks are different from those of
conventional banking.
Product development continues to be a challenge, including
the time this process takes. Offering basic transactional and
savings products is not diffi cult but the product development
process to deliver full-service banking, including mortgages
and credit cards, presents real diffi culties. Innovative
investment products also require enormous skill and depth of
knowledge in the development process.
One challenge that is specifi c to Africa is illiteracy. It’s hard to
persuade a man to hand over his hard-earned cash in return
for a piece of paper that he cannot read and for him to believe
that his money is safe and that he can get it back whenever
he wants.
Twenty per cent of Muslims will demand Shariah compliant
banking, no matter how much it costs them in terms of
inconvenience or loss of revenue. Another 20% will never
accept Shariah compliant banking and will give all kinds of
excuses to justify their choice. Gaining this market share from
the remaining 60% is an opportunity that will be achieved
based on value creation for the customer.
The bank that can win them over through a compelling
fi nancial service offering that satisfi es the dictates of their
faith as well as their need for a value-based offering will
undoubtedly succeed. This challenge is particularly true on
the African continent.
Ahmed Moola is managing
director of Absa Islamic
Banking in Johannesburg,
South Africa. He can be
contacted via email at ahmed.
moola@absa.co.za
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