WHOSE ROLE TO PROMOTE UNDERSTANDING OF ISLAMIC BANKING IN TANZANIA?

INTRODUCTION.

Islamic Banking emerge in 1960s and reached Tanzania in 2008 when KCB bank launched Amana Accounts. Today, there are several banks and SACCOs offering Sharia compliant financial services. In this epoch, Tanzanian banking customers have also witnessed new delivery channel of banking services through mobile banking services. All these are new to many and so often the mass wonder how it works. When it comes to Islamic banking many dont know what is it? those who have heard often wonder how can a bank be said to follow Sharia rules and principles and be able to cover the costs of operations? What sort of services are offered? What is the difference between Islamic banking and conventional/normal banks?

In this article, i dont intend to answer those questions but to analyse initiatives so far taken to build understanding of Islamic Banking in Tanzania and what needs to be done by various players.

WHY PEOPLE NEED TO UNDERSTAND ISLAMIC BANKING?

In Tanzania where the level of financial exclusion is high and where majority of Tanzanian use non-bank formal products, it may rightly be asked why understanding Islamic Banking while the normal banking which is many years old not even used by the majority? To fairly answer this, we need to understand why normal banking is not widely used as might be expected despite having close to 50 banks in the country. Recently published Finscope Survey provide reason for this, 2/3 of Tanzanian population lives in rural areas often remote parts of the country, low level of education where 2/3 of our population is with no formal education or with primary school education or less and nearly quarter of the population is dependent on others for their main source of income.What this survey doesnt tell us and surveyors seems not interested is if there is a population that doesnt want to access normal banks based on religious grounds? However, if you look at regions with highest levels of financial exlusions most of them the population is predominatly Muslim for example Zanzibar and Singida with highest level of financial exclusion. I remember when
the Finscope survey was launched at Bank of Tanzania, one of the participants wanted to know if one of the reason for Zanzibar to be on the top of these financially excluded is because they are predominatly Muslim. The response was that,they dont think that was the reason but rather there is high level of dependents in Zanzibar! If you examine Dar es Salaam which has the highest number of people using bank products (31.6%), the remaining dont use bank products. Why? Arent most of the banks in city? arent the majority of the Dar dwellers educated? These are unanswered questions which Finscope survey doesnt provide straight answers.

Tanzania is a religious sensitive country. By this i mean there is significant number of our population which maketheir choices and decisionsbased on the tenents of their religions. Islam and some sect within christianity prohibits interest which is the tool of normal commercial banks to make exorbinant profits. The teachings of these two religions are dearly followed casuing followers to refrain from banks or use it only where necessary.Thus,understanding Islamic Banking and how it works is likely to attract those excluded on religious grounds. Furthermore, with the presence of Islamic banks/Window in the country, the public deserve to know how this banks work to protect them from deceitfulpractitioners who might use the word Islamic Banking while doing other things.

LEVEL OF UNDERSTANDING OF ISLAMIC BANKING.

I am yet to come across a research in the country gauging the level of understanding of Islamic Banking either across the bank's customer or general public. However, through various public gathering and exchanges with even bankers, very few know about Islamic Banking or banks which provide Islamic Banking services in the country. Just recent outreach carried by Amana Bank around Buguruni area in Dar es Salaam many people where interested to know about Islamic banking and what is the difference between islamic banking products with conventional products. Similar interest displayed during my presence in Sabasaba Trade Shows last years as well as promotion initiatives in Radio and Masjid platform. More people are interested to know but limited sources to enlighten them. This gap has left without understanding, misconceptions and myth.

Importantto note that people are interested to know a wide range of issues in regards to Islamic Banking and from different perspectives. The most dominant perspective are those on legal, operational, commercial, sharia, risk as well as marketing perspective. Besides, people interested to know Islamic Banking are from different academic backgrounds and level of education.

INITIATIVES FOR PROMOTING UNDERSTANDING OF ISLAMIC BANKING IN TANZANIA.

The first initiative to understand Islamic banking was undertaken by KCB when it introduced Islamic banking products in the country in 2008 followed with scattered advertising campaign using Radio, brochures, Masjid Talk and billboards. However, most of this initiatives as well as those taken by new entrant centered on products offered rather than on Islamic Banking per se. This appears to be the shortest and least cost by banks offering Islamic financial services to date.

In 2012, Zanzibar university launched 'certificate course on Islamic Finance' focusing on basics of Islamic Banking.However this programme after the first graduate it has not continued to date.Similar year,Bank of Tanzania organised a three day seminar on Islamic Banking, despite its limited audience it did not continue in 2013 and hopefully will be done again in 2014 as per the BOT training calender 2014. In 2013, Amana Bank organised the first training on Islamic Banking to students of Ubungo Teacher's college.Noting the gaps on Islamic Banking training, several foreign entity eying the opportunity have started to organise training in Tanzania like the KPI of India which conducted training in Feb 2014.

All these initiatives have specific limited target audience and none target the general public at grassroot level on long term basis. I am certain that with this approach so far Islamic Banking will continue to face shortage of skilled manpower within the country and Islamic Banks/Windows will have extra burden by having uninformed customers who might be banking with them with unrealistic expectations such as expecting free money from Islamic banks/window, expecting fixed returns on their deposits, expecting banks not to have collaterals when financing, expecting forgiveness when they default or unable to pay, expecting charity among others.

WHAT NEEDS TO BE DONE.

Various initiatives needs to be done by different stakeholders to provide understanding on Islamic Banking in the country. Forecample;

Tanzania Institute of Education under the Ministry of Education, has to review primary school curriculum to incorporate banking as whole and Islamic banking in particular. The need for this reveiw is self-evident from the finscope survey which showed that the most likely to be financially excluded are those with primary school edecation or less one of the reason might be-they dont know what bank does. The population of those who attend primary school is higher compared to any other level of education in the country which provide a strong base for our people to know what bank does, inform their parents and when mature to access bank products. Besides,secondary school curriculum should incorporate Islamic Banking since Banking is part of the topic on the commerce subject. However, rather than banking being tought at form 3, it should be tough at either form 1 or 2 so that those opting science or art can have access to the banking topic. This curricullum changes must move upward up to university level for those undertaking banking or finance.

Bank of Tanzania Training Institute, need to have systematic approach to train Islamic Banking courses with adequate curriculum to ensure seminars or workshops cover the curriculum from basic, intermediary to advanced topics of Islamic Banking. The BOT is expected to play leading role on Islamic Banking training for bankers taking note of their responsibility to ensure sound and efficient banking system. Forexample in Malaysia, the central bank annually sponsor students to undertake courses relevant in promoting Islamic Banking industry and finance research in the vast fields of Islamic Banking.

Training Institutes/Colleges under NACTE should also deliberate on developing a course on for basic technician certificate in Islamic Banking, Technician in Islamic Banking to Ordinary Diploma on Islamic Banking. NACTE must ensure the curriculum is adequate, systematic and up to date to provide skills to the students undertaking the courses.

Islamic Banks/Windows rather than focusing on product awareness or understanding alone,they should adopt schools
or colleges or universities to deliver lectures to students in order to impart understanding of Islamic Banking on each intake. Besides, they can jointly or separately sponsor experts to speak on Radio/TV for public awareness,prepare articles about Islamic Banking for the media, sponsor researches in the Islamic Banking field undertaken in Tanzania, prepare leaflets which answer frequently asked questions from time to time,organise seminars/workshops to bring Islamic banking into the attention of policy makers, take her staff abroad to attend seminars, workshop and training as per the organizational needs from time to time and the least goes on.

CONCLUSION.

The role to provide understanding of Islamic Banking may go beyond those mentioned above to include academicians, researchers, media owners, Sharia scholars,private entreprises among others,each according to his ability. I believe, once such boldsteps above are taken not only Islamic banking will prosper but also overall banking industry.