OPPORTUNITIES FOR ISLAMIC FINANCE IN TANZANIA

Islamic Banking started in Tanzania in 2008 by Kenya Commercial Bank, followed by People Bank of Zanzibar, National Bank of Commerce, Stanbic Bank and Amana Bank. It is only Amana Bank which is fully flegded Islamic Bank in the country. What are the opportunities for Islamic Finance in Tanzania?

There are number of opportunities besides Islamic Banking such as:

1. Education and specialised Training on Islamic Finance.

There are few institutions which offers courses or teaches subjects related to Islamic Finance. Initially, four month certificate course was offered by Zanzibar University in 2012 followed by Muslim University of Morogoro which also offer Certificate in Islamic Banking and Finance course. Both universities likely to have subjects in their economics and business management courses which provide foundational background on Islamic Finance for undergraduate students. Recently, an institute called ZIBRET in Zanzibar has shown commitment to provide certificate and diploma courses on Islamic Banking in Zanznibar.

In short, there is lack of knowledgeable manpower and on the supply side there is no dedicated institution to provide required practical training that can shape those in the industry and aspirants to be well versed with the operations of Islamic Banks among others. This gap has partially and inconsistently filled by external training providers from as far as India, Pakistan, South Africa, Kenya among others who organise short term training on Islamic Banking or Finance.

2. Islamic Insurance companies.

This is uncharted opportunity which has existed for so long but positive signs emerge that very soon new or existing conventional insurance players shall fill the market with Takaful products. The reason for the delays was from the regulatory side which however recently has shown progress after inviting stakeholders to submit their opinions on the proposed Takaful regulation. It is expected that in the coming year 2015, the regulation shall be out and chances are high that the market shall start to witness takaful companies.


3. Islamic Wealth Management Services.

This is less understood opportunity and a recent development in the Islamic finance field. Tanzania has witnessed raising Muslim middle and higher class within the community that might requires financial advisory services centered on wealth management within the ambit of Sharia'h i.e Islamic teachings. This author is unaware of any firm which has taken the challenge and focus on providing Islamic wealth management services.

4. Sharia Advisory Services Firm.

Meantime, all banks in Tanznaia offering Islamic financial products have inhouse Sharia advisory personnels and constituted Sharia boards. However, their service can be outsourced if there is reputable firm to offer on time Sharia advisory services on the operations and offerings of the banks or Takaful companies and at reasonable costs. This firm can also provide Sharia review and audit services, legal documentation services as well as arbitration services.

5. Islamic Microfinance.

To date there not more than five Islamic microfinance institutions which operate in limited areas of the country due to limited resources and expertise. However, there are more than forty microfinancial institutions and thousands of SACCOs accross the country. In Tanzania, majority of self employed individuals meet their needs through carrying out micro-businesses and small sacle farming, hence Islamic microfinance has a huge market opportunity to do business profitably and change lives.

6. Last but not least is Islamic Funds.
There are so many conventional funds in the country the like of Wekeza Maisha Fund, Watoto Fund, among others. These funds have billions which they mainly invest in fixed income portfolio such as fixed deposit and treasurty bills. The country being on the steady economic growth path and with the huge potential on real estate sector due to increasing demand for low cost houses and office premises, Islamic fund that may focus on real estate sector among others is likely to succeed.


This is all for today, i trust reader shall make an informed decision before taking any of these opportunities. Wish you the best!