Michael Gondwe: Islamic commerce and finance
Opening remarks by Dr Michael Gondwe, Governor of the Bank of Zambia, at the workshop
on "Islamic commerce and finance", Lusaka, 24 March 2013.
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The Guest Speakers, Mufti Shafiq Jakhura and Maulana Bilal Jakhura;
Distinguished invited guests;
Participants;
Ladies and gentlemen;
On behalf of the Bank of Zambia and indeed on my own behalf, I would like to extend a very
warm welcome to you all to this important workshop on Islamic Commerce and Finance. To
our Guest Speakers, Mufti Shafiq Jakhura and Maulana Bilal Jakhura, I wish to extend a
special welcome to you to Zambia and in particular to Lusaka.
Ladies and gentlemen, the Bank of Zambia is honoured and delighted to be invited to give
a keynote address at this workshop.
This Workshop on Islamic Commerce and Finance could not have come at a more opportune
time than now, when the Bank of Zambia has embraced financial inclusion on its policy
agenda as a way of increasing access to appropriate financial products and services to all
segments of society in Zambia.
Ladies and gentlemen, Islamic commerce and finance have expanded significantly in the
last few decades globally both in terms of size and the number of players. For Instance,
Islamic finance is currently practiced in more than 50 countries worldwide. In many countries,
Islamic finance co-exists with conventional finance and is not limited to Muslim countries.
Distinguished participants, recent industry estimates indicate that Islamic finance is set to
continue growing at an annual rate of about 15%. The increased trade between the
subSaharan region and Islamic nations in the Middle East only reinforces our view that
partnerships among the corporate players between the two regions will foster more
developments in the area of Islamic finance.
Ladies and gentlemen, the Government of the Republic of Zambia (GRZ) recognizes that
the limited access to financial services and low number of products available to the different
sectors of the economy has hindered the development potential of Zambia's economy. There
is need therefore, to revitalize the financial sector so that it meets the challenges of
accelerated and sustained investments in key sectors of the economy. This can only be
achieved where the financial system is able to improve its allocative efficiencies by providing
appropriately designed products and services to all segments of the population like the
Muslim community.
Recent developments in the financial sector world-wide offer some encouragement that
working together could extend the range and reach of financial services that are available to
our people. Still a lot remains to be done to extend financial services to the majority of our
people, particularly those that are economically active and to foster ongoing sustainability of
our financial institutions. It is against this background that Bank of Zambia accepted your
invitation to present the keynote address as a way of marking our commitment to ensuring
that the financial system caters for all segments of the population.
Distinguished participants, the rapid growth of Islamic finance raises a series of important
questions, such as whether Islamic finance should be regulated differently from conventional
finance. Because modern Islamic finance is relatively new to most countries, rules for
financial accounting, bank governance, and lending standards are continually evolving as
business practices become more refined.
you may wish to note that since October 2008, when the Bank of
Ladies and gentlemen,
Zambia hosted the first ever Islamic Banking Conference here in Lusaka, work has been
ongoing to develop a regulatory framework for Islamic banking. The Bank has held several
consultations both internally and externally and has also subjected the Islamic Banking
framework to expert review by internationally renowned Islamic banking experts. The
framework is now in its final stages and is expected to become operational before the end of
the year.
We are aware that the financial sector has waited for so long to start offering Islamic banking
products and services. As a central bank, we assure you that the regulatory framework is
receiving active attention and the market will be informed once all the formalities have
completed.
although the Muslim Community constitutes only an estimated
Ladies and gentlemen,
12 per cent of Zambia's population, the community constitutes high value businessmen who
control a very significant share of the Zambian economy in various sectors. Their exclusion
from the financial sector therefore, has significant impact on the Bank of Zambia efforts on
financial inclusion. You may wish to note that the majority of the Muslim community shun the
use of commercial banks due to lack of banking products and services that are compliant to
their religious ethos and yet they control a significant share of economic activities in all the
major sectors. The introduction of Islamic finance may provide a solution to injecting the
much needed liquidity currently being kept in homes on account of lack of shariah compliant
banking products and services.
It is the firm belief of the Bank of Zambia that a robust regulatory framework will not only
seek to expand access to finance but will also have positive effects on the overall interest
rates in the money markets and ultimately affect the rate at which financing for economic
activity is being provided.
Ladies and gentlemen, the introduction of Islamic banking would come with its own
challenges. For us at Bank of Zambia, this entails further strengthening of our supervisory
capacity. We would welcome this challenge and hope to rise to the occasion by providing
adequate supervisory infrastructure and a sound environment in which economic agents can
conduct their businesses.
I have no doubt that this workshop is very timely and that it provides a unique opportunity for
participants to share knowledge and experiences on how best to promote financial diversity
and inclusiveness especially with regard to Islamic commerce and finance.
Distinguished participants, on behalf of Bank of Zambia, I would like to thank the
organizers and presenters of this workshop for recognizing the important role that Islamic
commerce and finance plays in an economy like ours. It is my hope that all delegates will
engage fully in these discussions and make the most of the wealth of knowledge generated
in the house.
Ladies and gentlemen, It is now my honour and privilege to declare the Islamic Commerce
and Finance Workshop officially open.
Thank You.