Ethiopian Muslims look to interest-free banking

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SHAFAQNA - Ethiopia’s Muslim community is only just beginning to use Interest-Free Banking (IFB), according to a Commercial Bank of Ethiopia (CBE) official who spoke with Anadolu Agency.

In an exclusive interview, Ephrem Mekuriya, CBE’s corporate communications head, said that IFB only began in earnest in Ethiopia – a country where Muslims account for nearly 40 percent of the population – last October.

“Many people in the country shy away from banking services due to the interest attached on money savings,” he said.

He noted that, currently, there were only about 20 million bank account holders in Ethiopia, where the total population is estimated at some 95 million.

“This number can be substantially increased now that IFB has been introduced,” he said. “Figures registered since the introduction of IFB show a positive trend.”

He went on to say that, from October of last year to June 2015, total investments under IFB had reached 100 million birr (roughly $4.8 million) with total deposits reaching 60 million birr (roughly $2.9 million).

During the same period, he noted, the number of account holders using IFB, which is now being provided at commercial banks throughout the country, had reached more than 105,000.

“These account holders have already deposited 1.5 billion Birr in only one year,” Ephrem noted.

Globally, Islamic – i.e., non-interest-bearing – bank accounts account for some $3 trillion, and the number is growing at between 15 and 25 percent annually.

More than 300 financial institutions in numerous countries – including Malaysia, Saudi Arabia, Bahrain, the UAE, Kuwait, Qatar, Sudan, Iran, Pakistan, Bangladesh, Egypt, Indonesia and Brunei – currently provide Islamic banking services.

According to a recent CBE publication, the industry is undergoing considerable growth, especially in India, the U.K., Germany, the U.S., Canada, Singapore, Thailand and Australia.

But in Ethiopia, Ephrem said, “we must promote Islamic banking services in rural communities, which host most of the population.”

The concept of Islamic banking as a modern financial service is still relatively new, having first debuted in the 1960s.

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