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Tanzania’s Islamic banks draw non-Muslim customers

High-interest rates causing social inequalities force customers in Christian dominated country to deposit money in Islamic banking outlets

13:35 - 6/04/2022 Çarşamba
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File photo
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High-interest rates and poor banking facilities are luring non-Muslims in the East African country of Tanzania to interest-free or Islamic banking to manage personal finances.

Speaking to Anadolu Agency, Lilian Lupogo, a customer at the Amana Bank counter, said the undue interests changed by the commercial banks drove her to do business with Islamic banks. She said that commercial banking was causing social inequalities.

“For me, it is not about religion, it is about personal ethics and human values,” said Lupogo.

The Muslims make up 35% of Tanzania’s 59.05 million population. Besides Amana Bank, which is a full-fledged interest-free bank established in 2011, other commercial banks have also opened Sharia-compliance windows.

According to experts the Shariah (Islamic law) compliance finances rest on two fundamental principles -- sharing of profit and loss and the prohibition of the collection and payment of interest by lenders and investors.

Tanzania, which attained the status of a middle-income country in 2020—reflecting sustained macroeconomic stability has one full-fledged Islamic bank. A dozen more conventional banks have opened a window for customers to bank the Islamic way.

Miraji Athumani, head of the Islamic Banking unit at Tanzania Commercial Bank, formerly known as Tanzania Postal Bank or TPB, told Anadolu Agency the Sharia-compliant window has helped his bank lure a flock of new customers, who otherwise prefer to keep money at home.

He said that the bank uses money through this window to make a profit by engaging in trade and sharing profits rather than interest.

“It has appealed to non-Muslim customers who wish to manage their finances ethically. We don’t ask our customers about their religious affiliation. But I know we have very many Christian customers for the Islamic banking window” he said.

He said the interest-free banking practice provides a sustainable alternative to conventional banking practices.


- Managing finances and religious obligations

“Our customers are happy to know that their money is in safe hands and is not being invested in a manner contrary to their wishes,” said Athumani.

Residents said that for years many Muslims, who wanted to do business and manage their finances as per their religious obligations, were keeping the money at home to avoid interest.

Local banks are now eyeing a potentially growing Muslim market, promising non-interest-bearing services that comply with Islamic laws by opening Sharia-compliant windows.

“Islamic banking is the only way of financing that is more ethical, equitable, and adheres to the law of Allah,” said Alhaj Mussa Salum, Tanzania’s chief cleric based in the port city of Dar es Salaam.

With $2.7 trillion in assets stashed in the Islamic banking system across the world, the system is making great strides. Economists believe that the assets will grow to $4 trillion by 2023. In Africa, Kenya, a predominantly Christian nation, is taking up the lead in offering Sharia-compliant banking services.

Many people like Zubeda Fuime, who had an account in a commercial bank, are now shifting to Amana Bank.

“I wanted to lift the burden off my shoulders. I have the peace of mind now for I know I am in safe hands,” she said.

While Islamic banking still represents a tiny portion of banking activities in the country, its fast-growing appeal to both Muslims and non-Muslims makes it a potential competitor to conventional banking.

Dassu Mussa, head of marketing at Amana Bank, said they are trying their best to help people manage finances as well as fulfill their religious obligations.

#Africa
#Tanzania
#Christians
#Islamic
#banking
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