Safaricom partners Gulf African Bank to launch Sharia-compliant mobile financial product

KENYA – Safaricom, a mobile network operator, has partnered with Gulf African Bank to launch Halal Pesa, the first Sharia-compliant mobile and digital financial product.

The deal will see Gulf African Bank offer Shari’ah compliant financing to all M-PESA customers.

Halal Pesa becomes the first Shariah-compliant mobile and digital financial solution in the country. Customers accessing financing through the service will receive the amount requested in full with a repayment period of 30 days at a 5% commodity Murabaha margin.

“Kenya is now a highly innovative, interconnected and fast-paced community that requires solutions on the go. All our digital offerings, including Halal Pesa, seek to directly address this aspect,” said Abdalla Abdulkhalik, MD – Gulf African Bank.

“Our current strategy is focused on digitization for financial inclusion. Our aim is to provide instantaneous access to interest-free credit through Halal Pesa. We are glad that we could partner with a like-minded partner like Safaricom limited to advance this vision.”

Halal Pesa will empower M-PESA customers who have previously been locked out of access to financing due to barriers such as the lack of Shariah modelled mobile facilities.

“We remain keen on partnerships that enable us to provide a wide variety of financial solutions that meet the diversified needs of our customers further broadening financial inclusion to ensure that we leave no one behind,” said Peter Ndegwa, CEO -Safaricom.

Gulf African Bank is a strategic partner that will enable us to deliver affordable and convenient M-PESA services such as Halal Pesa that are Shariah-compliant in accordance to the Islamic faith.”

The bank will disburse the cash –up to a maximum of Sh20,000— and will recover the amount plus the five percent margin.

The repayment period is 30 days on the platform dubbed Halal Pesa and which is built out of the telco’s mobile money platform M-Pesa.

Islamic banks do not charge interest and instead levy a margin or profit.

Halal Pesa is cheaper than the cost of taking loans on M-Shwari which is a partnership between NCBA Bank  and Safaricom.

M-Shwari customers pay a fee of 7.5 percent and 1.5 percent excise duty. M-Shwari also allows clients to save money while Halal Pesa specialises on financing.

All M-Pesa customers can access Halal Pesa as a mini App. Customers will initially be provided with a personalised facility limit based on their M-Pesa usage. The limit can be increased based on a customer’s usage of Halal Pesa.

“Halal Pesa becomes the first Shariah compliant mobile and digital financial solution in the country,” Safaricom said in a statement.

“Customers accessing financing through the service will receive the amount requested in full with a repayment period of 30 days at five percent commodity Murabaha margin.”

Murabaha refers to cost-plus financing where the customer and the bank agree on the margin.

The service offers Safaricom an opportunity to reach millions of Muslims with M-Pesa’s credit capability, with the platform’s earlier derivatives locking them out due to charging of interest.

“Our current strategy is focused on digitisation for financial inclusion. Our aim is to provide instantaneous access to interest-free credit through Halal Pesa,” said Anuj Mediratta, the deputy CEO at Gulf African Bank.

The bank’s managing director Abdalla Abdulkhalik said uptake of M-Shwari in Muslim-dominated regions like Mombasa, Lamu, Malindi and North-Eastern areas has been low because the service did not conform to the faith.

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