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Muslims to have own bank

29/01/2012 00:00:00 MFANUKHONA NKAMBULE

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MBABANE – A bank that, in accordance with Sharia law does not charge interest, may be established in Swaziland to cater for the Islamic community.

It can be said that some Christians also make use of the Islamic banks because they do not charge the interest usually charged by conventional banks.

The Times SUNDAY can reveal that Qatar National Bank (QNB), the leading commercial bank in the Middle East, has been identified as a suitable financial institution that could cater for the Islamic community in Swaziland.

Through its Embassy in Qatar, government understands that many investors from the Arab world can invest in Swaziland if an Islamic bank can open a branch here.

It is understood that the Arabic community believes in one of their own to handle their investment affairs.

The US State department says there are about 100 000 Muslims in Swaziland.

The overall population stands at slightly over a million.

Presently, there are four mainstream banks in the country, namely First National Bank (FNB), Nedbank, Standard Bank and SwaziBank.

There is also a society that primarily offers mortgage services. This is the Swaziland Building Society.

According to a diplomatic document from the Swaziland Embassy in Qatar, Ambassador Felizwe Dlamini has held high level talks with the Governor of the State of Qatar Central Bank.

On top of their agenda, among other important issues discussed, was wooing one of the commercial or investment banks in Qatar to open a branch in the Kingdom of Swaziland.

"It is hoped therefore, that new companies from the Middle East can develop interest in investing in Swaziland and keep their profits in a bank that they have confidence in," reads the document.

The ambassador has already initiated negotiations with the Chief Executive Officer (CEO) of QNB.

"In their discussions, the CEO reiterated the common language of the Qataris – asking Swaziland to bring a detailed bankable project. This project should be supported by a clear feasibility study," it is said.

Established in 1964 as the country’s first Qatari-owned commercial bank, QNB, also known as Bank Qatar Al watani, has an ownership structure split between the Qatar Investment Authority (50 per cent) and the private sector (50 per cent).

QNB Group has steadily grown to be among the largest banks in the Middle East and North Africa region and is by far the leading financial institution in that country with a market share approaching 40 per cent of banking sector assets and a distribution network of 60 branches and offices in addition to more than 200 ATMs.

It has the largest market share in Qatar.

QNB Group has witnessed rapid international expansion in the past few years and has established presence in over 24 countries worldwide including branches in France, Kuwait, UK, Mauritania, Oman, Sudan, South Sudan, Singapore, Yemen and Lebanon.

Central Bank is aware

MBABANE – Martin Dlamini, Governor of the Central Bank of Swaziland (CBS), says many investors from the Middle East are interested in establishing Islamic banks in the country.

He did not single out any financial institution as having approached the CBS but said there were many people from the Middle East who had shown interest in this project.

Dlamini said there was, however, nothing formal in terms of documentation that had been submitted to CBS. He said the people who approached the Central Bank were given information on how to establish a bank in the country – the requirements.

The governor said the Central Bank would institute an inquiry into any application for establishing the bank to ascertain viability and capacity to venture into a financial business of this magnitude. He said one of the things they looked into was expertise, sound capital and history of operations.

"We check whether they are experienced enough to start a bank. We check where they come from to see whether they will provide quality and reliable service to customers," he said.

He said CBS had not fixed a minimum capital for establishing a bank but considered applications on a case to case basis since banks offered different services.

However, the governor said they insisted on investing eight per cent of the liabilities and that could rise to 10 per cent to cater for risks.

He said the ambassador or government were free to negotiate with any investor.

"We appreciate efforts aimed at improving the economy. There is no way we can stop a worthwhile project. If the project meets the local requirements, we can grant the licence accordingly," he said.

He said the investors from the Middle East who approached them had not yet returned to the Central Bank of Swaziland with latest developments.

Zodwa Mabuza, Chief Executive Officer of the Federation of Swaziland Employers and Chamber of Commerce (FSE&CC), said there were lot of sensitivities in businesses like this one, hence she needed to consult with the executive.

"To start with, I am not aware that there are such talks. I have to touch base with the executive, there are a lot of sensitivities," she said.

Members of the FSE&CC include among others the financial institutions in the country. Mtiti Fakudze, Minister of Foreign Affairs and International Cooperation, said the Swazi Embassy in Qatar, which is under his jurisdiction, had not yet briefed him on setting up an Islamic Bank in Swaziland.

The minister hinted though, on an existence of free enterprise in Swaziland.

Fakudze said he would make a follow up and establish facts about the matter, particularly because this newspaper has relayed the information to him.

It can be said that there have been some complaints in parliament that Asians practised ‘pillowcase banking.’

The allegation is that most of them do not keep their money in the conventional banks for reasons that were not disclosed to either government or the Central Bank.

It is believed they did so because local banks did not offer services that observed the Islamic faith.

The Constitution of the Kingdom of Swaziland Act of 2005 recognises freedom of religion.

It’s long overdue, says Hamidullah

MBABANE – "It’s good news to us that government thinks of bringing an Islamic bank into the
country, now we can begin to practise our religion freely," remarked Hamidullah Dlamini, one of the prominent Muslims in the country.

Dlamini said an Islamic bank was long overdue.

He foresaw a windfall of investment setting up shop in Swaziland since investors from the Arab world would keep their money in a bank that observed the Islamic faith.

Speaking in his personal capacity in the absence of the spokesperson reported to be out of the country, he said the charging of interest contravened Islamic laws. He said it was wrong to receive interest and it was wrong for the bank to charge it.

However, he said, investment profits were allowed in the Islamic faith.

"There’s nothing wrong with making a profit but it’s wrong to keep your money in the bank and then you tell them to give you an interest. It’s wrong for the banks to charge us an interest as well but our faith accepts investment profits," he said.

He said some banks in South Africa had introduced services that catered for the Islamic community.