Ethiopia apex bank order financial institutions to establish Shariah complaint board
The National Bank of Ethiopia (NBE) has issued a directive mandating all financial institutions to participate in a comprehensive study aimed at establishing a national Shariah complaint board.
According to Fortune, the move indicates a crucial step towards accommodating Islamic finance principles within the country’s banking sector.
The Ethiopian Bankers Association has been entrusted with spearheading this initiative, underscoring the collaborative effort among key stakeholders.
The study aims to assess the feasibility and framework necessary for the establishment of a Shariah complaint board, ensuring adherence to Islamic banking principles and practices.
Islamic finance operates on the principles of Shariah law, which prohibits the charging or paying of interest (riba) and emphasizes ethical and socially responsible investment practices.
Establishing a Shariah complaint board in the second largest African population would provide oversight and guidance to financial institutions seeking to offer Shariah-compliant products and services, catering to the needs of Muslim consumers and investors.
The directive from the NBE underscores the growing importance of Islamic finance in Ethiopia’s banking landscape and reflects the government’s commitment to fostering financial inclusivity and diversity.
Sharia-compliant financial organizations don’t charge interest on loans, in contrast to traditional finance. Rather, they take a cut of the possible gains or losses incurred by the companies they underwrite.
