Rippling from the Gulf, the Islamic finance wave will soon reach the paradisiacal islands of the Seychelles as the National Assembly is poised to vote on a legal framework accommodating the industry, enabling Bahrain’s Al Salam Bank to start onshore activities. MARC ROUSSOT has more.
Following other Indian Ocean nations like the Maldives, Sri Lanka and Mauritius, where Islamic finance has long been introduced, the government of the Seychelles intends to leverage Shariah funding to better serve the local business community and bridge the MSME financing gap in the country, where only 1.6% of the population are Muslims, state-owned Seychelles News Agency reported.
MSMEs are also expected to benefit from a new player, as greater competition is likely to put pressure on prices, while high interest rates on loans has been a constant issue over the past few years among manufacturing and agriculture SMEs, in particular, according to a survey conducted by the Central Bank of Seychelles in 2018.
Al Salam Bank will be the first and only bank to provide Islamic banking services in the Seychelles as soon as the Islamic banking environment is operationalized, said Maurice Loustau-Lalanne, the minister for finance, trade, investment and economic planning, without giving an indication as to when the National Assembly will vote on the Islamic legal framework.
Once passed, the new legislation could open the floodgates to other players to offer Shariah products as from eight banks operating in the Seychelles, at least three have expertise in providing Islamic solutions besides Al Salam Bank, namely Sri Lanka’s Bank of Ceylon, Pakistan’s Bank Al Habib and Barclays Bank.
Off East Africa, the archipelago of 115 islands has been mulling the introduction of Islamic banking and finance since 2014 when a feasibility study was conducted leading to the development of a national strategy paper presented to stakeholders in October 2016.
Adopting an agnostic approach, the Financial Sector Development Implementation Plan recognized the need for greater diversification of financial services through the introduction of additional financial services, including Islamic banking, investment banking and private banking.