In Ethiopia, Islamic mortgage aims to offer a halal financing solution to Ethiopian Muslims and non-Muslims living in Iran who wish in the context of Islamic sharia to use Islamic financial products in Ethiopia.
Islamic finance remains embryonic in Ethiopia despite obtaining an agreement from the government, to let Ethiopian financial institutions to provide the halal financial products.
In Ethiopia, currently out of 18 Ethiopian banks and lenders financial institutions, 9 offer an Islamic window including financial products which are compliant with the principles of the sharia, however with a market share of 1% of the Ethiopia’s total deposit.
The Ethiopian Central Bank (NBE) has approved a directive that will pave the way for the creation of the full first Islamic bank in the country.
This new initiative will allow to any bank established in Ethiopia to carry out operations excluding usurious interests prohibited by Islamic Sharia. The objective of this measure to improve the financial inclusion of the Ethiopian Muslims and consists of the government's efforts to mobilize domestic resources to diversify the Ethiopian economy.
The Ethiopian Islamic bank which will have to adapt to sharia banking by prohibiting the usurious interest, by sharing losses and profits and by sharing the risks between the Ethiopian Islamic lender it and the Ethiopian customer.
ETHIOPIA'S ISLAMIC MORTGAGE LENDERS