In a ceremony at the Intercontinental Hotel on 6th March 2012 attended by the Governor of the Central Bank of Kenya, Prof Njuguna Ndun’gu, the Chief Executive Officer of the Capital Markets Authority, Ms. Stella Kilonzo and the Chairman of the Insurance Regulatory Authority, Mr. Steve Mahinda, First Community Bank launched Kenya’s first shariah compliant mutual fund.
First Community Bank, established in April 2008, currently has assets of Kshs. 8.4 billlion and deposits amounting to Kshs. 7.3 billion and is a fully-fledged shariah compliant bank and the mutual fund is an opportunity for investors to diversify their portfolios by getting a shariah-based mutual fund. The fund will be denominated in Kenya shillings and the target amount for the fund is Kshs. 1 billion and will be invested in money market instruments, equity, structured investments and other shariah compliant investment schemes.
A mutual fund by nature allows investors to pool funds and invest as a single entity and benefits of this include the use of specialist managers. Under shariah law, unequal exchanges or unfair advantages in trade is prohibited. It is on this basis that transactions in which risks are borne disproportionately are disallowed. It is important to note that shariah products are not exclusively for Muslims and people of all religions are free to use the products.
In his statement at the event, Prof. Ndungu welcomed the new mutual fund saying “This move is a positive step towards not only attracting increased foreign direct investments into the country and the region at large, but also enhancing the capacity of the Kenyan people to harness the available resources for national development.” The CBK Governor concluded “The Islamic Finance picture is now complete.”