Kenya's FCB Capital, a subsidiary of the First Community Bank, will launch the country's first fully Shari'ah compliant investment fund, the First Ethical Opportunity fund, in January.
The fund has been licensed by the Capital Markets Authority and "it will be an open-ended fund that will be available to retail and institutional investors," said MD of FCB Capital, Antony Wambura. Each unit will be priced at $20, with a minimum investment of 10 units
Wambura said to The Islamic Globe: "Our biggest challenge, as of now, is the limited nature of investments available to us especially on the Nairobi Securities Exchange (NSE), where according to the regulations we are supposed to invest most of our money."
He said because of the prohibition of Riba, the fund is barred from investing in the finance and banking sector of the NSE, the most liquid and active sector in the market.
The regulator requires the fund to limit its investment in non-listed assets to 20%, 10% in offshore investments, 10% in cash or near cash assets and 20% in real estate although the market still lacks Real Estate Investment Trusts (Reits).
"We have an ongoing positive dialogue with the regulator on initiatives to help expand the investment universe. In the medium-term, we would like to see all of the country's financial regulators to come together and find ways of increasing opportunities for Islamic finance funds," said Wambura.
He also said opportunities off the NSE which Shari'ah compliant funds could utilize included structured products like those used for the financing of the importation of oil and commodities especially the import of sugar and rice.
© The Islamic Globe 2011
