- Safaricom has partnered with Gulf African Bank to introduce a Shariah-compliant mobile finance service that will see the bank earn a profit of 5%.
- The bank will disburse the money – up to a maximum of Sh20,000 – and collect the amount plus the five percent margin.
- Halal Pesa is cheaper than the cost of loans on M-Shwari which is a partnership between NCBA Bank and Safaricom.
Safaricom #ticker: SCOM has partnered with Gulf African Bank to introduce a Shariah-compliant mobile finance service that will see the bank earn a 5% profit.
The bank will disburse the money – up to a maximum of Sh20,000 – and collect the amount plus the five percent margin.
The repayment period is 30 days on the platform dubbed Halal Pesa and which is built on the mobile money platform of telecom operator M-Pesa.
Islamic banks do not charge interest and instead charge a margin or profit.
Halal Pesa is cheaper than the cost of loans on M-Shwari which is a partnership between NCBA Bank #ticker:NCBA and Safaricom.
M-Shwari customers pay a 7.5% royalty and 1.5% excise duty. M-Shwari also saves customers money while Halal Pesa specializes in finance.
All M-Pesa customers can access Halal Pesa as a mini-app. Customers will initially receive a custom install limit based on their M-Pesa usage. The limit may be increased depending on the customer’s use of Halal Pesa.
“Halal Pesa becomes the first Sharia-compliant mobile and digital financial solution in the country,” Safaricom said in a statement.
“Customers accessing financing through the service will receive the requested amount in full with a 30-day repayment period at a 5% margin on Murabaha products.”
Murabaha refers to cost-plus financing where the customer and the bank agree on the margin.
The service offers Safaricom the ability to reach millions of Muslims with M-Pesa’s credit capability, with earlier derivatives of the platform locking them out due to interest charges.
“Our current strategy is focused on digitization for financial inclusion. Our goal is to provide instant access to interest-free credit through Halal Pesa,” said Anuj Mediratta, Deputy Managing Director of Gulf African Bank.
The bank’s managing director, Abdalla Abdulkhalik, said adoption of M-Shwari in Muslim-majority areas like Mombasa, Lamu, Malindi and northeastern regions was low as the service was not compliant with the faith.