Sharia-compliant banking and digital identity gain ground in Kenya and Somalia

Africa as a continent is carrying out a transformation in its financial and digital landscapes, with the rapid adoption of digital banking and the development of market innovations like Sharia-compliant online services. This shift has been particularly evident in Kenya and Somalia, where financial inclusion efforts have taken on a new dimension, integrating the principles of Islamic finance into modern digital platforms.

In Kenya, emerging digital identity innovation around proxy verification and Sharia compliant identification is active, according to reports from Medium.

Initiatives such as the National Integrated Identity Management System (NIIMS) aims to provide a digital identity for every citizen. This system is designed to streamline access to services and improve financial inclusion. Craft Silicon, a Kenyan fintech company, has been developing digital banking software that cater to the needs of the unbanked population.

Craft Silicon’s platforms have facilitated mobile banking to let users conduct transactions, access loans, and make payments through their phones. The company’s commitment to innovation has also extended to developing Sharia-compliant products, ensuring that their services are accessible to all segments of the population. This focus on inclusivity has helped Kenya to focus on integrating digital ID systems with financial services to improve financial inclusion.

In Somalia, the country’s efforts to rebuild its banking system after decades of instability have been marked by a strong emphasis on Sharia-compliant banking. According to Horseed Media, East Africa’s Salaam Bank, in partnership with Paymentology, has introduced a co-branded, tokenized tap-to-pay digital companion card along with a physical card for users of its Waafi mobile money app.

Somalia’s journey towards financial inclusion has been enhanced by mobile banking.

A global player adapting to local needs

The global blockchain technology company IOTA has also recognized the importance of Sharia compliance in expanding its reach in markets like Africa. IOTA’s recent certification as Sharia-compliant underscores the company’s commitment to adhering to Islamic finance principles, making its technology more appealing to Muslim-majority countries.

“Shari’a compliance significantly benefits the IOTA Ecosystem DLT Foundation by enhancing its credibility and ethical standards, which are essential for promoting IOTA technology and the IOTA token within Muslim communities,” says Dominik Schiener, co-founder and chair of the IOTA Foundation.

“This compliance supports the Foundation’s work in helping grow and nurture DLT and blockchain projects in the Middle East, including homegrown initiatives and external projects seeking regional entry.”

Article Topics

banking  |  digital economy  |  digital identity  |  financial inclusion  |  IOTA Foundation  |  Kenya  |  Somalia