(capitalethiopia.com) Ethiopia’s first interest-free bank Zam Zam Bank is about to launch founding share sales this week, Capital has learnt.
About 1,000 shareholders, who have already pledged to subscribe shares from Zam Zam Bank, are meeting at the City’s Municipality hall today to deliberate on proposals to be forwarded by the organizing committee, including the launch of share sales starting next Friday, December10.
“ZamZam’s capital is proposed to be 250 million birr. The proposal is to offer shares each valued at 1,000 birr to raise the stated capital,” a source close to the organizing committee told Capital.
A minimum of twenty shares’ purchase will be required for shareholders that will establish Ethiopia’s first non-interest bank that, according to the National Bank’s directive, includes modes of advancing funds on a profit-and-loss sharing basis consistent with the Sharia’h law. Sharia’h – Islamic law – prohibits believers from taking or giving interest. To share profit from investments, equally accepting losses is permissible in Islam, while interest is not.
According to the source close to the ZamZam bank founders, who spoke on condition of anonymity not to preempt today’s official announcement, there will not be a cap of subscription, except the regulator National Bank’s stipulation that disallows anybody from having more than 5 percent share from any bank. A five percent service fee and 40 percent down payments are expected to be proposed for the 1,000 founding shareholders by the organizing committee.
A green light from shareholders, who until now were asked to keep their money in their pocket, would also be asked about executives hunt and staffing and a future headquarters for ZamZam. Shareholders are expected to be briefed why it took three years to realize ZamZam. “When the idea of establishing interest free banking was brought up three years back, more than one thousand people from various part of the country came to buy shares and put pledges. Though it took too long, the legal technicality is now over. We can now go ahead to forming the bank,” the source said.
The 2008 proclamation for the first time in the country’s modern banking history has opened doors for non-interest banking operation which is also known as Islamic banking. A subsequent belated directive detailing the particulars when first tabled on June proposed both a fully-fledged interest-free bank and a window for the service in the existing conventional banks.