The long waited ZemZem bank’s hope seems diminished after the national bank of Ethiopia deputy governor announced that religious based banks will not operate in the country. The announcement comes during the meeting with Diaspora community in Addis Ababa however, he said, to the question that was raised from one of the attendee concerning the halting of ZemZem bank’s activity, the deputy governor responded that all banks will give interest free services from their window but there will not be fully operational Islamic bank.
Many Muslims in the country aspired for long to see ZemZem bank opened and that hope abruptly faded by the news from the banks deputy governor. Since Muslims are reluctant to borrow money from the conventional bank why they shouldn’t look available alternatives to suit their desires and engage in the development of the country by allowing them to establish their own financial institution?
The banning seems a deliberate marginalization of Muslims from the economy rather than that Islamic banking is unprofitable business. Nevertheless the governor did not give details why it is excluding the fully operational interest free banking while more than half the population are keen on the scheme.
Islamic Banking is banking or banking activity that is consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees (known as riba or usury) for loans of money. Investing in businesses that provide goods or services considered contrary to Islamic principles is also haraam (forbidden). While these principles have been applied in varying degrees by historical Islamic economies, it is only in the late 20th century that a number of Islamic banks were formed to apply these principles to private or semi-private commercial institutions within the Muslim community.
Shariah-compliant assets reached about $400 billion throughout the world in 2009, according to Standard & Poor’s Ratings Services, and the potential market is $4 trillion. Iran, Saudi Arabia and Malaysia have the biggest sharia-compliant assets