Exclusive Interview with
Mazhar Ali Bokhari.
Head of International Operations & Strategic Planning Division
Gulf African Bank Limited - Nairobi, Kenya

Q: Please introduce yourself in detail with achievement, educational and banking background?

By the Grace of Almighty ALLAH, I have done my MBA from Institute of Business Administration, University of the Punjab Lahore. I am also Diplomaed Member of Institute of Bankers in Pakistan (DAIBP) and Fellow Member of Institute of Corporate Secretaries in Pakistan, Karachi (FCIS). I started my banking career in March 1988 by joining State Bank of Pakistan as Inspecting Officer. I was promoted to Grade I in the year 1993. In SBP, I had been inspecting all the commercial banks in the jurisdiction of Punjab & NWFP. In July 1994, I left SBP due to my family pressure that I SHOULD NOT WORK IN AN INTEREST BEARING BANKING SYSTEM. So I resigned from SBP and joined Albaraka Islamic Bank as Assistant Vice President in Credit & Marketing Deptt. I was also member of Regional Credit Committee approving financing facilities up-to US $ 300,000. In Albaraka Bank I worked in Credit & Marketing, Trade Finance, and Operations & also dealt with Treasury. In the year 2003, when Bank Alfalah planned to start Islamic Banking, I was assigned the responsibility to set – up the Systems & Operations of the newly Islamic Banking Division. It was a great challenge for me because of two basic reasons i.e I never been working for Systems & Ops in any bank and other was that Islamic Banking was in its infancy stage & no developed systems were available. Products range was to be developed. Alhamdo Lillah, I was successful in launching Islamic Banking of Bank Alfalah Limited in December 2003.

After successful running of 15 Islamic Banking branches of Bank Alfalah, I was offered to head an Islamic Banking Division of Prime Commercial Bank Limited (now ABN AMRO BANK) in September 2005. Alhamdo Lillah in short span of just 3 months time, I got approval of setting up of Islamic Banking Division & launched first Islamic Banking Branch in early January 2006. In March 2007, GULF AFRICAN BANK LIMITED planned to start an Islamic Banking in Africa especially in Kenya. They offered me to head their International Operations & Strategic Planning Division to set – up the Islamic Banking Systems, arrange the training of Kenyan Staff and launch the Islamic Banking in Kenya. AlamduAllah , we have got license from central bank of Kenya and now in the process to expand our operations.

Q: You have a diversified Islamic banking background in Pakistan. You have been worked with SBP, Albaraka Islamic Bank, Bank Alfalah Islamic Banking and Prime Bank in Pakistan. How do you feel now being the work outside from the Pakistani Market? Please elaborate your experiences in this regard.

Due to my diversified exposure in central bank as well as Islamic commercial banks in Pakistan, I feel proud being first Pakistani selected by GULF Group to this senior position in Kenya (Africa).  From this selection it is obvious that Pakistani Islamic bankers are fully capable to handle the setting up & to launch successfully the operations of Islamic Banking in any country in the world because Pakistan is the land of expertise & opportunities in Islamic Banking.

Having exposure in Islamic Banking for more than 13 years, and successful launching of TWO Islamic Banking Divisions in Pakistan, I feel comfortable to handle this assignment very easily. It added an International Exposure to my credit. Kenyan market has no expertise in Islamic Banking and I have to start from scratch in country where every thing has to be done by myself. This is a great challenge & I am fully ready to handle this project (INSHA’ALLAH).

Q: What is the recent environment in African Countries regarding the development of Islamic Banking industry?

At present two banks have started Islamic Banking Window operations, but there is no full fledge Islamic Bank in Kenya. The product range is negligible and there is a lot of potential for Shai’ah Compliant Products in the country. 

The Bank will contribute to the development of Kenya and improving its economy in several areas:

• By supporting industry and trade via their specialized Shari’ah Compliant product range. This will also help to improve and enhance businesses in the Country especially in the SME sector’
•  By providing customers with Islamic banking facilities having competitive pricing as an alternative to conventional banking. This development will assist in providing banking services to the section of the population which feels it cannot participate in any interest-based business and which therefore has limited or restricted participation in the banking sector today.
• By developing a competent and skilled workforce through comprehensive training programs backed up by the professional sponsor; BMI. GAB is expected to recruit 120 employees in its first year of operations and go up to 250 employees by 2010. At commencement stage, more than 90% of the staff in the Bank would be recruited from Kenya. Over a period of time, we hope to achieve a 100% Kenyanisation by providing them training in Islamic Banking.
• By bridging the excess investment funds available in the GCC with the need for foreign direct investment in Kenya.

Q.What’s the legal and regularity obligation involved to starting Islamic Banking Operations in Kenya?

Just like Pakistan and other countries in the world, we also require obtaining Islamic Banking License from Central Bank of Kenya (CBK). Market is not so developed & concept is new in the market. The persons involved in the processing of Licenses are trying to learn the knowledge of Islamic Banking in Central Bank. For this purpose, CBK sent their staff to UK & Bahrain to study the Islamic Banking System & its operations in these countries.
Initially Central Bank shall monitor the Islamic Banking through its Prudential Regulations for conventional banks and gradually transformation & modifications shall be implemented in line with AAOIFI Standards.
In Africa Islamic Banking is an emerging market and have huge potential as RIBA is prohibited not only Islam it is also not liked by Christianity / Judaism followers. Therefore, we see a lot of potential in Kenya for Islamic Banking Products.

Q. Explain branches expansion strategy of Gulf African Bank Ltd in the region? Have you any plane to start operation in Pakistan?

As from the name of the bank, it is obvious that it will start Islamic Banking operations in Africa only. This bank is being launched with an initial Paid – up Capital of US $ 25 million which will gradually be increased to US $ 100 million by the year 2010.

We have already selected premises for our four Islamic Banking Branches; three in Nairobi and one in Mombassa. The premises have been ready and Insha’Allah we shall start operations before December 2007. Group plans to open 25 Islamic Banking branches in Kenya in next 3 – 4 years and 25 branches in other African countries like Tanzania, Uganda etc.

Q. Project sponsor and major shareholders of project company ?

The Bank has been sponsored by a number of prominent institutions from the Gulf and Africa including Bank Muscat International (BMI), a Bahraini bank that is majority owned by Bank Muscat, Oman, International Finance Corporation, Istithmar (the investment arm of Dubai World), PTA Bank Limited (a regional bank in Africa owned by 21 countries including the African Development Bank plus China), Al Romaizan Group (owned by Abdullah Al Romaizan, a prominent Saudi businessman) and Gulf Cap (an investment company formed by Mr. Suleiman Shahbal, who is the Chairman of the Bank, and is the main driver behind GAB).

Q. What are the major challenges facing the Islamic banking industry right now?

The major challenges being faced by the Islamic Banking Industry are:

• Scarcity of trained Islamic Bankers / expertise, for which ALHUDA is playing a vital role to fill the gap of supply & demand of trained human resources in Islamic Banking. But still there is a BIG gap because a short training cannot coup with the situation. There is a need to have training courses with practical implications in the transaction to make understandable for the Islamic Bankers.
• Lacks of awareness to the Customers, all the banks are trying to do the Islamic Banking business without arranging Customer Awareness Seminars. It is very much important for the Islamic Banking to allocate certain budget for this purpose.
• Lack of Research & Development in the Islamic Banking Industry. Every Islamic Bank in Pakistan wants to make the money without investing in Research & Development. If an Islamic Bank do not have the desired level of innovative products and do not have the expertise in STRUCTURING the PRODUCT in relation to Customer’s basic requirements, how we expect the growth level to be achieved. ALHUDA has the expertise to help the Islamic Banks in development & structuring the products in line with the Shari’ah Guidelines.
• High Level of Business Expectations. All the Islamic Banks are in a race to be ahead of each other and to achieve the AGGRESSIVE BUSINESS TARGETS; many times they forget the basic Islamic norms mean they do not care the spirit of Shari’ah Guidelines. This is very much alarming situation in Islamic Banking. All the Islamic Bankers are required to strictly follow the Shari’ah Guidelines.
• Running of Islamic Banks by Professional having business expertise in Conventional Banks and they are trying to run the show in the same ways which leads to misconception among the masses.
• Special Profit Rates offered by some of the Islamic Banking operations in the similar ways like the conventional banks.

We have to seriously look into these issues and resolve the same on priority basis.

• Islamic Riets, Sukuk & Takaful are emerging market in the World, What’s your point of View on these new concepts of Islamic Finance?

• What’s the product range you will offer in Gulf African Bank ?

The Gulf African Bank Limited (GAB) will operate in line with the Bank’s product diversification strategy, i.e. to evolve as a comprehensive and quality solution provider to its clients desiring Islamic Shari’ah compliant products and services to meet their personal as well as business needs. The product range initially will include, but not limited to:

i)          Deposit and Investment Products

1. Current Accounts
2. Musharaka / Saving Accounts
3. Musharaka Investment / Term Deposit Accounts

ii)        Asset Products

1. Murabaha Finance
1. Commercial Murabaha
2. Export Murabaha
3. Consumer Murabaha (Umrah, Hajj, Medical, etc.)
2. Ijarah Finance
1. Consumer – Car / Vehicle Ijarah
2. Consumer – Housing Ijarah
3. Commercial – Car / Vehicle Ijarah
4. Commercial – Machinery / Equipments Ijarah
3. Diminishing Musharaka
1. Consumer – Housing Finance
2. Commercial – Machinery / Equipment
3. Commercial – Project Financing
4. Musharaka Finance
5. Mudarabah Finance
6. Equity Investments
7. Project Financing

iii)       Fee-Based Products

1. Issuance of Bank Guarantees
2. Establishing Letters of Credit (Import / Inland)
3. ATM / Debit Card

We have a great challenge in Kenya regarding Liquidity Management, and INSHA’ALLAH we shall develop liquidity mechanism with the patronage of Central Bank of Kenya. This product shall also help the Islamic Banking Industry to resolve the Shari’ah Compliant Liquidity resolution. Further products line will be added or modifications in the existing products range shall be made keeping in view market requirements / demand.

Q.Being the Expert in Islamic Banking & having International experience in the field. Do you have any plane to come Bank into Pakistani market to serve the nation?

I am a PURE Pakistani and Proud of being Pakistani Islamic Bankers working to set – up an Islamic Banking System in African countries. Whenever, my COUNTRY NEED MY SERVICES IN PAKISTAN, I shall always be happy to come back to serve my country.

Q.How much growth you predict in Islamic banking industry in the next decade?

If we care the Shari’ah Guidelines in TRUE SPIRIT, It will be around 20% of total assets of conventional banking in Pakistan. If we have the AGGRESSIVE PLANS without taking care of SPIRIT OF SHARI’AH, we can go beyond any expectations.

Q. Any message to the reader of the Magazine?

Be true and dedicated islamic bankers. There is a big responsibilty on our shoulders as masses believe on us and our commitment to the islamic banking. If we shall deviate the shari’ah guidelines by making the transaction islamic for our management / auditors but remember almighty allah is watching us seriously