BLANTYRE-(MaraviPost)-Malawi is exploring Islamic finance as an alternative to conventional financing, with financial regulators and industry experts highlighting its potential to attract foreign investment, expand access to banking and support economic development.
Speaking to MaraviPost in interviews during the first-ever International Islamic Finance Conference and Workshop in Blantyre on Monday, Reserve Bank of Malawi (RBM) Director of Bank Supervision Chimwemwe Kachingwe, Tengo Wolasa and Takaful LDC Managing Director Adil Chilungo outlined opportunities and challenges facing the sector.
Kachingwe said the RBM had made progress in reviewing the 2017 regulations governing the supervision of non-interest banking as the central bank works to create an enabling environment for Islamic finance in Malawi.
She said the revised regulations provide for the introduction of a Sharia-compliant board to support the regulation and supervision of Islamic financial services in the country.
Kachingwe added that the central bank had been licensing financial institutions interested in offering Islamic finance products and engaging stakeholders on the implementation of the system.
However, she expressed concern over the slow development of Islamic finance in Malawi, citing limited public understanding of the concept as one of the challenges, and called for increased public awareness.
Meanwhile, Tengo Wolasa, Executive Chairman of BTI Advisory in Kenya, said Islamic finance could boost Malawi’s economy by attracting foreign investment, promoting financial inclusion and providing alternative funding for infrastructure development.
Wolasa, who has approximately 23 years of experience in Islamic finance, also serves as head of Islamic banking at Absa Bank Kenya and works with several Sharia boards in Kenya.
He explained that Islamic finance follows ethical principles that prohibit interest-based transactions and promote fairness, risk-sharing and financing linked to assets or economic activities.
Wolasa said Malawi could attract investors from the Middle East by establishing appropriate regulations and financial infrastructure to support Islamic financial services.
He also encouraged the government to explore Islamic bonds, commonly known as sukuk, as an alternative way of financing infrastructure projects such as roads, provided the arrangements comply with Islamic finance principles.
Drawing lessons from Kenya, Wolasa said conventional banks could introduce Islamic banking windows through their existing branches, allowing them to offer Sharia-compliant products without immediately establishing fully fledged Islamic banks.
On capacity building, Takaful LDC Managing Director Adil Chilungo said the workshop aimed to help financial institutions conduct the necessary studies and develop their products correctly through expert guidance and training.
Chilungo said the initiative seeks to address gaps in Malawi’s financial services industry by equipping banks with the knowledge and skills needed to develop and deliver financial products effectively. He highlighted the importance of consultancy and collaboration with relevant partners in strengthening the sector.
The conference held under the theme “Demystifying Islamic Finance: Exploring a Sustainable and Ethical Alternative to Conventional Financing and Economic Architecture.” Currently, FDH Bank offers Islamic finance services through an Islamic banking window, while Malawi is yet to establish a fully fledged Islamic bank. The discussions seek to strengthen understanding of Islamic finance and identify practical steps towards expanding its adoption in the country.
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