Fortune News | Oct 09,2021
Mar 28 , 2020
By GELILA SAMUEL ( FORTUNE STAFF WRITER
)
Shabella Bank, an interest-free bank under formation, has sold 270 million Br worth of shares, of which 120 million Br has been paid.
Founded by 20 individuals from the Somali Regional State, the Bank is named after the Wabi Shabelle River, which means Tiger River in the regional language. The founders got approval from the National Bank of Ethiopia (NBE) to sell shares last October.
The organising committee, which is chaired by Mohammed Gani (PhD), the former president of the Somali Chamber of Commerce & Sectoral Association and former board director of the Ethiopian Chamber of Commerce & Sectoral Association, started selling shares in early November of last year with an official launch event in Saro Maria Hotel.
Omer Haji, the former head of the Regional State's finance bureau, Abdualhi Abdul Kadir, owner of Rabah Construction, and Egal Mohammed, owner of Egal Construction, are among the founders of the Bank, which sells shares with a par value of 1,000 Br.
The minimum number of shares a shareholder can buy is 10, while the maximum is set at 50,000. The Bank is selling its shares through Commercial Bank of Ethiopia (CBE), Awash Bank, Wegagen Bank and Nib Bank.
Shabella is the seventh fully-fledged, interest-free bank that is under formation after the central bank issued the directive that allowed the establishment of such institutions last June. Hijra Bank, Zad, Nejashi Kush, Huda and Zemzem are the banks that are already established or are undergoing the establishment process.
The Bank has set its sights on integrating cultural values with the banking service to support the development of the Somali Regional State through investments, according to Mohammed.
“People in the Somali Regional State can also be served in their own language,” he said.
Initially, the Bank planned to sell shares worth two billion Birr. The founders, however, decided to cut the ceiling by half about two months ago.
“We pulled the cap down so as not to make the Bank too capitalized and to boost the profit margin,” Mohammed told Fortune.
The organisers aim to sell shares for the next six months and to start operations by the end of this year. It has set up an office in Najah Building in Jijgia, Somali Regional State, and it is also setting up an office on African Avenue in the capital, which will open its doors by April 16, 2020. After its formation, the head office of the Bank will be situated in Addis Abeba.
For the establishment process, the organisers hired AL MAALI Group Islamic Finance Training & Consultancy, a Dubai-based company. The company was engaged in handling the documentation, conducting the market and feasibility study, and drawing up the business plan and operational path of the Bank.
The company was hired after going through a bidding process that was announced by the founders three months ago. Eight international companies vied for the project and the Dubai-based consultancy firm won with the lowest offer.
"We have already started looking at prospective investment areas now," said Mohammed. "The Bank will finance businesses in the areas of farming, livestock, poultry, dairy, honey and honey products."
Until the latest proclamation from the central bank was issued, interest-free banking was only permitted as a window service alongside conventional banking. Out of the 17 commercial banks, 10 of them have started offering the service. In the first half of the current fiscal year, the entire banking sector has raised 103.2 billion Br in capital, of which 55.8pc was for public banks, while 44.2pc went to private banks.
The emergence of Islamic banking with a significant number of institutions opens the way for the competition and inclusion of different cultures in the banking sector, according to Abdulmenan Mohammed, a financial expert with close to two decades of experience.
"The central bank needs to fully equip itself as a regulatory body to manage these banks with a deep knowledge of the interest-free banking system," said Abdulmenan.
PUBLISHED ON
Mar 28,2020 [ VOL
20 , NO
1039]
Fortune News | Oct 09,2021
Commentaries | Jun 15,2024
Sunday with Eden | Jan 07,2023
Radar | Jan 01,2023
Radar | Sep 17,2022
Fortune News | Oct 01,2022
Fortune News | Dec 04,2022
Radar | Aug 31,2019
News Analysis | Jan 19,2024
Advertorials | Sep 13,2021
Dec 22 , 2024 . By TIZITA SHEWAFERAW
Charged with transforming colossal state-owned enterprises into modern and competitiv...
Aug 18 , 2024 . By AKSAH ITALO
Although predictable Yonas Zerihun's job in the ride-hailing service is not immune to...
Jul 28 , 2024 . By TIZITA SHEWAFERAW
Unhabitual, perhaps too many, Samuel Gebreyohannes, 38, used to occasionally enjoy a couple of beers at breakfast. However, he recently swit...
Jul 13 , 2024 . By AKSAH ITALO
Investors who rely on tractors, trucks, and field vehicles for commuting, transporting commodities, and f...
Feb 23 , 2025
Africa is a place where the frustrations of its elites run high due to what they feel...
Feb 16 , 2025
Madame Kristalina Georgieva, managing director of the International Monetary Fund (IM...
Feb 9 , 2025
This week, the African Union's (AU) annual summit in Addis Abeba is set to be more th...
Feb 1 , 2025
Urban renewal is seldom gentle to those on the receiving end of redevelopment. Take s...
Loading your updates...