ZamZam Pioneers Interest-Free Banking

ZamZam Bank has received an operating license from the National Bank of Ethiopia (NBE), which makes it the pioneer of full-fledged, interest-free banks in the country. The Bank received the license today at the event held at Skylight Hotel with the presence of Yinagear Dessie (PhD), the governor of NBE, and one of his deputies, Solomon Desta.

The Bank, which has been in the under-formation process for over a year, will join the industry with more than 870 million Br and 1.8 billion Br in paid-up and subscribed capital, respectively, raised from 11,200 shareholders.

The central bank has also approved the appointment of Melika Bedri, the former chief financial officer at Commercial Bank of Ethiopia, as the first president of ZamZam. Melika, who recently retired from the state bank, will be the only sitting female president in the banking industry. She has served CBE for the past three decades at different capacities including manager of promotion and treasury and assistant vice president for marketing and research.

zemThe Bank needs three months to start operations, according to Jemal Muzeyian, board member of ZamZam Bank.

“There are recruitments and system deployment, which will take time,” he said.

This is the second time the promoters of ZamZam Bank have started the process of forming a bank that exclusively offers IFB services. Close to a decade ago, the promoters started the formation process following the legislation of the interest-free banking proclamation. But their attempt did not foresee the issuance of a directive that limited IFB to window service only.

When the process was aborted, the under-formation Bank had raised 137 million Br in paid-up capital from the 337 million Br of subscribed capital from 6,800 shareholders.

However, last year the central bank issued a directive that allows full-fledged IFB service, triggering ZamZam Bank's promoters to reinstate the process. Currently, along with ZamZam, more banks are under formation to give wholly interest-free banking services, including Hijira, Zad, Kush and Huda banks.

To reach different parts of the community on the access to financial services, the window service was not enough, according to Yinager.

“There was a need to introduce the service on a bank-level," he said.

The 11 board members of ZamZam, chaired by Nasir Dino (PhD), were also approved by the central bank back in June.

ZamZam is also joining the 17 operational commercial banks in the country, of which over half of them already provide window interest-free banking services.

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