SIB Najah Islamic Investment Banking is on the cusp of launching its own Shariah compliant pension scheme, eyeing a public announcement in the next two months, executive director Abdullahi Omar Adan shared with IFN Investor.
This Shariah division of Kenya’s Standard Investment Bank (SIB) has secured the Retirement Benefits Authority (RBA) pension fund management license. “We are waiting for RBA approval to launch our own pension schemes.”
This development comes after SIB Najah inked deals to provide Shariah investment windows within pension funds already operating at several institutions, thus enabling Kenya’s Muslim employees to choose between conventional and Islamic pension schemes.
Several Islamic banks in Kenya plus a government agency have joined SIB Najah in offering Shariah compliant pension scheme options to their staff, Abdullahi revealed.
At the end of 2024, Kenya’s pension total assets reached around KES2 trillion (US$15.5 billion), mainly conventionally-managed, while SIB Najah has since been engaged to manage Shariah investments amounting to US$30-40 million in assets, said Abdullahi.
Among the advantages gained is the opening up of assets classes that pension funds are currently investing in – mainly fixed deposits and government bonds – to others which could potentially give better returns, like Sukuk and also SIB Najah’s private equity deals.
With the RBA license, SIB Najah further managed to obtain an exemption from the 15% cap applied to all Kenyan pension schemes for offshore or alternative investments, noted Abdullahi.
“We told the (RBA) the Islamic space is quite different and that opportunities are more open and better on the global markets. So, we got an exemption for the Islamic pensions … from the existing asset class limitations under the current regime within the 2023 Finance Act.”
Such investments now cover the US markets and a number in the Middle East, mainly Saudi Arabia, and Asian nations like Malaysia and Indonesia. Pension scheme investments also include the UK – with all these complementing investments locally within Kenya.
“As a bank, we have counterparties across all the major markets. That gives us the opportunity to be able to invest in all the major markets.”
