List of Salaam Microfinance Bank Branches

Salaam Microfinance Bank Limited is a trusted and reputable Kenyan Financial  organization regulated by the Central Bank of Kenya under the Microfinance Act of 2006 with its Head office based in Nairobi. It has an excellent grasp of the environment it operates in and offers Islamic compliant products and services at a national scale.

Salaam Microfinance Bank is owned by Salaam African Bank which aims to become Africa’s center of excellence in financial inclusion by enhancing the social and economic development of its customers through its deep-rooted core values of innovation, integrity, growth, professionalism, and a strong focus on its customer service through improved digital platforms such as Mobile and Internet banking.

The next stage of our expansion includes the opening of new branches in Garissa, Mombasa, Kimathi and Eastleigh, and the growth of the bank’s presence to further assist our customers in their ventures. Salaam Microfinance Bank takes great pride in doing business responsibly by powering people first and helping them achieve greater financial success.

Here is a List of Salaam Microfinance Bank Branches

Uwezo Microfinance Bank Head Office

Location: Park Plaza, Moktar Daddah Street, opposite Jivanjee Gardens, Nairobi

Phone: 0703591302

Uwezo Microfinance Bank Gikomba Branch

Location: Nafuu Building 1st Floor, Pumwani Road, Gikomba

Phone: 0703591302

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Contacts Info

• www.salaammfbank.co.ke
• info@salaammfbank.co.ke
• Head Office, Park Plaza, Opposite Jivajee Garden, Moktar Daddah Street
• Office: +254-718373737
  Cell: +254-710544444
  Cell: +254-717233333

SHARIAH-COMPLIANT MICROFINANCE FREQUENTLY ASKED QUESTIONS

Q: What is Shariah banking?
A: Shariah banking, also known as Islamic banking, refers to a system of banking that operates in accordance with the principles of Shariah law. It is guided by ethical and moral principles derived from the Quran and the teachings of Prophet Muhammad (peace be upon him).

Q: How does Shariah banking differ from conventional banking?
A: Shariah banking differs from conventional banking in several ways. Firstly, it prohibits the payment or acceptance of interest (riba). Instead, Shariah banking employs risk-and-return sharing arrangements or provides financing through asset-based transactions. Secondly, it prohibits investments in sectors that are considered haram (forbidden) such as alcohol, gambling, and pork, and promotes halal business. Lastly, Shariah banking emphasizes ethical and socially responsible investments that promote the well-being of society. Also, Shariah-compliant banks retain Shariah scholars who provide guidance on and ensure compliance with Islamic principles.

Q: How do Shariah banks generate profits without charging interest?
A: Shariah banks generate profits through various mechanisms whose cornerstone is risk-and-return sharing, for example, trading, agency fees, and commissions, buying and selling, renting and leasing, and partnerships. One common method is profit-sharing, where the bank and the customer share the profits or losses generated from an investment or financing arrangement. Another method is through the sale and purchase of goods or assets, where the bank earns a profit by selling the asset at a higher price to the customer through installments.

Q: Can non-Muslims use Shariah banking services?
A: Yes, non-Muslims are welcome to use Shariah banking services. Shariah banks are open to customers of all faiths who are interested in ethical and alternative banking options.

Q: What is Shariah compliant microfinance?
A: Shariah-compliant microfinance refers to the provision of microfinance services, such as financing, savings, and insurance, that operate in accordance with the principles of Shariah law (Shariah). It incorporates ethical and moral considerations into its operations, following the guidelines set by the Quran and the teachings of Prophet Muhammad (peace be upon him).

Q: How does Shariah-compliant microfinance work?
A: Shariah-compliant microfinance institutions offer financial products and services that comply with Shariah principles. They provide small-scale financing to low-income individuals and entrepreneurs, usually through profit-sharing arrangements known as trust partnerships (Mudarabah) or joint venture partnerships (Musharakah). These arrangements allow the microfinance Institutions to share the risks and rewards of the financed activities with the borrowers. Murabaha is an arrangement that provides for asset acquisition while Ijarah offers leasing options.

Q: What are the key principles of Shariah-compliant microfinance?
A: Shariah-compliant microfinance operates based on key principles, including the prohibition of interest (riba), the promotion of asset-backed financing, risk-sharing, avoidance of uncertainty (gharar), and adherence to ethical and socially responsible practices. These principles guide the design and implementation of Shariah-compliant microfinance products and services. The sanctity of products is another principle that reinforces the notion that Shariah-compliant finance is not only a financial system but also a means to seek divine approval and blessings in economic activities.

Q: Who benefits from Shariah-compliant microfinance?
A: Shariah-compliant microfinance primarily benefits low-income individuals, small business owners, and entrepreneurs who are financially excluded or lack access to traditional banking services. It aims to empower them economically and improve their livelihoods by providing them with financial resources, support, and opportunities to engage in productive economic activities. It also seeks to fulfill the Sustainable Development Goals (SDGs) through poverty eradication.

Q: What are the Islamic contracts used in Shariah-compliant microfinance?
A: Islamic microfinance utilizes various financing contracts that comply with Islamic principles. Some of the commonly used contracts include:

1. Murabaha: This is a cost-plus financing arrangement where the Islamic microfinance institution purchases an asset or product based on the client’s request and sells it to the client at an agreed-upon price, which includes a profit margin. The payment is typically made in installments, making it accessible to microfinance clients.
2. Musharaka: This is a joint venture partnership where the microfinance institution and the client contribute capital to a business venture. They share the profits according to a pre-agreed ratio, while losses are shared based on the capital contributions. Musharaka can be used to finance small businesses and entrepreneurial ventures.
3. Mudaraba: This sharing arrangement is where the microfinance institution provides the capital (Rabb-ul-Maal), and the client or entrepreneur manages the business operations (Mudarib). The profits generated are shared between the microfinance institution and the client based on a pre-agreed ratio, while the microfinance institution bears the losses unless they result from the client’s negligence or misconduct.
4. Ijarah: This is a leasing or rental contract used in Islamic microfinance to provide financing for the acquisition of assets. The microfinance institution purchases the asset and leases it to the client for an agreed-upon rental amount. The client may have the option to purchase the asset at the end of the lease period.
5. Istisna’a: This is a contract used for financing the production of specific goods or assets. The microfinance institution enters into an agreement with the client to manufacture a specific item according to agreed-upon specifications. The payment is made in installments or upon delivery of the completed item.
6. Salam: This is a forward sale contract used to provide financing for the production of goods. The MFI pays the client upfront for the delivery of specific goods or commodities at a future date. The client uses the funds to produce the goods, and upon delivery, the MFI receives the goods and can sell them in the market.
7. Tawarruq: This is a financing arrangement where an individual in need of funds purchases a commodity from a seller on deferred payment terms. The individual then sells the commodity in the market to obtain cash, effectively converting it into money. Tawarruq is commonly used as a means of accessing cash for short-term financing needs.
8. Wakalah: This is an agency agreement in Islamic finance. It involves one party (the principal) appointing another party (the agent) to act on their behalf in a specific matter. In the context of Islamic banking, wakalah is used to establish an agency relationship between a customer and a financial institution for managing funds or investments. The agent is compensated based on an agreed-upon fee or percentage of the profits earned.
9. Wadiah: This is a type of safekeeping contract in Islamic finance. It involves a person depositing their funds or assets with a financial institution for safekeeping. The financial institution is considered the custodian and is responsible for the safekeeping and preservation of the deposited assets. The institution may provide services such as withdrawals, transfers, and account maintenance, but the deposited funds remain the property of the depositor.
10. Takaful: This is an Islamic form of cooperative insurance. It operates on the principles of mutual assistance and shared responsibility. Participants contribute to a common fund, which is used to provide coverage against potential losses or damages. In the event of a covered loss, compensation is provided to the affected participants. Takaful promotes risk-sharing and solidarity among participants.

Q: What are the roles of Islamic scholars in Shariah-compliant microfinance?
A: Shariah scholars play crucial roles in various aspects of Shariah-compliant banking, including product development and documentation, audit and supervisory functions, dispute resolution, capacity building, and awareness creation:

1. Product Development and Documentation: Shariah scholars provide guidance and oversight in the development of Shariah-compliant financial products. They review and ensure that the products and contracts adhere to Islamic principles. Scholars offer input on the structuring, terms, and conditions of the products, ensuring their compliance with Shariah guidelines.
2. Audit and Supervisory Functions: Shariah scholars perform audits and conduct regular supervision to ensure ongoing compliance of the banking institution’s operations with Shariah principles. They review the institution’s practices, transactions, and internal control mechanisms to identify any non-compliance and recommend corrective measures.
3. Dispute Resolution: Shariah scholars play a role in resolving disputes that may arise in Shariah-compliant banking. Their expertise in Islamic law allows them to provide guidance and make decisions in cases where there are disagreements or conflicts related to contracts, transactions, or interpretations of Shariah principles.
4. Capacity Building: Shariah scholars contribute to capacity-building efforts by conducting training programs, workshops, and seminars for bankers, employees, and stakeholders. They help build the understanding and knowledge of Islamic finance principles and practices, ensuring that individuals involved in Shariah-compliant banking have the necessary expertise to carry out their roles effectively.
5. Awareness Creation: Shariah scholars play a significant role in creating awareness among the public about the principles and benefits of Shariah-compliant banking. They engage in public discourse, publish educational materials, and participate in conferences and events to promote understanding and acceptance of Islamic finance.

Q: Do you need to be a Muslim to work at a Shariah-compliant bank?
A: No, you do not.

Q: How do you assess the impact of Shariah-compliant microfinance?
A: Some common approaches to assessing the impact of Shariah-compliant microfinance:

1. Economic Empowerment: Evaluating the economic empowerment of microfinance clients involves assessing changes in income levels, livelihood improvement, employment generation, asset accumulation, and entrepreneurial development. This can be done through surveys, interviews, and analysis of economic indicators.
2. Social Impact: Assessing the social impact of Shariah-compliant microfinance focuses on measuring changes in poverty levels, access to basic services, social inclusion, gender empowerment, and overall well-being of clients and their communities.
3. Financial Inclusion: Evaluating the extent of financial inclusion facilitated by Shariah-compliant microfinance involves examining the accessibility and usage of financial services by previously underserved populations. Indicators include the number of clients served, the depth of financial services, and the level of client satisfaction.
4. Environmental Impact: Assessing the environmental impact of Shariah-compliant microfinance involves examining the sustainability practices promoted by Shariah-compliant microfinance institutions and the environmental benefits achieved by clients. This includes assessing the adoption of eco-friendly practices, such as sustainable agriculture or renewable energy initiatives.
5. Governance and Transparency: Assessing the governance and transparency practices of Shariah-compliant microfinance institutions ensures adherence to ethical standards and compliance with Shariah principles. This may involve evaluating governance structures, internal controls, transparency in operations, and adherence to Shariah guidelines.

Q: What are the opportunities in the shariah compliant model?
A: Shariah-compliant microfinance presents several opportunities that combine the benefits of microfinance with the ethical principles of Islamic finance:

1.  Financial Inclusion: Shariah-compliant microfinance opens doors to financial services for individuals who were previously excluded or underserved by traditional banking systems. It offers inclusive and accessible financial products and services that cater to the needs of a diverse range of customers, including low-income individuals, small businesses, and marginalized communities.
2. Social Impact: Shariah-compliant microfinance has the opportunity to create positive social impact by targeting disadvantaged communities and marginalized individuals. By providing financial resources, training, and support it can help alleviate poverty, promote entrepreneurship, and empower individuals to improve their livelihoods.
3. Entrepreneurship and Job Creation: Shariah-compliant microfinance can foster entrepreneurship and job creation. By providing capital and support to small businesses and micro-entrepreneurs, Shariah-compliant microfinance contributes to economic development and employment generation.
4. Ethical and Socially Responsible Investing: Shariah-compliant finance provides an opportunity for individuals and institutions to invest in a manner that aligns with their ethical and moral values. It promotes investments in sectors that are socially responsible, such as healthcare, education, renewable energy, and other sustainable industries, while avoiding sectors deemed as compromising moral norms.
5. Partnerships and Collaboration: There are opportunities for philanthropic organizations, development agencies, and government entities to collaborate and engage Sharia-compliant microfinance to combine resources, expertise, and networks to promote financial inclusion, social development, and economic empowerment initiatives.

Q: What are the challenges facing shariah compliant microfinance?
A: Shariah-compliant microfinance faces several challenges that can impact its growth and effectiveness:

1. Regulation: Lack of clear and comprehensive regulatory frameworks specific to Shariah-compliant microfinance can pose challenges. The absence of specific guidelines or regulatory oversight may lead to ambiguity, inconsistent practices, and hinder the development and expansion of Shariah-compliant microfinance institutions.
2. Stagnation: Limited awareness and understanding of Shariah-compliant microfinance among potential clients, investors, and stakeholders can contribute to stagnation. The perception that Islamic finance is only for religious purposes may restrict its appeal and adoption among a broader range of individuals and businesses.
3. Liquidity: Shariah-compliant microfinance institutions often face challenges in mobilizing and managing liquidity. Accessing adequate funding sources, particularly for longer-term financing, can be difficult, hindering the ability to meet the demand for Shariah-compliant microfinance services and expand operations.
4. Capacity: Building the capacity of human resources within Shariah-compliant microfinance institutions is crucial but can be challenging. Developing a skilled workforce that understands both microfinance principles and Shariah compliance requires targeted training, expertise, and ongoing professional development.
5. Harmonizing Shariah Practices: Ensuring consistency and harmonization of Shariah practices across different jurisdictions and interpretations can be a challenge. Shariah scholars may have varying views on certain aspects, leading to potential differences in the implementation and interpretation of Shariah principles, which can create complexities for cross-border operations and standardization.
6. Market Perception: Overcoming misconceptions and negative perceptions surrounding Islamic finance, such as the belief that it is only for Muslims. That it is less efficient or less competitive compared to conventional finance, is also another challenge.