By Brenda Kerubo
Rahma Hersi is the managing partner and founder of Awal Consulting. The very first Islamic Finance Advisory Firm in East and Central Africa founded in 2014.
“Well, it was a journey that arose from a need to address the gaps in the industry and working to create awareness around financial inclusion and poverty alleviation and use Islamic finance as an alternative to offer solutions in this regard,” says Hersi.
Islamic finance is free from interest payments and pure monetary speculation unlike conventional finance. This is how it works. It is a concept that is based on Islamic law or Sharia principles. The financial institution does not charge interest but gets a markup as profit. A customer can also be penalized for delayed payments.
“Awal Consulting is a regular advisory firm that specializes in Islamic finance. So we advise clients interested in the industry,” she adds.
The International Monetary Fund estimates that Islamic finance has over 2 trillion dollars of assets globally and is offered in over 60 countries.
The business is common in Middle East countries and North Africa but is slowly being adapted in Sub-Saharan countries like Kenya. Rahma Hersi is all too familiar with this.
At the beginning, Hersi’s interest was in communication, far from the financial services she is in now. She wanted to be a journalist. But after a couple of internships in various media stations, she decided to join law school and study Islamic law. She graduated with Honors in Shari’a Law and got a scholarship to do her master’s in the United States.
She came back to Kenya in 2009 and started work at an Islamic financial institution, First Community Bank. Hersi got another opportunity to work for the Islamic division of global auditing firm, Ernst and Young in Bahrain, a small island in the Persian Gulf. Bahrain is considered a global leader in Islamic finance with a large concentration of Islamic financial institutions. Seven Islamic insurance companies and Islamic securities firms. It was a learning opportunity for Hersi, considering the market over there is more mature.
She returned to Kenya in 2012 but employment was not an option for her. She chose the path of, entrepreneurship and set up Awal Consulting Limited with two partners.
“It was hard. They perceived us to be young and women and so we were not taken seriously sometimes. But we proved ourselves with hard work and passion and a deep sense in bringing economic justice through financial inclusion for many who would not touch regular banking as well as those who wanted ethical finance as a value proposition for their businesses,” she explains.
Awal Consulting Limited is actively involved in Islamic banking set up, product development, regulatory and legal advice, research, training and capacity building, Shariah governance and conference planning.
“We recognized there were opportunities for resources to come into our country with investors from the Gulf countries and the Far East but certain frameworks needed to be put in place,” says Hersi.
Kenya is yet to spell out a legal and regulatory framework for Islamic financing in the country but has a platform, Islamic Finance Project Management Office to draft proposals on policy, tax and legal affairs for the industry.
The office is made up of key representatives from Islamic financial institutions in charge of formulating regulations to boost growth of Shariah compliant products in the country.
Industry players believe that establishment of a legal and regulatory framework for Islamic banking in the country will also boost investment flows from South East Asia and Middle East. Others are advocating for clauses in the Banking Act to accommodate Islamic banking in a bid to create a level playing field with other financial institutions.
“Awal has recently merged with a Global Islamic finance advisory firm, Gateway Islamic Finance advisory. With this milestone, I see us in the future being not only global advisors on Islamic finance but also the regional Islamic finance advisors, ready to join the fight against poverty and promote opportunities where alternative sources for resource mobilization enters our continent to develop our markets.”
Rahma Hersi’s passion for her faith in finance has seen her present at financial conferences in Kenya, Uganda and Finland. In March 2014, Hersi completed the first comprehensive write up on Islamic finance and its growth in Kenya.
It was published by the John Wiley Islamic Finance Series, chapter titled “The Islamic Finance Handbook: A Practitioners Guide To The Global Markets”.