SHOFCO Sacco enters Islamic finance with Shariah-compliant product

Shining Hope for Communities (SHOFCO) Savings and Credit Cooperative Organization (SACCO) has unveiled a Shariah-compliant financial product, SHAM haina Riba tailored to providing alternative financial services and solutions to its Muslim youth members.

This bold innovation signals a transformative chapter in the Sacco’s quest to deepen inclusivity, promote ethical finance, and serve its increasingly diverse membership base. The Sacco has over19, 000 members and has disbursed more than Sh 1 billion in loans.

The SHOFCO Sacco is the only savings and credit institution in Kenya serving communities in informal settlements across the country, including Kibera, Mathare, Kawangware, Kariobangi, Mombasa, and Kakamega

Speaking to the Sahifa Media, SHOFCO Financial Inclusion Manager Jonathan Kioko, said the SHAM haina Riba Shariah-compliant product has been developed to provide services that conform to the Islamic principles and stated the product will help them be more inclusive and expand operations to address the need of the Muslim population.

“We did not have a credit facility that caters for the needs of our Muslim youth members, therefore the Shariah-Compliant product will address that gap. This is an opportunity for the Muslim youth to be equipped with entrepreneurial skills and access funding to expand their existing businesses,’’ Kioko remarked.

He further stated that Shariah-compliant product will empower Muslim youth and women in informal settlements across the country, who have previously been locked out of access to financing due to barriers such as lack of Shariah modelled facilities.

Kioko further revealed that the SHOFCO Sacco has developed an exciting strategy to train and give out loans to youth between the age of 18 to 35 years who are currently doing business.

The SHOFCO financial manager encouraged youth and women within the Muslim community to take advantage and access the Shariah-compliant product pointing out that SHOFCO Sacco is focused on expanding its offering of youth-friendly products and services to attract young people to increase their loan uptake and grow their businesses exponentially.

“We remain keen on partnerships that enable us to provide a wide variety of financial solutions that meet the diversified needs of our customers further broadening financial inclusion to ensure that we leave no one behind,” added Kioko.

He noted that Muslim members who previously avoided conventional financial services due to interest accrual on loans and dividends will now be catered for through the shariah product which operates under a Shariah advisory council and dedicated staff to maintain strict adherence to shariah principles.

The broader Islamic finance sector in Kenya has been gaining momentum, supported by a regulatory framework that has evolved since the first fully-fledged Islamic banks began operations in 2008.

Amendments to the Co-operative Societies Act and the Sacco Societies Act have paved the way for Saccos to offer these products, deepening financial inclusion for Kenya's Muslim population.