Ensuring The Compliance of Islamic Finance Applications with Shariah Principles in Ethiopia: The Way Forward

Abstract

The notion behind Islamic finance is providing alternative Shariah-compliant financial services and products for those who do not willing to access conventional finance as it contravenes Shariah principles. Currently, Islamic finance is expanding throughout Muslim and non-Muslim countries. One of the most critical challenges of the Islamic financial sector is the extent of the compliance of Islamic finance practices with Shariah principles. Therefore, there should be a control mechanism for ensuring the compliance of the products and services provided by Islamic financial institutions with Shariah principles. Scholars argue that a Shariah governance framework should be applied by institutions engaged in Islamic finance in countries where Islamic finance is being practiced. Shariah governance framework is mainly categorized into two approaches centralized and decentralized Shariah governance framework. The availability of a centralized Shariah governance framework is essential in ensuring the application of Islamic finance in accordance with Shariah principles. Ethiopia is one of the countries that accommodated the application of Islamic finance through exclusively interest-free banking windows by conventional banks in 2011 and fully-fledged interest-free banks in late 2019. However, the National Bank of Ethiopia (NBE) did not specify any Shariah governance framework in any of its legislations. The unavailability of an established Shariah governance framework may expose the sector to Shariah non-compliance risk. This study investigates how to ensure Ethiopia's Islamic finance applications' compliance with the Shariah principles. Semi-structured interviews and document studies were conducted with 15 respondents, including experts in Islamic finance, Shariah scholars, and Islamic finance practitioners, to collect the needed data for this endeavor. The findings indicate that interest-free banks, especially interest-free banking windows, do not give the necessary attention to the issue of the Shariah governance framework. The presumed manifestations of Shariah compliance in Ethiopia are having Shariah advisory committee, using Arabic words and names for their products and services, declaring they are following the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), Islamic Financial Services Board (IFSB) standards, and participating in corporate social activities. However, these claims are insufficient to argue that their products and services are Shariah-compliant, as long as an external authorized body should oversight and control their application. In addition, the results indicate that adapting the AAOIFI standards to the extent of industry development is recommended to ensure Shariah compliance in Ethiopia. Besides, considering responsible stakeholders in ensuring Shariah compliance, government/NBE and financial institutions engaged in Islamic finance are identified as primary stakeholders. On the other hand, the Ethiopian Islamic Affairs Supreme Council (EIASC), religious scholars and institutional Shariah advisors, interest-free professional associations, academicians in Islamic economics and finance, and educational institutions are considered secondary stakeholders. In addition, the findings also indicate that the policymakers' approaches of Türkiye, Malaysia, Kenya, and South Africa to the Islamic finance industry could be the best model for policymakers in Ethiopia. Establishing a centralized Shariah advisory committee under the NBE is recommended to ensure the compliance of interest-free finance applications with Shariah principles in Ethiopia. To this endeavor, all stakeholders such as government/NBE, financial institutions engaged in the Islamic finance industry, EIASC, religious scholars and institutional Shariah advisors, interest-free professional associations, academicians in Islamic economics and finance, and educational institutions should play a significant role by fulfilling their respective responsibilities.

Keywords

• Ethiopia
• Islamic finance
• National Bank of Ethiopia
• Shariah governance
• Shariah compliance
• interest-free banking

Etiyopya'da İslami Finans Uygulamalarının Şer’i İlkelere Uyumunun Sağlanması: İzlenecek Yol

Abstract

Geleneksel finansın ürünleri ve operasyonları İslam’ın ilkelerini ve yasaklarını dikkate almamakta ve bunlara uymamaktadır. Bu nedenle, geleneksel finansın sunduğu hizmetlere erişmeye istekli olmayanlar için İslam’ın ilkelerine ve yasaklarına uygun alternatif finansal ürünler ve hizmetler sunmak İslami finansın arkasındaki temel fikirdir. İslami finans halihazırda İslam İşbirliği Teşkilatı üyesi ülkelerde olduğu kadar gayrimüslimlerin çoğunluk olduğu ülkelerde de büyüyen bir sektördür. İslami finans sektörünün karşılaştığı en kritik zorluklardan birisi, İslami finans uygulamalarının Şer’i ilkelerle ne kadar uyumlu olduğudur. Bu nedenle, İslami finans kuruluşlarının sunduğu ürün ve hizmetlerin Şer’i ilkelere uygunluğunu sağlamaya yönelik bir kontrol mekanizması olmalıdır. İslami finansın uygulandığı ülkelerde, İslami finans sektöründe faaliyette bulunan kurumlar tarafından uygulanması gereken bir Şer’i yönetişim çerçevesinin olması gerektiği savunulmaktadır. Şer’i yönetişim çerçevesi esas olarak merkezileştirilmiş ve merkezi olmayan Şer’i yönetişim çerçevesi olmak üzere iki yaklaşıma ayrılmaktadır. Merkezi bir Şer’i yönetişim çerçevesinin mevcudiyeti, İslami finansın Şer’i ilkelere uygun olarak uygulanmasını sağlamak için esastır. Etiyopya, 2011'de faizsiz bankacılık pencereleri aracılığıyla geleneksel bankalar tarafından ve 2019'un sonlarında ise tam teşekküllü faizsiz bankalar tarafından İslami finans uygulamalarını devreye alan ülkelerden biridir. Ancak, Etiyopya Ulusal Bankasının (NBE) belirlediği yasal düzenlemelerde Şer’i yönetişim çerçevesine dair herhangi bir hüküm veya ibare bulunmamaktadır. Yerleşik bir Şer’i yönetişim çerçevesinin bulunmaması, İslami finans sektörünü Şer’i uyumsuzluk riskine maruz bırakabilir. Bu çalışma, Etiyopya'nın İslami finans uygulamalarının Şer’i ilkelere uygunluğunun nasıl sağlanacağını araştırmaktadır. Bu çaba için gerekli verileri toplamak amacıyla İslami finans uzmanları, İslam alimleri ve İslami finans uygulayıcıları da dahil olmak üzere 15 katılımcı ile yarı yapılandırılmış görüşmeler ve belge çalışmaları yapılmıştır. Bulgular, faizsiz bankaların, özellikle faizsiz bankacılık pencerelerinin, Şer’i yönetişim çerçevesi konusuna gerekli ilgiyi göstermediğini işaret etmektedir. Etiyopya'da Şer’i uyumluluğunun varsayılan unsurları arasında Şer’i danışma komitesine sahip olmaları, ürün ve hizmetleri için Arapça kelimeler ve isimler kullanmaları, İslami Finansal Kurumlar için Muhasebe ve Denetleme Kurumu (AAOIFI), İslami Finansal Hizmetler Kurulu (IFSB) standartlarını takip ettiklerini beyan etmeleri ve kurumsal sosyal faaliyetlere katılmaları yer almaktadır. Ancak bu unsurlarla birlikte dışarıdan yetkili bir kuruluş tarafından İslami finans kurumlarının uygulamalarını gözetlenmesi ve denetlenmesi gereği göz önüne alındığında, İslami finans kurumlarının ürün ve hizmetlerinin Şer’i açıdan uygun olduğunu iddia etmek için yeterli zemin olmayacaktır. Bununla birlikte, Etiyopya'da Şer’i uyumluluğu sağlamak için, İslami finans sektörünün gelişimi ölçüsünde AAOIFI standartlarının uyarlanmasının önerildiği çalışma kapsamında elde edilen bulgularda görülmektedir. Ayrıca, Şer’i uyumluluğun sağlanmasındaki sorumlu paydaşlar dikkate alındığında, İslami finans sektörüyle ilgili hükümet organları, Etiyopya Merkez Bankası (NBE) ve finansal kuruluşlar birincil paydaşlar olarak tanımlanmaktadır. Öte yandan, Etiyopya İslami İşler Yüksek Konseyi (EIASC), İslam alimleri ve kurumsal Şer’i danışmanlar, faizsiz finans meslek kuruluşları, İslam ekonomisi ve finansı alanında çalışan akademisyenler ve eğitim kurumları ikincil paydaşlar olarak değerlendirilmektedir. Ayrıca, elde edilen bulgular Türkiye, Malezya, Kenya ve Güney Afrika'daki politika yapıcıların İslami finans sektörüne yaklaşımlarının Etiyopya'daki politika yapıcılar için en iyi örnek olabileceğini de göstermektedir. Etiyopya'da faizsiz finans uygulamalarının Şer’i ilkelere uygunluğunu sağlamak için NBE bünyesinde merkezi bir Şer’i danışma komitesi kurulması tavsiye edilmektedir. Bu doğrultuda, hükümet, NBE, İslami finans sektörüyle uğraşan finans kurumları, EIASC, İslam alimleri ve kurumsal Şer’i danışmanlar, faizsiz finans meslek kuruluşları, İslam ekonomisi ve finansı alanında çalışan akademisyenler ve eğitim kurumları gibi tüm paydaşlar sorumluluklarını yerine getirerek önemli bir rol oynamalıdır.

Keywords

• İslami finans
• Etiyopya
• Etiyopya Merkez Bankası
• Şer’i yönetişimi
• Şer’i uyumluluk
• faizsiz bankacılık

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