Under pact, Turkish know-how to help foster development of Islamic finance sector in Djibouti
Under a new agreement, the Horn of Africa country of Djibouti is set to learn more about Islamic finance models from Turkish participation banks.
The memorandum of understanding (MoU) between the Participation Banks Association of Turkey (TKBB) and Djibouti’s Economy and Finance Ministry took place on Tuesday at the Bosphorus Summit in Istanbul.
The pact is set to support the transfer of knowledge, skills, and technical know-how to Djibouti stakeholders and the development of the Islamic finance sector in the coastal country.
“Global economic crises have shown us that in the world of the future, an interest-based system will be replaced by a financial architecture in which risk sharing is essential,” Metin Ozdemir, head of the Turkish participation banks group, said in a speech at the signing.
Participation finance enables stronger social and economic structure and wider income distribution, he added.
Saying that Turkey has given greater support to Islamic finance over the last 20 years, Ozdemir said this has played an important role in its growth, especially as the public sector entered the sector as a player in 2015.
In the last five years, participation banks’ share of the Turkish banking system rose from 5% to 7.2%.
“The TKBB is working on a roadmap in line with current needs in order to promote the participation finance sector and reach our strategic goal of taking a 15% share of the banking sector,” he said.
But it also does not want to be limited to Turkey but instead to share its experiences with different regions, he added.
“In particular, we are in close contact with participation financial institutions in Islamic countries,” he said.
“While opening branches in countries such as Germany, Bahrain and Sudan, we hold meetings with delegations from Indonesia, Malaysia, Morocco, Djibouti, Somalia, and Azerbaijan.”
Ziraat Participation broke new ground by opening the first Turkish bank branch in the African continent, in Sudan, he noted, adding that efforts to open a branch in Somalia have already begun.
The TKBB is the main representative of the participation banking sector in Turkey and works with the government, regulators, and other stakeholders to raise public awareness and understanding of the contribution the sector makes to the Turkish economy.