Kenya’s financial laws need further changes to give Islamic finance room to grow, Kenya Revenue Authority Chairman Nderitu Muriithi has said, arguing that the country has some legal provisions in place but still lacks a system that fully supports asset-backed Islamic financing.
Muriithi said existing tax and public finance laws already recognise key Islamic finance arrangements, but more changes are needed to make it easier for investors and financial institutions to use assets as security when providing Sharia-compliant financing.
Speaking at the Islamic Finance Forum and Dialogue Conference 2026 on Thursday, he said the Income Tax Act and the Value Added Tax Act provide for Islamic finance arrangements, while the Public Finance Management Act recognises Sukuk as a form of government security.
“I do think that there is scope for improvement,” Muriithi said.
He proposed changes to the Movable Property Security Rights Act to allow interests created through Islamic financing arrangements to be formally entered into the registry of security interests.
The law was introduced to provide a formal system for registering security interests in movable property. Muriithi said it could also be used to support Islamic financing models involving assets such as vehicles and livestock.
“If I have provided finance for you to buy a truck, it could be structured such that it is my interest in that truck,” he said.
“My interest should be recorded,” he added.
Muriithi said having such interests formally recorded could open up new financing opportunities, particularly in the livestock sector, where pastoralists and businesses could use animals as part of financing arrangements.
He said technology could also help put such a system into practice by connecting financing arrangements with existing formal business registration systems.
“If you help me get a few camels, 50 of them or 100, your interest in that venture is recorded in a formal legal register,” he said.
According to Muriithi, such a system would provide a clear legal structure for investments in livestock while supporting financing models that follow Islamic finance principles.
He also spoke about taxation, making a distinction between tax evasion and tax avoidance. He said tax evasion is illegal, while businesses can legally arrange their affairs to operate in jurisdictions where they can achieve tax efficiency.
His remarks came as calls grew for Kenya to establish a clearer legal framework specifically tailored to Islamic finance rather than relying mainly on provisions within existing conventional financial laws.
Stima Sacco CEO Gamaliel Hassan said the country still lacks a dedicated legal and regulatory framework for Islamic finance, with the sector largely operating through exemptions and provisions contained in banking, Sacco and tax laws.
“Kenya lacks a dedicated legal and regulatory framework for Islamic finance,” Hassan said, describing the absence of a specific framework as a major barrier to the sector's expansion.
He called on regulators to provide “the legislative clarity that unlocks scale” and urged financial institutions to focus on developing products that respond to the actual needs of customers instead of simply modifying conventional financial products.
Stima Sacco CEO Gamaliel Hassan speaking at the Islamic Finance Forum and Dialogue 2026 in Nairobi on September 10, 2026. PHOTO/Ignatius Openje/RG.
Kenya has already incorporated Islamic finance into several pieces of legislation. The Income Tax Act defines an “Islamic finance arrangement” and an “Islamic finance return”, while the VAT Act provides exemptions for specified financial services structured in conformity with Islamic finance.
The Public Finance Management Act also provides that references to interest on national government securities apply to Islamic finance returns on Sukuk.
The proposed changes would therefore build on provisions that are already contained in Kenyan law while seeking to make the legal system more suitable for wider use of Islamic finance and asset-backed investments.