Islamic Finance is built around a simple principle: money should support a real economic activity or asset rather than generate more money through interest, Premier Bank Kenya Head of Shariah Department Sheikh Maulid Makokha has said.
Speaking during a Radio Generation interview on Tuesday, Makokha said Islamic Finance goes beyond banking and requires financial dealings to follow Shariah principles, with transparency, tangible assets and clearly agreed transactions forming the basis of the system.
He explained that Islamic Finance draws a clear line between helping someone in need and providing money for a business venture. According to Makokha, a loan given purely to assist a person should not become a source of profit through interest.
“In Islamic Finance, a loan given to someone in need is not considered a business transaction from which either party should profit. It is simply about helping someone who needs funds. So, if I give you Sh1,000 because you have a need, why should you pay me an additional Sh50? I gave you the money because you needed help,” Makokha said.
He said profits are allowed when money is used in a genuine business arrangement where the parties understand the activity involved, the risks and how any returns will be shared.
“This is a business agreement that we're entering with you today, and that relationship that we have created is on which we, the two of us, actually are entitled, maybe, to any profit that will be generated in the business activity that we are undertaking. Yes, so at the end of the duration, maybe we agree one year or three years. We shall look at the calculations and see how much has our business generated.”
Makokha said this approach means Islamic Finance does not allow institutions to simply exchange money for a larger amount of money. Instead, financing must be connected to a real economic activity or a tangible asset.
He used Murabaha, a cost-plus financing model, to demonstrate how an Islamic bank can help a customer acquire property.
Under the arrangement, he said, the bank first purchases the property requested by the customer and takes ownership of it before selling it to the customer at the original cost plus an agreed profit.
“What the bank does here is that it buys that land. That is step number one. We buy the piece of land, we own it. Let us say it was at 10 million shillings. So we buy it from the vendor that you have told us. We bought it at 10 million. Then we sell it to you at 10 million plus the agreed profit,” Makokha noted.
He said the structure means the bank assumes ownership and the related risks before the asset is sold to the customer. Once the final selling price has been agreed, it remains unchanged throughout the repayment period.
“The moment we agree today that I'm selling to you at 1,000,000.5 or point one, that pricing will remain fixed like that for the duration. Even if the market rates will keep on changing... We don't have changes. We are not supposed to change anything in the argument.”
Makokha also pointed to transparency as a key part of Shariah-compliant finance, saying customers should receive exactly the products and terms they were promised when they joined the institution.
“Whatever that we tell you is whatever that you will get. Therefore, starting from the onboarding, all the process to daily activities, we have ensured that we are within the teachings of Shariah compliance.”
He said the Shariah Supervisory Board plays a central role in guiding institutions and approving financial products to ensure their operations remain within Shariah requirements.
The discussion comes ahead of the Islamic Finance Forum and Dialogue organised by Radio Generation on September 10, 2026, at Radisson Blu Arboretum in Nairobi.
The forum is expected to bring together financial institutions, investors, small and medium-sized enterprises, scholars, regulators and members of the public to examine Shariah-compliant finance and the opportunities available under the system.
The event will also feature discussions and practical sessions on Islamic financial models and products, including Murabaha, Musharakah and Sukuk.
Organisers said the forum is open to both Muslims and non-Muslims who want to learn more about ethical finance, investment and financial inclusion.
Members of the public, businesses and investors have been encouraged to attend and explore how Islamic Finance models can be used to support investment and business growth.
Delegate tickets are available through LangoPass, with early-bird tickets going for Sh7,000 and advance tickets at Sh8,000. A corporate table for 10 people costs Sh100,000.