REACHING OUT TO THE RWANDAN MUSLIM COMMUNITY

UNCLAS KIGALI 000489 SIPDIS DEPT FOR AF/C AND AF/EPS DEPT FOR USAID FOR AFR/EA, PPC, AND AFR/SD SIPDIS E.O. 12958: N/A TAGS: EFIN EINV ODIP SCUL RW SUBJECT: REACHING OUT TO THE RWANDAN MUSLIM COMMUNITY ¶1. On May 13, Ambassador attended the opening ceremony of Al- Halaal Micro-Finance Institution, a new private financial credit company established consistent with Islamic banking principles. The Ambassador's participation was part of post's continuing effort to reach out to the Muslim community, which has also included developing a good working relationship with the Mufti of Rwanda and with the predominantly Muslim political party, Parti Pour la Democratie Ideale (PDI). Also in attendance were the British Ambassador, the Libyan Charge, the Minister of Internal Security, and a Parliamentarian. The guest of honor was the Minister of Finance and Economic Planning, James Musoni, who underscored the government's support of the Muslim community and the importance of institutions such as Al-Halaal that provide Rwandans much needed access to capital. ¶2. Al-Halaal started banking operations in February, and currently has 10 employees and 615 customers, and has already extended over 12 million Rwandan Francs (around USD 22,000) in credit. Its mission is to assist customers to access credit on easier terms than available from traditional banks and to create a vehicle by which to spur development within the Muslim community. The new bank is capitalized entirely by members of the Rwandan Muslim community. ¶3. Al-Halaal's banking operations are guided by Islamic law, which prohibits the collection and payment of interest. It also prohibits trading in financial risk and investing in businesses that sell alcohol or pork, or businesses that produce un-Islamic media. Instead of collecting interest, Islamic banks offer financing on a profit and loss sharing basis. With equity financing, losses are shared by the financier along with the entrepreneur based on the ratio of their respective capital invested. The profits, however, are distributed according to a pre-negotiated agreement with the investors. Thus, while officially licensed under the Rwandan Central Bank, Al-Halaal operates more like a private equity fund than a depository institution like other banks in the country. Depositors are essentially putting funds into a pool that they hope will appreciate. ¶4. COMMENT: While Al-Halaal and its Islamic banking principles are a first in the region, Islamic banking is managing up to an estimated USD 200 billion worldwide. The opening of Al-Halaal is a good example of Rwanda's efforts to take new initiatives that can serve as a model for the region. The presence at the opening of a high-level government minister demonstrated the GOR's support for the historically marginalized Muslim community. The Muslim community appeared to be extremely appreciative of US Embassy's outreach to the Muslim community. ARIETTI