Zemen Bank Launches Z-Qamar, Its Islamic Finance Division, After Extensive Preparation

Zemen Bank has entered Ethiopia’s growing Islamic finance market with the launch of Z-Qamar, an interest-free banking brand developed over two years, as the lender expands beyond its traditional focus on corporate banking clients.

The launch makes Zemen one of the later entrants into a segment that has attracted most commercial banks in recent years. Bank executives said the lender’s corporate customer-centred business model and efforts to establish a comprehensive Sharia-compliant operating framework contributed to the longer preparation period.

“We may have come later than others, but we wanted to build a strong foundation before entering the market,” Abdulkadir Welela, director of interest-free banking at Zemen Bank, told Birrmetrics.

The move comes amid rapid growth in Ethiopia’s Islamic finance industry. Most commercial banks now offer interest-free banking services, while a growing number of fully fledged Islamic banks have entered the market in recent years, reflecting rising demand for Sharia-compliant financial products. Industry figures from several lenders show interest-free banking deposits and customer numbers have continued to expand, making the segment one of the fastest-growing areas of Ethiopia’s banking industry.

Zemen Bank said it completed the segregation of its interest-free banking operations from its conventional business, including the separation of funds and physical facilities, before introducing the new brand. The lender added that the operation was designed in line with standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board (IFSB).

To support the business, the bank has established an independent Sharia Advisory Board, an interest-free banking governance structure and internal Sharia control units responsible for overseeing compliance.

The bank has appointed Ustaz Abrar Shifa as a chair of its independent Sharia Advisory Board to oversee the governance and compliance of its Z-Qamar interest-free banking operations. Shifa holds a master’s degree in Teaching English as a Foreign Language (TEFL) from Hawassa University. The board also includes Ustaz Tofik Bahiru, who serves as deputy chair.

The bank said both members have more than two decades of experience in Islamic teaching, supporting the lender’s efforts to ensure its products and services align with Sharia principles.

Z-Qamar will initially operate under the window banking model. According to the bank, the platform currently offers more than 11 interest-free banking products and services, including deposit products based on the Wadiah contract.

The bank chose to begin with the Wadiah contract because it offered a practical entry point for building its Islamic banking operations. The deposit arrangement allows the bank to mobilise funds while maintaining compliance with Sharia principles, said Abdulkadir Welela, adding that the product would serve as the foundation for expanding Z-Qamar’s range of interest-free banking services over time.

“The new brand strengthens our customer-centric approach and enables us to better serve customers seeking Sharia-compliant financial services,” said Eneye Bemir, chairperson of the bank’s board of directors.

The brand name combines “Z”, representing Zemen Bank, and “Qamar”, the Arabic word for moon. Bank officials said the name was selected after gathering feedback from more than 1,600 customers.

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