Ensuring The Compliance of Islamic Finance Applications with Shariah Principles in Ethiopia: The Way Forward

The notion behind Islamic finance is providing alternative Shariah-compliant financial services and products for those who do not willing to access conventional as it contravenes Shariah principles. Currently, expanding throughout Muslim non-Muslim countries. One of the most critical challenges sector extent compliance practices with Therefore, there should be a control mechanism ensuring provided by institutions Scholars argue that governance framework applied engaged in countries where being practiced. mainly categorized into two approaches centralized decentralized framework. availability essential application accordance Ethiopia one accommodated through exclusively interest-free banking windows banks 2011 fully-fledged late 2019. However, National Bank (NBE) did specify any its legislations. unavailability an established may expose non-compliance risk. This study investigates how ensure Ethiopia's applications' Semi-structured interviews document studies were conducted 15 respondents, including experts finance, scholars, practitioners, collect needed data this endeavor. findings indicate banks, especially windows, give necessary attention issue presumed manifestations are having advisory committee, using Arabic words names their services, declaring they following Accounting Auditing Organization Financial Institutions (AAOIFI), Services Board (IFSB) standards, participating corporate social activities. these claims insufficient Shariah-compliant, long external authorized body oversight application. In addition, results adapting AAOIFI standards industry development recommended Ethiopia. Besides, considering responsible stakeholders compliance, government/NBE identified primary stakeholders. On other hand, Ethiopian Affairs Supreme Council (EIASC), religious scholars institutional advisors, professional associations, academicians economics educational considered secondary also policymakers' Türkiye, Malaysia, Kenya, South Africa could best model policymakers Establishing committee under NBE applications principles To endeavor, all such government/NBE, industry, EIASC, play significant role fulfilling respective responsibilities.