Strategy Implementation Challenges Associated With Islamic Banking In Kenya

Abstract

Strategy implementation is the action aspect of the strategic management process through which strategy is translated into action. The objective of the study was to assess the challenges of strategy implementation facing Islamic Banks in Kenya. The study was descriptive survey study and utilized primary data. The study identified the challenges encountered by Islamic banks in the implementation of its strategies associated with Islamic banking in Kenya. Islamic banks in Kenya are the target population. Primary data was obtained through administering of questionnaires. Questionnaires were administered to individuals responsible for strategy implementation within the organizations. The findings indicate that Some of the key challenges to strategy implementation in Islamic banks that affect the organizations to a very great extent is Poor understanding of the concept of Islamic banking by clients and policy makers in Kenya, the fact that the concept of Islamic banking is perceived to be too complex and hence delaying the process of policy amendments, Poor strategy formulation, organization culture particularly within government stakeholders, poor resource allocation, uncertain, dynamic and turbulent environment where change pressures are continuous and changing, The availability of resources, in terms of staff, skills, knowledge, finance and time, changing environment, is one of the key challenge to implementation of Islamic banking. Other challenges include the Banking Act and subsidiary regulation from Central Bank. This has resulted from the lack of knowledge of Islamic Banking by the regulators and the absence of legislative and institutional framework for Islamic Banks in this country. Lack of requisite knowledge in Islamic Financial system is unwittingly translating itself into policies that restrict the growth of Islamic Banking. The Central Bank tools of monetary policy is skewed against Islamic Banks in the sense that these banks cannot use the lending functions of the lender of last resort for liquidity management, cannot participate in the secondary money market and are excluded from all interest-based inter-bank borrowing and lending. Current legislative framework is therefore inadequate to handle an industry that includes Islamic Banks. In order to aid the development of Islamic Banking in Kenya and reap the most benefit for the country, a legislative framework should be put in place to enhance the regulation of the industry. This means both the Central Bank Act as well as Banking Act should be amended to incorporate Islamic Banking concepts