Zemen Bank Enters Islamic Finance Market with Launch of Z-Qamar

Zemen Bank has entered Ethiopia’s rapidly expanding Islamic finance market with the launch of Z-Qamar, a new interest-free banking brand developed over a two-year period as the lender seeks to diversify beyond its traditional corporate banking business.

The launch marks Zemen Bank’s first dedicated move into Sharia-compliant banking, making it one of the latest commercial banks to establish an interest-free banking operation amid growing demand for Islamic financial services nationwide.

Bank officials said the extended preparation period allowed the institution to establish the governance, operational, and compliance structures required to deliver Islamic banking products in line with international standards.

According to the bank, Z-Qamar has been built on a fully segregated operational framework, with separate funds, governance systems, and banking facilities from its conventional banking business. The structure follows standards developed by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board (IFSB).

To oversee compliance, Zemen Bank has established an independent Sharia Advisory Board alongside dedicated governance and internal Sharia control units responsible for ensuring products and operations remain consistent with Islamic finance principles.

The new platform will initially operate under Ethiopia’s window banking model, offering customers more than 11 Sharia-compliant banking products and services.

Among the first products introduced is a Wadiah-based deposit account, an Islamic safekeeping arrangement that enables customers to deposit funds while complying with Sharia principles. Bank officials say the product will serve as the foundation for expanding the lender’s broader portfolio of interest-free financial services.

The brand name, Z-Qamar, combines the letter “Z” for Zemen Bank with the Arabic word “Qamar,” meaning moon. The bank said the name was selected after consultation with more than 1,600 customers.

The launch comes as Ethiopia’s Islamic finance industry continues to expand rapidly. Most commercial banks now operate interest-free banking windows, while several fully fledged Islamic banks have entered the market in recent years as demand for Sharia-compliant financial products continues to grow among individuals and businesses.

The sector has become one of the fastest-growing segments of Ethiopia’s banking industry, with banks reporting steady increases in deposits, customer accounts, and financing provided through interest-free banking services.

By entering the market, Zemen Bank is positioning itself to compete for a growing customer base seeking financial products that align with Islamic principles while supporting the broader diversification of Ethiopia’s banking sector.

The move also reflects the increasing importance of Islamic finance in Ethiopia’s financial landscape, where banks are expanding product offerings to reach previously underserved customer segments and strengthen financial inclusion.