For Ethiopians observing Ramadan, the holy month becomes a time of introspection that extends beyond personal piety. It’s a period to reflect on all aspects of life, including financial dealings. This is where Interest-Free Banking (IFB), also known as Islamic banking, resonates deeply with many.

IFB operates on core principles that align with Islamic teachings. One key concept is the prohibition of riba, which refers to usury or interest. Instead, IFB utilises profit-sharing models like Mudarabah. In a Mudarabah agreement, the bank acts as an investor, providing capital for a project or venture. The client uses their skills and effort to manage the project. Profits are then shared according to a predetermined ratio, fostering a sense of fairness and shared risk between the bank and the client.