The Market for Interest-Free Banking Still Needs to Be Tapped

Melika Bedri Mohammed CEO, Zamzam Bank

Melika Bedri Mohammed is the CEO of ZamZam Bank, Ethiopia’s first full-fledged interest-free bank. With a solid educational background in banking and finance, including a Diploma in Banking & Finance and a Master’s degree in Business Administration, Melika has honed her expertise in the intricacies of the financial sector. Throughout her career at the Commercial Bank of Ethiopia (CBE), Melika showcased exceptional competence and leadership acumen. Rising through the ranks, she held vital roles, such as Chief Finance Officer and Vice President of Information Systems, where she played a pivotal role in driving the bank’s success and spearheading its technological transformation. As the CEO of ZamZam Bank, Melika continues to lead the institution with dedication, navigating regulatory frameworks and fostering a vision of ethical finance in Ethiopia’s banking sector. Under her leadership, ZamZam Bank has introduced a pioneering model that aligns with Sharia principles while embracing modern banking practices. This approach has positioned the bank as a beacon of ethical finance, catering to the needs of a diverse customer base. In an exclusive interview with EBR’s Eden Teshome, Melika shares insights into her journey, challenges, and vision for ZamZam Bank’s future. With her wealth of experience and deep understanding of the industry, Melika provides valuable perspectives on the role of ethical finance in driving economic growth and fostering financial inclusion in Ethiopia.

Being a woman CEO in a male-dominated sector, what challenges have you faced throughout your career, and how have you overcome them? How has your gender influenced your leadership style and approach to business?

As the first and only female president in the booming finance industry of Ethiopia, I am keenly aware of the need for more women in leadership positions. While there are over thirty banks in the sector, it is disheartening to see that I stand alone as a female president. Rather than taking pride in my position, it highlights the urgent need for capacity building and empowering women. I have faced numerous challenges throughout my career as a woman in a male-dominated field. Still, I have persevered by focusing on building my capabilities and being eligible for leadership roles. Women can excel in leading positions while fulfilling natural obligations like building families. It is crucial for the banking sector to actively work on empowering women and creating an environment where they can thrive in prominent roles. My gender has undoubtedly influenced my leadership style and approach to business, as I bring a unique perspective and understanding. I am determined to pave the way for more women to rise to the top, ensuring a more diverse and inclusive future for the financial sector in Ethiopia.

In what ways do you believe gender diversity and inclusion in the banking sector can contribute to the overall growth and success of financial institutions such as ZamZam Bank?

Gender should never be a barrier to accomplishment or taking on responsibilities. In the finance sector, there are challenges that both men and women face, but it is crucial to recognise that these obstacles shouldn’t discourage women from pursuing leadership positions. Although the sector has shortcomings, it is a manageable feat for women to excel. I am a living example, showing that capable women can thrive. Gender diversity and inclusion in the banking sector can significantly contribute to the growth and success of financial institutions like ZamZam Bank. By embracing diverse perspectives and talents, we can foster innovation, creativity, and a deeper understanding of the diverse needs of our clients. Numerous other sectors have demonstrated that women make exceptional leaders, and it is high time the banking sector follows suit.

How do you anticipate the entrance of foreign banks into the Ethiopian banking sector will impact both ZamZam Bank and the broader banking landscape in the country?

The entrance of foreign banks into the Ethiopian banking sector brings opportunities and challenges. On the positive side, it will bring advanced technology, innovative products, and services, as well as capital and asset investors, which can enhance the capacity of [existing local] banks. This influx can have a positive impact on the sector as a whole. However, there are challenges to consider. Currently, banks in Ethiopia are responsible for opening branches in rural areas to provide access to finance and fulfill their social responsibilities. Foreign banks may not prioritise this, so local banks like ZamZam need to enhance the services they provide to meet the needs of society. For ZamZam, the entrance of foreign banks from the Middle East presents an opportunity. Ethiopia has strong trade and geographical connections with the region, and the interest-free banking model of ZamZam Bank makes it an attractive choice for these banks. Being the first interest-free bank in Ethiopia, ZamZam Bank stands to benefit from this development.

With opening of the financial sector to foreign banks and investors, what strategies or measures has ZamZam Bank implemented to ensure its competitiveness and continued growth in the face of increased competition?

To ensure competitiveness and continued growth amidst increased competition from foreign banks, ZamZam Bank has implemented several strategies. We have recognised the importance of technology and skilled workforce in this new landscape and have focused on training and enhancing our capital base. Additionally, we have prioritised adhering to modern financial standards, ensuring that our operations align with industry best practices. Being a banking sector latecomer has presented us with an opportunity. Unlike established banks that had to migrate from older systems, ZamZam Bank began with the latest technology, giving us a significant advantage. Our vision from the start was to be competitive with international banks, and the arrival of foreign banks is like realising that vision. Our modern systems and forward-thinking approach make us well-positioned to thrive in this new banking era.

As the first fully Interest-Free Bank in Ethiopia, how has ZamZam been able to address the unique challenges and opportunities associated with operating under Sharia-compliant financial principles?

Being the first fully interest-free bank in Ethiopia, ZamZam Bank has faced unique challenges. With no prior experience to draw from, we had to develop our business model from scratch, taking inspiration from international banks. Overcoming these challenges, we have managed to achieve profitability. The market for interest-free banking in Ethiopia still needs to be tapped, presenting us with significant opportunities. It’s important to note that interest-free banking is not exclusive to Muslims; it is an inclusive model. ZamZam Bank has successfully addressed the challenges and embraced the opportunities associated with operating under Sharia-compliant financial principles.

With the rise of fintech startups and innovative financial solutions, how does ZamZam Bank collaborate or engage with these emerging players? Is there a focus on fostering partnerships or investing in such ventures?

ZamZam Bank is driven by a mission to leverage technology in its operations, making it a focal point of interest. The bank collaborates with fintech solution providers to deliver technology-supported services like ATM and mobile banking. One area of focus is digital lending, enabling individuals to access loans using just their mobile phones. This approach empowers aspiring entrepreneurs who need more collateral to secure traditional loans, mainly benefiting the youth. ZamZam Bank’s business model revolves around reaching the underserved rather than catering primarily to the wealthy, aligning with its commitment to social responsibility. The bank actively engages with emerging fintech startups and innovative financial solutions, fostering partnerships and potentially investing in ventures that align with its vision and goals.

How has the national bank’s implementation of the 14% credit cap affected your bank, and what are your thoughts on its implementation?

Implementing the 14% credit cap by the National Bank of Ethiopia has impacted ZamZam Bank. While acknowledging that the move was necessary to regulate inflation at a macroeconomic level, it should have considered the differences among banks. As a new bank in the sector, our impact is relatively limited compared to larger banks. Furthermore, our interest-free business model operates differently, as we execute purchases through our bank without cash transactions. Therefore, the credit cap might not have directly affected us in contributing to inflation. However, its implementation coincided with a period when it focused on demonstrating profitability to our shareholders. I believe that the National Bank should have considered the varying circumstances of different banks when implementing the credit cap.

What is your leadership philosophy, and how do you apply it as the CEO of ZamZam Bank? What core values or principles guide your decision-making and interactions with your team?

My leadership philosophy is driven by my extensive experience, from a counter clerk to the Vice President at the Commercial Bank of Ethiopia (CBE) and later as the Chief Financial Officer. I joined ZamZam seeking new challenges and the opportunity to make a significant impact. I follow a participatory leadership style, valuing the input and contributions of my team members. I believe in motivating and pushing others to reach their full potential, challenging them to achieve new heights. Core values such as empowerment, collaboration, and accountability guide my decision-making and interactions with my team. Being a woman in a leadership role requires me to put in much more effort and overcome additional challenges. I understand the importance of breaking barriers and setting an example for others. I strive to create an inclusive environment where individuals are inspired to excel, regardless of gender or background. While I am demanding at times based on the situation, I always keep the bank’s and its stakeholders’ best interests in mind. I am result-driven and focus on achieving tangible outcomes that benefit the organisation. However, I also recognise that leadership is a continuous learning process, and I can learn from the staff members under me just as much as they can. I value the knowledge and expertise of my team and believe in fostering a culture of continuous growth and development.

What advice would you give aspiring leaders, particularly women, who wish to attain executive positions in the banking industry? Are there any specific strategies or mindsets you believe are critical to their success?

Women possess a unique gift of being able to procreate, and this should not hinder their professional careers. Women like me can be examples of successfully balancing a thriving career, building a family, and receiving international recognition. Unlike previous generations like mine, today’s generation is fortunate to have numerous women leaders who can inspire others. I advise aspiring leaders, particularly women in the banking industry, to dedicate themselves wholeheartedly to their work and be prepared to face challenges head-on. The financial sector is constantly evolving, so it is crucial to remain competitive in the workplace while navigating the demands of womanhood, such as procreation and caring for one’s family. Aspiring women leaders can overcome obstacles and succeed in executive positions by developing resilience, determination, and adaptable mindset. It’s about embracing the opportunities that come their way, confidently pursuing their goals, and creating a supportive network of mentors and allies. With the right strategies and a belief in their capabilities, women can break barriers, shatter glass ceilings, and make a lasting impact in the banking industry and beyond.EBR

12th Year • March 2024 • No. 127

Eden Teshome

Editor-in-Chief of Ethiopian Business Review (EBR). She can be reached at

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