For KES 100,000 you cannot touch for a year, Gulf African Bank's 12-month Mudarabah deposit declared 4.9499% for August 2026 and carries KDIC cover; for money you may need next week, Etica Capital's Special Shariah Fund showed a 5.33% effective annual profit on its site and Ziidi Shari'ah inside M-PESA indicates roughly 6% to 8%, both from KES 100 with instant withdrawal but no deposit insurance. The bank deposit buys certainty of structure and protection; the fund buys liquidity and a lower entry. Most Kenyan savers should hold both, and should size the fund to what they can afford to see fall.
Ready to compare halal options?
The two products in one sentence each
An Islamic fixed deposit is a Mudarabah: you provide capital, the bank invests it in Shari'ah compliant trade and financing, and profit is shared at a declared ratio, with the capital contractually exposed to loss even though banks in practice smooth returns. Gulf African's FAQ says customer savings go into a common Mudaraba pool invested in Shari'ah compliant trade and investments. A Shari'ah money market fund is a CMA-regulated unit trust: a fund manager pools money from many investors, buys sukuk, Mudarabah deposits at Islamic banks and Shari'ah-screened securities, and you own units whose value moves daily.
The practical differences are tenor, minimum, protection and price transparency. The halal investing hub sets funds in context; our guide to Islamic term deposits in Kenya compares the bank products among themselves. This article puts the two categories head to head using only what the providers published on the day we checked.
What the Islamic banks pay and require
Gulf African Bank is the only Kenyan Islamic bank that prints its deposit rates. Its sheet for August 2026 declares, for KES 50,000 to KES 999,999.99: 3.2002% on 1 month, 3.4498% on 3 months, 3.6995% on 6 months, 4.9499% on 12 months and 5.2007% on 15 months or more. From KES 1 million the 12-month rate rises to 5.1995%, and at KES 10 million to 5.6999%. The fixed deposit page sets the minimum at KES 50,000, tenors of 30, 90, 180 or 365 days, profit on a pro-rata basis, and withdrawal or reinvestment at maturity. A KRA PIN is required. The Kuza savings account, a rolling 3-month Mudarabah, pays the savings rate of 3.2002% only if you hold KES 10,000 throughout and withdraw at most once in the tenure.
KCB Sahl's Fixed and Short-Term Maturity Accounts need KES 100,000 for 1 to 12 months with no upper limit and no published rate. Absa's La Riba Al Mudharaba Deposit takes KES 50,000 for 1 to 60 months and pays at maturity, rate on request. DIB Bank Kenya's personal Fixed Term Deposit needs KES 100,000, pays profit quarterly, and is offered in USD, GBP and EUR as well as shillings; no rate is printed. KCB's own deposit calculator reminds you that a 15% withholding tax applies to the return.
What the Shariah money market funds pay and charge
Etica Capital's Special Shariah Fund (KES) page lists a KES 100 minimum, no lock-in, a 2.0% annual management fee, no initial fee, daily compounding, Co-operative Bank as trustee, Equity Bank as custodian and the Capital Markets Authority as regulator. The benchmark is the average rate on Shari'ah compliant 3-month deposits plus 2% a year. On 15 September 2026 the site's rate banner showed 5.33% effective annual profit for the Special Shariah Fund (KES) and 3.36% for the USD class; a second, older banner line on the same page shows 9.64% under the name Etica Shariah Fund (KES), so ask Etica which figure is live before you invest. Etica's March 2026 fact sheet gave an average profit of 5.41% a year for March.
Ziidi Shari'ah Money Market Fund, offered by Safaricom through M-PESA and managed by GulfCap Investment Bank with KCB Bank Kenya as trustee, starts at KES 100 with a KES 10 minimum withdrawal, no deposit or withdrawal fees, a management fee built into the displayed yield, 15% withholding tax deducted automatically and a 3:00 pm cut-off for same-day earnings. Safaricom's page describes the return as variable and approximately 6% to 8%, market dependent, and lists the assets as sukuk, Mudarabah deposits with Islamic institutions and Shari'ah-screened securities; its FAQ adds Murabaha and Ijara instruments. An optional lock holds funds until you ask for release, which takes 72 hours. Our guide to Shariah money market funds in Kenya covers the governance in depth.
| Product | Minimum | Published return | Fees | Access |
|---|---|---|---|---|
| Gulf African 12-month Mudarabah | KES 50,000 | 4.9499% declared Aug 2026 | None stated; 15% WHT on profit | At maturity |
| Gulf African Kuza savings | KES 10,000 to earn | 3.2002% declared Aug 2026 | No monthly or ledger fee | One withdrawal per 3 months |
| KCB Sahl Fixed Maturity | KES 100,000 | Not published | Not published | 1 to 12 months |
| DIB Fixed Term Deposit | KES 100,000 | Not published | Not published | At maturity, quarterly profit |
| Etica Special Shariah Fund KES | KES 100 | 5.33% banner, 5.41% March 2026 | 2.0% a year management | Daily, no lock-in |
| Ziidi Shari'ah MMF | KES 100 | About 6% to 8% indicated | Built into yield | Instant to M-PESA |
Protection: KDIC covers one and not the other
The Kenya Deposit Insurance Corporation covers current, savings, fixed deposit and call accounts at member banks up to KES 500,000 per depositor per institution, with Gulf African Bank, KCB Bank Kenya, Absa, DIB Bank Kenya and National Bank all on its member list. Its deposit insurance page lists what is not covered, and the list names mutual funds including money market funds, unit trusts, and balances above the limit. So a KES 400,000 Mudarabah deposit at Gulf African is inside the scheme; KES 400,000 in Etica or Ziidi Shari'ah is not, and the fund's safeguards are instead the CMA licence, the independent trustee and the custodian.
There is a Shari'ah wrinkle on the bank side. A Mudarabah deposit is contractually loss-bearing, and KDIC's pages do not discuss how a profit-sharing account is treated at liquidation; our piece on KDIC and Islamic banking walks through the uncertainty. For the fund, Safaricom's page states that client assets are held by the trustee separately from GulfCap's own balance sheet, which is the standard unit trust protection against manager failure, not against market loss.
A worked example on KES 100,000 for one year
Take KES 100,000 placed on 15 September 2026 and left for twelve months, assuming the published figures hold, which they will not exactly. At Gulf African's declared 4.9499% the gross profit is about KES 4,950; after 15% withholding tax that is roughly KES 4,207, and the money is untouchable until maturity. At Etica's banner 5.33%, which the site presents as an effective annual profit after the 2% management fee, the figure is about KES 5,330 before any tax treatment you should confirm with Etica, and you could have withdrawn on any business day. At the midpoint of Ziidi Shari'ah's indicated 6% to 8%, the gross would be about KES 7,000, with Safaricom stating that the 15% withholding tax is already deducted from what you see.
The gap looks decisive until you add two facts. Fund returns float daily and Safaricom's own page says returns are not fixed or guaranteed; a declared bank rate for the month just ended is at least a known quantity for the money you placed last month, though it too changes monthly. And the bank deposit sits inside KDIC's KES 500,000 limit while the funds do not. A saver who needs the KES 100,000 for a January school fee should not be comparing yields at all; the fund wins on access alone.
Tax, timing and small print
- Withholding tax of 15% applies to deposit profit at the banks and to fund returns; Ziidi Shari'ah states its displayed yield is net of it, Etica's banner does not say, and KCB's calculator shows it as a deduction.
- A Gulf African fixed deposit pays pro rata and only at maturity; breaking it early is not addressed on the page, so ask what profit, if any, is paid on premature withdrawal.
- Kuza savings forfeit the whole quarter's profit if the balance dips below KES 10,000 or you withdraw twice, which makes it a poor emergency account.
- Ziidi Shari'ah deposits made after 3:00 pm earn from the next business day, and the FAQ says funds must be held at least 24 hours to earn.
- Etica's USD class has a one-month lock-in and a USD 100 minimum, unlike its KES class, according to the March 2026 fact sheet.
- Fund management fees are 2.0% a year at Etica and built into the yield at Ziidi Shari'ah; the banks disclose no explicit fee on deposits but set the profit-sharing weightage instead.
The decision
Hold the emergency fund and anything you will spend within six months in a Shari'ah money market fund, and if you are already an M-PESA user Ziidi Shari'ah is the lowest-friction way to do it, with Etica the choice if you prefer a fact sheet, a named trustee and custodian and a long-running published rate. Keep the amount at a level whose daily movement you can watch without flinching, because there is no KDIC backstop.
Put the money you are sure you will not need for a year into a Mudarabah deposit, and if you want to know the rate before you sign, that means Gulf African Bank, in tranches under KES 500,000 per bank if protection matters to you. Use the Islamic bank accounts hub to pick the current account that feeds the deposit. If a KCB Sahl, Absa La Riba or DIB relationship is already in place, ask for the last six declared profit rates in writing and compare them with Gulf African's public sheet before locking funds. Facts checked against gulfafricanbank.com, ke.kcbgroup.com, absabank.co.ke, dibkenya.co.ke, eticacap.com, safaricom.co.ke, kdic.go.ke on 15 September 2026.
Frequently asked questions
What is the Islamic fixed deposit rate in Kenya right now?
Gulf African Bank's declared rate for August 2026 is 4.9499% on a 12-month Mudarabah deposit of KES 50,000 to KES 999,999.99, 3.4498% on 3 months and 5.2007% beyond 12 months. KCB Sahl, Absa La Riba and DIB Bank Kenya do not publish deposit rates; they quote on request. Rates at Gulf African change monthly and are posted as a PDF on its Weightages and Profits page.
Is a Shariah money market fund safer than a bank fixed deposit?
No, not in the deposit insurance sense. KDIC covers bank fixed deposits up to KES 500,000 per depositor per bank and explicitly excludes money market funds and unit trusts. A fund's protections are its CMA licence, an independent trustee holding assets apart from the manager, and daily liquidity. A fund can fall in value; a declared bank profit rate is at least known for the month it covers.
What is the minimum to open an Islamic fixed deposit in Kenya?
Gulf African Bank and Absa La Riba's Al Mudharaba deposit both start at KES 50,000. KCB Sahl's Fixed and Short-Term Maturity Accounts and DIB Bank Kenya's Fixed Term Deposit start at KES 100,000. By contrast Etica's Special Shariah Fund and Ziidi Shari'ah each start at KES 100, which is why funds dominate for small savers.
Is Ziidi Shari'ah better than Etica's Shariah fund?
They differ in convenience and disclosure rather than category. Ziidi Shari'ah lives inside M-PESA, is managed by GulfCap Investment Bank with KCB as trustee, and indicates roughly 6% to 8% with tax already deducted. Etica publishes a monthly fact sheet, a 2% fee, Co-operative Bank as trustee and Equity Bank as custodian, and showed 5.33% on its banner. Choose on the governance documents you can read, not the headline.
Do I pay tax on profit from an Islamic fixed deposit in Kenya?
Yes. A 15% withholding tax applies to the profit, which KCB's deposit calculator shows as a deduction from gross return, and Ziidi Shari'ah states the same 15% is taken from fund returns before they reach you. The tax treatment is the same whether the return is called interest or profit. Confirm with the provider whether a displayed rate is gross or net.
Compare providers in your county
See side-by-side comparisons of Shariah-compliant products, or let our matcher recommend the best options for your situation.
Can I break a Gulf African Bank fixed deposit early?
Gulf African's fixed deposit page says profit is earned pro rata and that you withdraw or reinvest at maturity; it does not state what happens on early withdrawal. Ask the branch in writing what profit, if any, is paid if you break a 365-day deposit at month seven. If early access is likely, use a shorter tenor or a money market fund instead.
