The venture, which is to be called Gulf African Bank (GAB), is a partnership between Dubai's governmental investment organisation Isithmar, International Finance Corporation and BMI, whom will own stakes of 30 per cent, 10 per cent and 20 per cent respectively. The remaining shares will be owned by Saudi investors.
BMI have also announced that it will offer 40 per cent of its share for sale after the bank opens in April.
Commenting on the move in an interview with Reuters, Abdul-Malik Al Khalili, chairman of BMI, said: "Africa is an attractive emerging market for the growth of Islamic finance. There is a lot of liquidity in the Gulf and we are making a bridge between the two."
The bank will serve the eight million Kenyan muslims who are forbidden under Sharia law to earn interest on their savings. It is hoped that the venture, which will start with $25 million capital, will provide a foothold for the company for further expansion of Islamic banking in Africa.