Tanzania debuts first Shariah-compliant investment scheme
Global Finance reports that Islamic finance is today a Sh 502 trillion ($3.9 trillion) industry spread in over 80 countries with the bulk concentrated in very few markets.
The launch of the Alpha Halal Fund by Alpha Capital-Tanzania on Tuesday signals a significant development in Tanzania's capital markets.
This Shariah-compliant collective investment scheme introduces a new ethical investment option, adhering strictly to Islamic law. By focusing on equities, Shariah-compliant listed funds, and other permissible investments, the Alpha Halal Fund aims to diversify and enrich Tanzania's investment landscape.
Alpha Capital Chief Executive Gerase Kamugisha commended the move, noting more people will now be welcomed into the capital markets.
"This is a significant step towards including investors who have traditionally been left out of capital markets due to the absence of products or services that align with their ethical or religious standards," he said.
Kamugisha also revealed that the fund aims to raise about Sh10 billion by October 17, 2024, with contributions expected from local and international investors.
Global Finance reports that Islamic finance is today a Sh 502 trillion ($3.9 trillion) industry spread in over 80 countries with the bulk concentrated in very few markets.
Comparing data from different sources shows that just 10 countries account for almost 95 per cent of the world's Sharia-compliant assets.
Saudi Arabia and Iran lead the way with 25 per cent to 30 per cent market share each, followed by Malaysia (12 per cent), the UAE (10 per cent), Kuwait and Qatar (5.5 per cent), Turkey and Bahrain (3.5 per cent), Indonesia and Pakistan (2 per cent).
Going further, Deputy Minister of State in the President's Office (Planning and Investment), Stanslaus Nyongo, who graced the launch event, emphasised the importance of the Halal Fund in broadening Tanzania's investment opportunities.
"The fund would not only increase savings and capital accumulation within the economy but also open new doors for the investment community in Tanzania by offering diverse investment options," he said.
The deputy minister expressed optimism that the fund would attract a wide range of investors, both for ethical reasons and due to its potential for financial returns.
He added that the fund is expected to draw significant foreign capital, thereby enhancing liquidity in Tanzania's capital markets.
This would benefit both individuals and companies seeking investment in various sectors of the economy.
The Capital Markets and Securities Authority (CMSA) approved the fund's Offer Document and Operational Agreement on April 16, 2024.
CMSA Chief Executive Nicodemus Mkama confirmed that the Alpha Halal Fund meets all legal and regulatory requirements under Tanzania's Capital Markets and Securities Act and adheres to the guidelines for collective investment schemes.
"The fund provides an opportunity for small, medium, and large investors to pool their resources and invest collectively in Sharia-compliant capital market opportunities," he said. Mkama highlighted that the fund is managed by Global Alpha Capital Limited, with CRDB Bank serving as the custodian, ensuring the fund's compliance with ethical finance principles.
He further noted that the Alpha Halal Fund strictly adheres to ethical finance principles, prohibiting investments in activities such as alcohol production, gambling, and high-risk ventures.
"These principles ensure that all investments are backed by tangible assets and that the benefits of the investments are equitably shared among all stakeholders," Mkama added.
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