AlHuda Centre of Islamic Banking and Economics (CIBE) served because the Shariah advisor for the profitable issuance of the CRDB–Albarakah Multicurrency Sukuk in Tanzania. The issuance, structured on the idea of Ijarah, was accepted by the Capital Markets and Safety Authority (CMSA) and the Dar Es Salaam Inventory Trade (DSE) for itemizing, marking a big growth within the Islamic capital markets of East Africa.
The CRDB–Albarakah Sukuk was launched with a multicurrency construction, permitting subscriptions in each Tanzanian Shillings (TZS) and US {Dollars} (USD).
The Sukuk is a Shariah-compliant monetary instrument backed by tangible leased property below an Ijarah (leasing) construction, guaranteeing that each one returns are derived from asset-based transactions somewhat than curiosity. This aligns with the requirements of the Accounting and Auditing Group for Islamic Monetary Establishments (AAOIFI).
The instrument has a tenor of 5 years and gives returns of as much as 12 per cent each year for the TZS tranche and 6 per cent each year for the USD tranche, with funds made quarterly. The minimal subscription quantity was set at TZS 500,000 and $1,000, making it accessible to a variety of native and worldwide buyers.
Muhammad Zubair, chief govt officer of AlHuda CIBE, commented on the issuance: “This can be a pioneering initiative that demonstrates the rising function of Islamic finance in Tanzania and the broader East African area. By structuring this Sukuk on the idea of Ijarah, CRDB has ensured that buyers achieve entry to a safe, clear, and moral funding avenue. Importantly, the multicurrency construction widens participation, attracting each home and worldwide buyers.”
The rising world Sukuk market
Zubair additionally supplied context on the worldwide Sukuk market, noting that it grew from $904.5billion in 2023 and is projected to achieve $2,160.55billion by 2028. Annual issuance stood at $197.8billion in 2023 and $193.4billion in 2024, with expectations of $190–$200billion in 2025.
Overseas currency-denominated Sukuk surged by 29 per cent to $72.7 billion in 2024, largely pushed by Saudi Arabia, Malaysia, and Indonesia. In the meantime, sustainable Sukuk issuance elevated to $11.9billion in 2024, with Saudi Arabia accounting for 38 per cent of the whole.
Wider financial influence for Tanzania
The multicurrency Sukuk issuance is predicted to hold vital advantages for the broader Tanzanian economic system. By mobilising long-term, Shariah-compliant funding, the Sukuk helps CRDB Financial institution in increasing its financing capability, which in flip helps channel capital into productive sectors of the economic system.
For the Authorities of Tanzania, the initiative helps to deepen the home capital market, entice international funding by its multicurrency function, and diversify funding sources past standard devices. The announcement additionally highlighted the function of the Sukuk in strengthening monetary inclusion by providing faith-based funding alternatives and positioning Tanzania as a possible regional hub for Islamic finance.
