Sukuk gains ground as a crucial financing tool for development
Participants at an investors’ Iftar event in Dar es Salaam that was preceded by training on halal investment opportunities in the capital markets. PHOTO | COURTESY
Dar es Salaam. Islamic bonds, commonly known as sukuk, are emerging as one of the fastest-growing segments within Islamic finance and an increasingly important instrument for financing development projects worldwide.
The Chief Executive Officer of the Capital Markets and Securities Authority (CMSA), Mr Nicodemus Mkama, said the global value of sukuk issuances has surpassed $800 billion, reflecting growing demand for Sharia-compliant investment products.
Mr Mkama’s remarks were delivered on his behalf by CMSA spokesperson Charles Shirima, during an investors’ Iftar event in Dar es Salaam that was preceded by training on halal investment opportunities in the capital markets. The event was organised by Yusra Sukuk Company.
In the remarks, Mr Mkama said countries such as Malaysia, Saudi Arabia, Indonesia and the United Arab Emirates are leading in the use of sukuk to finance infrastructure, energy, education and other development sectors.
“In 2025 alone, sukuk issuances in Tanzania mobilised more than Sh600 billion for development financing,” he said.
Major issuances in Tanzania included the CRDB Sukuk worth Sh125.4 billion and $32.3 million issued by CRDB Bank, the Zanzibar Sukuk valued at Sh382 billion, and the iTrust Sukuk. According to Mr Mkama, the instruments attracted strong interest from both domestic and international investors.
He said sukuk has helped broaden the range of investment products available in Tanzania’s capital markets while increasing participation among investors who prefer financial instruments that comply with Sharia principles.
“Islamic capital markets are an important part of the global financial system that contribute to promoting sustainable investment, sound risk management and broader public participation in economic activities,” he said.
Mr Mkama explained that sukuk forms part of the wider Islamic finance industry, which also includes Islamic banking, Islamic funds and takaful which is a form of Islamic insurance.
Unlike conventional bonds, sukuk does not operate on an interest-based structure. In traditional bonds, investors lend money and receive interest payments over a fixed period.
Sukuk, however, is structured around ownership or participation in an underlying asset or project that generates income. Investors receive returns derived from the performance or revenue of the asset rather than from interest payments.
This model has made sukuk an attractive option for individuals and institutions seeking alternatives to interest-based financial products while also widening investment opportunities within capital markets.
The chairman of Yusra Sukuk Company, Sheikh Mohamed Issa, said Islamic capital market services are expanding rapidly worldwide.
He noted that the sector has been growing at an annual rate of between 18.2 percent and 21 percent, a pace he said is faster than many other Sharia-compliant financial services and several conventional financial sectors globally.
Sheikh Issa also commended the CMSA for introducing the Corporate, Municipal and Subnationals Sukuk Guidelines 2023, describing the move as a significant step towards strengthening Sharia-compliant capital market products in Tanzania.
According to him, the initiative is particularly notable as no other country in East, Central and Southern Africa has yet introduced similar guidelines aimed at supporting sukuk development in capital markets.
