Zanzibar issues sharia compliant bond to finance infrastructure

DAR ES SALAM, Tanzania (MNTV)- In order to raise funds for financing key government projects, the government of Zanzibar in the South African Muslim state of Tanzania has issued a Shariah-compliant bond arrangement.

Speaking at the Sukuk Bond Board, the Minister of State in the President’s Office (Finance and Planning)Dr Saada Mkuya said the introduction of the bond would provide a broader platform for the government to secure funding for key infrastructure projects, reports The Citizen, Tanzania.

Dr. Mkuya, the Minister of Finance, stated that the funds raised through the Sukuk bond would be invested in projects compliant with Sharia principles, ensuring accountability and transparency in financial management. 

He emphasized that the initiative would support strategic national projects in infrastructure, energy, and social development.  

“By investing in Sukuk through the People’s Bank of Zanzibar, customers contribute to the development of key government projects, fostering economic growth and financial inclusion,” Dr. Mkuya said. 

He added that the Sukuk bond offers an attractive return rate of 10.5 percent per annum, making it one of the most rewarding investment avenues in the market.  

Arafat Haji, Managing Director of PBZ, highlighted the bank’s commitment to ensuring a seamless and transparent investment process. “Investors can participate in Sukuk through our branches and digital platforms, ensuring accessibility from anywhere,” he said. 

He also noted that PBZ’s Islamic banking division, PBZ Ikhlas, would provide professional advisory services to guide customers through the process.  

The Sukuk bond initiative comes as global Sukuk issuance is projected to reach US$190 billion to $200 billion in 2025, according to S&P Global Ratings. Fitch Ratings also expects outstanding global Sukuk to surpass US$1 trillion in 2025, driven by strong growth in emerging markets.  

Dr. Mkuya reiterated the government’s commitment to leveraging Islamic financing mechanisms to support sustainable development. “This initiative offers a secure opportunity for individuals and institutions to invest in government-backed projects while adhering to Sharia principles,” he said.  

The Sukuk bond initiative underscores Zanzibar’s efforts to prioritize infrastructural development and promote equitable economic growth through innovative financing solutions.