Creation of Sharia compliant investment avenues in Tanzania

Creation of Sharia compliant investment avenues in Tanzania SALUM AWADH

CONTENT 1. Overview of Islamic investment industry 2. Building an investment ecosystem 3. Types of sharia compliant investment avenues 4. Tanzanian case

OVERVIEW OF THE ISLAMIC ECONOMY 2018 ▪ Muslims spent around USD 2. 1 trillion globally ▪ Food and beverage was USD 1. 3 trillion ▪ Islamic finance sector was USD 2. 4 trillion . ▪ Clothing spending was USD 270 billion ▪ Pharmaceutical was USD 87 billion 3 ▪ Media was USD 209 billion ▪ Cosmetics was USD 61 billion ▪ Travel was USD 177 billion

OVERVIEW OF ISLAMIC INVESTMENT INDUSTRY o. Islamic banking is still the dominant activity in the Islamic finance industry globally o. Islamic banking is worth more than USD 2. 4 trillion in total assets, taking 80% of all industry value, while investment industry, by looking at AUM is estimated at only 3% of total Islamic finance market globally (2017) o And these funds are still very skewed in a few markets, majority of the funds being domiciled in Malaysia and Saudi Arabia 4

o Malaysia and Saudi Arabia take more than 50% of all Au. M globally o They also great cases for other markets such as Tanzania to learn from o And the main lesson is not about the muslim population in the country, but commitment and creation of the right environment for the industry to flourish 5

KEY HIGHLIGHTS ü Au. M reached USD 73. 4 billion in 2018 ü More than 1500 funds globally ü 70% of these funds are money market and equity-based ü Money market (35. 7%) ü Equity (34. 9%) But are these the only avenues? NO - Lets see the next slide 6

INVESTORS FUND/INVESTMENT MANAGERS/ADVIS ORS SHARIA ADVISORS REGULATORY FRAMEWORK Building a Sharia compliant investment ecosystem

TYPES OF INVESTMENT AVENUES HALAL EQUITIES HALAL CRYPTOCURRENCIES COMMODITIES HALAL FIXED INCOME SECURITIES PRIVATE EQUITY/VENTURE CAPITAL HALAL MUTUAL FUNDS WAQF FUNDS Halal REITs HALAL ETFS HALAL RETIREMENT FUNDS 8

WHY DO WE NEED THESE INVESTMENT FUNDS/AVENUES? Increase in muslim middle class Limited investment knowledge to invest on your own Increasing in investment opportunities Limited access to information 9

The Tanzanian case WHAT CAN BE DONE WHAT IS AVAILABLE Fixed income securities • Fixed deposit by way • None of Mudharabah • SUKUK REITs ETFs • Build Sharia ETF and list on DSE • Wananchi Housing • No sharia screening • Sharia compliant REITs Crypto Available but not sharia compliant. • Asset-backed crypto

WHAT CAN BE DONE WHAT IS AVAILABLE The Tanzanian case Private Equity/Venture Capital • Available • DSE • No Islamic Fund • No sharia index available • Developing Micro VC funds • Angel networks Commodities Public Equities • exchange • • Sharia Index TZ mercantile • Retirement funds We have pensionn funds No sharia compliant funds No sharia screening Sharia commodityy index • Start with occupational funds

A few case studies Investing in sharia compliant stocks, bonds, money markets. Sharia compliant crowdfunding platform Sharia compliant REIT Peer to peer lending platform. 12

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