Stockbroker and wealth advisor Alpha Capital launched Tanzania’s first ever Halal fund as this African nation had very little Islamic investments available that the firm could offer to its firm’s clients.
Executive Director Imani Joshua Mohingo, who is also research and financial analytics head, explained to IFN Investor that only one of the 28 securities currently listed on the Dar es Salaam Stock Exchange could arguably be considered Shariah compliant.
This meant the domestic capital market wasn’t properly serving Muslims, who formed roughly a third of Tanzania’s 61.74 million otherwise Catholic-majority population. For clients wanting a Shariah compliant investments portfolio, Imani said the firm had to venture to other African markets.
Seeking a long-term viable solution, Alpha Capital began working on creating a Halal fund and came up with an initial structure by December 2021. But this proposal didn’t meet the requirements set by external Shariah advisor – Tanzania-based Centre for Islamic Finance, Compliance and Advice (CIFCA).
“There were no regulations then and still none yet for Shariah funds in Tanzania. The regulator Capital Markets and Securities Authority made us seek advice from CIFCA and told us to ensure everything was done properly because being the first fund meant we had to set the right example for others to follow.”
After a steep learning curve that finally resulted in the proposed fund structure getting the CIFCA approval, Alpha Capital then proceeded to draw up a list of potential investments (using Refinitiv screening) to attain commercial viability and provide a decent return to investors.
This strategic outlook led to the final Alpha Halal Fund investment covering 18 exchanges in the East African Community (EAC) and Southern African Development Community (SADC) areas – where the open-ended fund can invest in various Halal stocks and ETFs, Shariah compliant deposits and Sukuk.
This fund’s initial offer period of a month ends on the 30th August 2024, with a TZS100,000 (US$37) starting investment and subsequent buy-ins set at multiples of TZS10,000 (US$3.70). Marketing within Tanzania include tie-ups with mobile money operators, commercial banks and online sales apps.
Available for subscription to both locals and foreigners, Imani said that apart from being the first Shariah compliant fund in Tanzania, this is also the first open-ended fund investing in the EAC and SADC regions to be offered in Tanzania.
The latter advantage has a further knock-on benefit for Alpha Capital’s brokerage and investment advisory operations, enabling lower transaction and custodian charges – benefits that can be passed on to the firm’s clients, noted Imani.
Citing strong support received from both retail and institutional investors, together with lots of interest from conventional fund managers watching the Alpha Halal Fund’s performance, Imani expressed confidence that more Shariah investment opportunities will be coming soon to Tanzania.
