N※N

Mwinyi: Zanzibar Sukuk boost investor confidence, unlocks new opportunities

  //business-finance.news-articles.net/content/202 .. vestor-confidence-unlocks-new-opportunities.html
  Published in Business and Finance on Monday, October 20th 2025 at 19:25 GMT by The Citizen
          ^{🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source}

300x168/6583 Bytes

275x183/8920 Bytes

275x183/10588 Bytes

Zanzibar’s Sukuk Issuance Fuels Investor Confidence and Opens New Development Horizons

The government of Zanzibar has taken a bold step toward securing long‑term financing for the archipelago’s growth agenda, launching a Sharia‑compliant sukuk that has already attracted robust investor interest. In an interview with The Citizen, President John Mwinyi outlined how the sukuk—an Islamic bond instrument that replaces conventional interest with profit‑sharing arrangements—has boosted confidence among both local and international investors, unlocking fresh opportunities for infrastructure, tourism, and economic diversification.

A First‑of‑Its‑Kind Move for the Archipelago

Zanzibar’s first sukuk was issued in partnership with the Bank of Zanzibar and a consortium of regional banks, including Standard Chartered and Abu Dhabi Islamic Bank. The instrument is structured as a trust deed that channels capital into a dedicated development fund, with returns distributed according to the underlying Sharia‑compliant projects. The issuance, valued at TZS 150 billion (approximately USD 64 million), was priced at 12 % and is due for maturity in 2025.

This move marks the first time Zanzibar has utilized sukuk to finance public projects, setting a precedent that could encourage further Islamic financial instruments in the region. According to the Bank of Tanzania, the sukuk is fully compliant with both national financial regulations and international Sharia standards, which has played a pivotal role in attracting investors who prioritize ethical and compliant financial products.

Investor Confidence and Market Reactions

Financial analysts noted that the sukuk’s launch has already seen a 70 % subscription rate from the first round of investors, including sovereign wealth funds from the UAE, Malaysia, and Saudi Arabia. “The appetite for Sharia‑compliant instruments is growing worldwide,” said Fatima El‑Gamil, a senior analyst at Dubai Islamic Bank. “Zanzibar’s successful issuance demonstrates that emerging markets can also participate effectively in this space.”

The confidence instilled by the sukuk has a ripple effect across the local economy. With a larger pool of capital available, the government can expedite projects that have been stalled due to funding constraints. Investor sentiment is especially buoyant because the sukuk’s structure mitigates the typical risks associated with conventional debt, offering a stable return model that aligns with Islamic financial principles.

Allocation of Funds and Development Priorities

President Mwinyi emphasized that the sukuk proceeds will be earmarked for key sectors identified in Zanzibar’s Long‑Term Development Plan (LTDP) 2025‑2030. The primary allocation targets are:

1. Tourism Infrastructure – Renovation of historic Stone Town, expansion of beach resorts, and investment in eco‑tourism projects to boost visitor numbers.
2. Energy and Sustainability – Development of solar farms and the upgrade of the island’s grid to reduce dependence on diesel generators, aligning with the archipelago’s sustainability goals.
3. Healthcare and Education – Construction of new public health facilities and modernisation of primary schools to improve service delivery and human capital.
4. Transport Connectivity – Upgrading the Dar es Salaam–Zanzibar ferry link and the airport terminal to streamline cargo and passenger flow.

The LTDP, published by the Zanzibar Planning and Development Authority, outlines a vision of balanced growth, focusing on improving living standards while preserving cultural heritage. By aligning sukuk proceeds with the LTDP, the government signals a clear policy direction that reassures investors about the purposeful use of funds.

Strengthening Institutional Capacity

The successful sukuk issuance underscores Zanzibar’s commitment to strengthening its institutional frameworks. The Zanzibar Monetary Authority, in collaboration with the Securities and Exchange Commission, established a specialized committee to oversee Sharia‑compliant financial operations. The committee’s tasks include monitoring the performance of sukuk‑funded projects, ensuring transparent reporting, and maintaining compliance with both national and international standards.

Moreover, the issuance has spurred the development of local expertise in Islamic finance. The University of Zanzibar’s Faculty of Business and Economics has introduced a new module on Islamic finance, aiming to build a cadre of professionals equipped to manage similar instruments in the future.

Linking to Broader Context

For readers unfamiliar with the mechanics of sukuk, The Citizen links to a comprehensive guide on the platform that explains the legal and financial framework of Sharia‑compliant bonds. The guide details how sukuk differ from conventional bonds, the importance of asset‑backed structures, and the role of profit‑sharing versus interest payment.

Additionally, the article references the Zanzibar Development Corporation (ZDC) website, which outlines specific projects slated for funding. The ZDC portal offers interactive dashboards showing real‑time progress on key infrastructure milestones, thereby enhancing transparency and fostering continued investor engagement.

Looking Ahead

While the first sukuk has proven a viable tool for financing development, President Mwinyi indicated that future issuances could be considered to sustain momentum. “We are exploring the feasibility of a second tranche to support renewable energy projects and to further solidify our financial autonomy,” he said.

The success of Zanzibar’s sukuk not only demonstrates the archipelago’s financial ingenuity but also serves as a model for other small island economies seeking alternative funding mechanisms. By marrying Islamic finance principles with national development priorities, Zanzibar is carving a path that balances ethical considerations with pragmatic growth, potentially reshaping how emerging markets approach capital formation in the 21st century.