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- Islamic Banking and Finance in South Africa
Islamic Banking and Finance in South Africa
This country of report deals with an overview of Islamic banking and finance in South Africa. Despite the fact that it has a comparatively small Muslim population, South Africa turns out to be a forerunner Sub-Saharan African country to establish itself as a prospective epicenter for Shari’ah-compliant finance in the region. With one full-fledged Islamic bank and five conventional banks offering Islamic windows, the stake of South Africa’s Islamic banking assets in the global arena became around 0.1%. As of June 2020, Islamic banking sector mobilized deposits amounting R37 billion and finances reaching to R14.6 billion. Albeit Takaful was initiated in 2003, the sector hasn’t developed a lot and there are few Takaful operators providing services nowadays. South Africa became one of the top ten destinations for Islamic fund assets with a global share of 1.2% in 2020 which gives the country an important position in Africa. The country was also involved in the global sukuk issuance first in 2014 through its sovereign sukuk and later in 2016 in the form of private sukuk to raise finance to broaden investor base that was in response to highly intensifying local and global demand for investment in order to stimulate growth. The government has confirmed it’s interest to sukuk and incorporated it in its 2022 budget review. Though there are regulatory challenges, lack of awareness and Shari’ah-compliance issues, Islamic finance is thriving in South Africa owing to enormous potential, accommodative policies and developed financial system.