Z’bar lists first ever sovereign Sukuk bond on DSE

ZANZIBAR: ZANZIBAR government marked a historic financial milestone yesterday by officially listing its first Ijara Sukuk, a Shari’ah-compliant sovereign bond on the Dar es Salaam Stock Exchange (DSE).

Zanzibar’s Minister of State in the President’s Office (Finance and Planning), Ms Saada Mkuya, described the move as a key step towards inclusive economic development.

“This is a major milestone for investors and the overwhelming interest has already sparked discussions on issuing a second tranche,” she said at the launch on Wednesday.

The Ijara Sukuk, based on a leasing structure that complies with Islamic law (Sharia), avoids interest and offers returns through profit-sharing. It involves a contract for the hiring or leasing of services or property, typically for a fixed period and price.

ALSO READ: DSE set to gain from US-China trade deal

Originally announced in February, the Sukuk was oversubscribed, raising 381bn/-, well above the initial target of 300bn/-.

This marks a pivotal moment in Zanzibar’s broader financial strategy, which aims to raise 1.0tri/- over the next seven years to fund critical infrastructure projects, including a new fish market, hospitals, roads, Mwangapwani Port and power systems.

The Sukuk offers an annual profit rate of 10.5 per cent, paid semi-annually over seven years. While the investor response has been strong, Ms Mkuya emphasised the need for greater public awareness and financial education to boost participation.

“There’s great interest in investment, but many people still lack the knowledge to get involved,” she added.

The Minister also highlighted that Zanzibar is in the process of establishing its own stock exchange, with plans for a launch in the 2025/2026 financial year.

ALSO READ: DSE, Yas partner to drive inclusive investment

“A feasibility study has already been completed and work is underway to build the necessary infrastructure,” she noted.

DSE Chief Executive Officer, Mr Peter Nalitolela, called the listing a transformative step that would deepen capital markets and provide the Zanzibar government with sustainable funding for essential development projects.

The Capital Markets and Securities Authority (CMSA) Director of Research, Policy and Planning, Mr Alfred Mkombo, echoed this view, noting that the initiative expands investment opportunities for citizens and supports broader financial inclusion.

Sheikh Issa Mohammed, Chairman of Yusra Sukuk Zanzibar Limited, stated that the Sukuk has attracted both local and international investors, including participants from the UK and Canada.

“This is not just a new funding source it’s an ethical one. It reflects the government’s commitment to innovative and inclusive financing,” he said.