Things You Want to Know About Islamic Finance in South Africa

Islamic Finance in South Africa

Islamic finance and banking are still in their infancy in South Africa, having been established in 1989. Currently, South Africa is a home for about 1 million Muslims, while there was only about 270,000 Muslim population in 1970. However, an increasing number of Muslims show a growing demand for Islamic financial services. Because they realize that everyone must appropriately fulfil their wealth in line with their faith.


Although Islamic Finance is posing a challenge, recent years have witnessed substantial developments in this sector. According to the Banking Association of South Africa (BASA), the value of Islamic finance increased significantly, with deposits reaching R37 billion (which was equal to R35 billion in 2019) in the year to the end of June 2020.

Globally, Islamic financial assets are worth $2 trillion now. In 2014, South Africa issued its $500 million sovereign Sukuk for a five-year term. Four times oversubscription for the Sukuk can highlight the appetite of individuals for this product. Later, Albaraka bank raised R200m from 94 individuals and institutions through the Sukuk issuance for ten-year terms. The increasing demand for Islamic financial products in South Africa shows the potentially rapid growth in the Islamic finance industry.

Islamic Banking in South Africa


In recent years, Islamic banks in South Africa have started to grow. The full-fledged Islamic banks offering their services in South Africa are including Albaraka, HBZ (Habib Bank AG Zurich), and the Habib Bank. Moreover, ABSA and the FNB (First National Bank) have established their Islamic banking departments. Followed by the Wesbank that has opened its subsidiary known as the Islamic Finance Bank.

These Islamic Banks offer clients only sharia-compliant products, services, and investment options responding to varying customer preferences. Islamic Banks offer their financial products and services to both Muslims and non-Muslims. They provide various services, including residential property, trade, savings, investment accounts, equity participation accounts, and estate planning finance.


Ziyaad Khan, Head of Commercial at FNB Islamic Banking, explains their Islamic banking system: “So, with regards to Shari’ah-compliant investments, one of the most prominent types of agreements is that of a participatory agreement. The customer contributes the funds, and the bank contributes managerial and entrepreneurial skills in terms of where and how these funds are placed. Naturally, said banks conduct the investment according to strict Shari’ah guidelines, and the bank and customer share the profits on a pre-agreed ratio.”


South Africa sees Islamic finance as a useful way to develop its Islamic economy. So, we can expect that South Africa’s Islamic Finance sector will keep expanding steadily all around the nation.

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