On Wednesday, Kenya made history by listing its inaugural Islamic bonds valued at $23 million. The Sukuk, or Islamic bond, was officially inaugurated at the Nairobi Securities Exchange (NSE) by President William Ruto. The bond was issued by Linzi Finco Trust Islamic. This landmark event marks a significant milestone in the nation’s financial sector and reflects Kenya’s growing commitment to diversifying its financial instruments to attract a wider array of investors.
Speaking in Nairobi during the listing of the Linzi Finco Trust Islamic Sukuk on the NSE at the launch ceremony, President Ruto highlighted the significance of the Shariah-compliant bonds in advancing financial inclusion and expanding market access.
“We are introducing new, diversified, and innovative financial instruments at the Nairobi Securities Exchange that will unlock broader investment opportunities and support our Bottom-Up Economic Transformation Agenda,” he stated.
“The landmark issuance of the Shariah-compliant Linzi Sukuk bond will not only foster financial inclusion but also broaden market access, aligning with the global trend towards more stable and robust economic growth.” He added
The Sukuk represents Kenya’s inaugural foray into Islamic finance, a sector that has been gaining traction across the globe. This financial instrument adheres to Sharia law, which prohibits the payment of interest and investment in industries deemed unethical by Islamic standards. Instead, Sukuk offers returns based on profit-sharing and asset-backed securities.
“The listing of the first Sukuk on the NSE PLC not only highlights the growing demand for ethical and inclusive investment options but also paves the way for further expansion of Shariah-compliant products in the Kenyan market opening avenues for more investors to participate in the growth and development of our economy,” said the CEO of NSE, Frank Mwiti.
Islamic finance, which operates under Sharia law, prohibits interest-based transactions and emphasizes profit-sharing. Sukuk are Islamic bonds that adhere to these principles by being structured to avoid interest payments, instead offering returns derived from profit-sharing agreements or lease arrangements.
The bond is also a residential-based security seeking to facilitate the construction of 3,069 affordable housing units, with a maturity period of 15 years and an 11.13 % internal rate of return.
The Linzi Sukuk bond aims to offer alternatives to traditional debt financing and enhance resource mobilization, thereby fostering economic growth and prosperity. The bond is designed to diversify investment portfolios while also expanding ethical financing options within the market. The funds raised will be allocated to several residential development projects for the Kenya Defence Force (KDF).
Sheikh Ibrahim Lethome, Chairperson of the CPF Salih Advisory Council, remarked, ‘‘The introduction of the Linzi Sukuk into our market opens new investment opportunities, broadens our financial toolkit, and sets the stage for a more inclusive and resilient economy.”
President Ruto assured investors of a favorable business environment. He emphasized that Kenya is open and safe for investment, highlighting that the country’s legal framework offers robust investor protection.
“I want to assure investors that I will go out of my way to make sure that Kenya is stable and safe for investors to unlock their potential in a peaceful environment,” he said.
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