What is Sukuk Bonds?
Sukuk Bonds are investment certificate of equal value declaring beneficial ownership in an asset, a project or business venture in which the certificate holders are investors those entitled for a return to their investments.
Like conventional bonds, they provide an income stream culminating with a refund of the principal amount invested in a Sukuk bond issuance at the maturity of the Sukuk bond.
However, they differ from conventional bonds in that they are mainly asset-backed or asset-based Shari'ah compliant capital markets products since they are based on Shari'ah principles.
These principles prohibit taking or giving of interest on loans or financing, excessive uncertainty (Gambling), ambiguity (Gharar) and dealing in impressible things or transactions according to these principles.
Sukuk bonds are recognized by The World Bank Group (WBG), IMF, UNDP and other multinational bodies as one of the tools for attaining Sustainable Development Goals (SDGs).
In Tanzania, the Ministry of Finance and all financial regulators recognise Sukuk bonds and there are legal and regulatory frameworks already in place to protect both the Issuers and investors dealing with Sukuk bonds.
