Tag archives: Islamic finance

Sustainable Finance:  New Markets for Islamic Finance

This blog was co-authored by Kristin January, Trainee Associate Islamic finance has shown to be systemically important in many jurisdictions and is growing in the wider regions of the Middle East, Asia and Africa. Recent discussions focusing around the favourable prospects of green Sukuk are another growth driver for Islamic Finance. COP-27 highlighted the massive … Continue reading

Introduction to Islamic finance – a series

Attempting to define Islamic financing is not always easy. Put simply, Islamic finance is a way of doing financial transactions and banking while respecting Islamic Law (Shari’ah).  The underpinning principles of Shari’ah are based on social vision of public interest, equity, justice and fairness. Shari’ah gives guidance as to what is, and what is not … Continue reading

Islamic finance update – new draft governance standards

The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is an independent Islamic international non-profit body that prepares accounting, auditing, governance, ethics and Shariah standards for Islamic financial institutions and the industry. AAOIFI is respected in the industry and their governance standards are used by many firms globally. The AAOIFI central Shariah board has … Continue reading

Islamic finance transactions: Is default interest payable?

Islamic finance transactions are governed by Shariah law. These cater for Islam’s prohibition on charging interest. A court will however apply default interest to such a debt when the debtor has failed to perform a contractual payment obligation under such agreement. The Supreme Court of Appeal in Lodhi 5 Properties Investments v FirstRand Bank Limited … Continue reading

Islamic Finance: The Musharakah contract

Islamic finance has an array of structures to deal with various commercial needs, but adhering to Islamic law (Shariah) principles. One commonly used structure is Musharakah. What is Musharakah? Musharakah is similar to a joint venture. It allows equity participation by the parties, who finance a project in agreed proportions in either cash or kind. They … Continue reading

Sukuk: South Africa accessing Islamic debt capital markets

The South African government issued its debut $500 million sukuk in 2014. The sukuk was four times oversubscribed, highlighting the appetite for this product. There have been a number of sovereign backed sukuks of this nature across the Muslim world and elsewhere, such as the UK, where the government issued its first sukuk in 2014. … Continue reading

Islamic Finance: What is it?

Islamic finance transactions are based on Shariah (Islamic law). For an Islamic finance structure to be Shariah compliant it cannot contain elements of riba (interest), gharar (uncertainty), maisir (gambling) or investment in prohibited industries such as alcohol, pork products, conventional finance and pornography. Interest Shariah deems money to have no intrinsic value – it is … Continue reading