How Sh1.115 trillion Islamic bonds will fund 12 key Zanzibar projects

Unguja. Twelve high-priority investment projects, valued at Sh1.115 trillion, are set to be funded through Zanzibar’s recently launched Islamic bonds (Sukuk). 

These projects, which span several key sectors, aim to drive the island’s infrastructure development and economic growth. 

The projects are divided across different ministries, with three under the Ministry of Blue Economy and Fisheries, seven under the Ministry of Works, Communications, and Transport, and one each under the Ministries of Health, Water, and Energy and Minerals. 

The Sukuk initiative, officially launched on February 22, 2025, started its registration process on March 8, 2025, and will remain open for subscription until April 6, 2025. 

Sheikh Mohamed Issa, CEO of Yusra Sukuk Co. Ltd., the advisory firm behind the project, confirmed that the funds raised through the Sukuk will be allocated directly to these strategic projects. 

“These are large-scale, impactful projects that will benefit Zanzibar for years to come. Once completed, they will serve as a testament to Sukuk investments, ensuring transparency in the use of public funds,” said Mr. Issa. 

Key projects to be funded include the construction of fish markets in Kama, Fungu Refu, and Mkoani. In the health sector, a priority project is the construction of Binguni Hospital, alongside efforts to reduce electricity loss. 

A significant portion of the Sukuk funds will also be directed toward road infrastructure. Notable projects include the construction of the seven-kilometre Mchomanne-Wawi to Votongoi road and the 23-kilometre Chwaka to Kilindi Market road.

Additional road improvements will be made in Kizimbani, Kiboje, Unguja Ukuu, and Makunduchi, with a total cost of Sh498.4 billion for all road projects. 

Other major projects include the development of the Mangapwani port, valued at Sh399.8 billion, and the construction of Terminal 2 at Zanzibar Airport, with an estimated cost of Sh62.4 billion. 

Mr Issa also noted that Sh159 billion will be required to pay Sukuk investors. He emphasized that the Sukuk investment model is particularly attractive as it avoids interest, tax deductions, and conflicts with Islamic principles, offering an ethical investment opportunity for both local and international investors. 

The Minister of State in the President’s Office for Finance and Planning, Dr Saada Mkuya, hailed the Sukuk initiative as a groundbreaking step in Zanzibar’s economic growth. 

“The response from investors has been tremendous, with both local and international interest, including from high-profile figures like President Samia Suluhu Hassan and Zanzibar President Dr Hussein Mwinyi, who have already invested,” said Dr Mkuya. 

Dr Masoud Rashid Mohamed, Director of Zanzibar Sovereignty Sukuk, explained that a dedicated government company has been set up to manage the funds raised, ensuring they are efficiently allocated to infrastructure development projects. 

The Ministry of Water, Energy, and Minerals Permanent Secretary, Mr Joseph Kilangi, suggested creating a dedicated investment window for government employees to transfer funds from the Zanzibar Social Security Fund (ZSSF) into the Sukuk, highlighting the need to create conditions that attract foreign investment. 

Dr Mkuya responded that the Sukuk system allows for individual investments and encouraged government employees to view it as a complementary opportunity alongside their ZSSF contributions. 

She also noted that the government would engage with various stakeholders, including those in the tourism sector, to promote investment opportunities and address any concerns. 

“This is an excellent investment opportunity, with an initial contribution starting at Sh1 million. For those unable to meet this threshold, forming investment groups is a viable option,” emphasized Dr Mkuya.