File Image: IOL
File Image: IOL

‘Sukuks can play key role in rebuilding economy’

By Staff Reporter Time of article published May 6, 2020

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Islamic bonds, also known as sukuks, are going mainstream as both institutional and retail investors seek socially conscious defensive assets. This is according to Maahir Jakoet, a portfolio manager at Old Mutual Investment Group’s Customised Solutions, following the recent launch of the Old Mutual Al Baraka Income Fund.

Jakoet says sukuks will play an essential role in rebuilding the economy after the Covid-19 lockdown.

“The scale of funding required to meet the financing needs of Sub-Saharan Africa post the pandemic is far beyond the scope of governments. Sukuks may be the innovative approach we need to finance the rebuilding of the economy.”

Jakoet says that, unlike bonds, sukuks are backed physical assets, providing investors with an additional layer of security. “Sukuks are more difficult to manipulate, as the value and risks are always related to real assets that have a tangible value rather than the artificial manipulation of debt and credit ratings,” says Jakoet.

He says that with sukuks, investors receive a share of the profits, but also accept a share of any loss, which promotes greater risk sharing.

“Sukuks provide an ideal way of financing projects that improve and promote sustainable development without falling into interest-based debt,” Jakoet says. 

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