Just two years after launching the Shirkah app as an online savings channel, Tanzania’s SSC Capital has seen demand for this Shariah compliant fintech platform’s offerings grow so rapidly that major upgrades are underway for the individual services to be spun off as distinct funds for subscriptions.
“There has been pretty much 50-60% growth in terms of users, in the total value of assets people have done through the app,” CEO Salum Awadh told IFN Investor. “They have been asking for us to provide funds, where we manage, and they expect us to do the work and give them returns.”
The first step was to convert the app’s operations into full-fledged asset management mode – which was completed last month, in May 2024. Salum said the products currently offered through the app are in the process of being turned into funds – which would be offered by Q3 2024.
“We will be running as a new Shirkah asset managing company with four Halal funds in different classes of assets. We are doing these already, not in terms of funds, but as products which people can pool their funds to buy these products through the app.”
The first will be a Sukuk fund, investing both in-country and offshore markets, mainly in Africa. The firm has identified opportunities in Kenya, South Africa and Zambia – which is in the process of issuing new Sukuk. Beyond Africa, this fund will initially be investing in Dubai.
Next is an equity fund – investing in three markets of Tanzania, Kenya and South Africa. Salum said the latter is the largest equity market in Africa.
The real estate fund is being revised into a real estate investment trust (REIT). Salum said the firm is in the process of getting approvals to launch this as a Shariah compliant REIT.
The final asset class is that of soft commodities as Tanzania is primarily an agricultural economy, providing roughly two-thirds of industrial raw materials and two-thirds of employment within this African nation.
“Many in Tanzania, especially living in the cities, want to invest in agriculture but don’t have a way to do that. So, we want to build a fund where we give them access to some of these commodities that we’re investing in.”
The initial focus will be on grains – mainly rice and maize, which Tanzania produces over 20 million tonnes yearly. Tanzania has positioned itself as a food basket, securing long-term contracts with its neighbors of Malawi and Mozambique, plus regular trades with Burundi, Congo, Kenya, Rwanda, Uganda and Zambia.
Salum said market volatility for such commodities is not that high and over time, the fund will be adding more traditional crops like coffee, tea and more.
These four funds form key steps towards SSC Capital’s expansion to offer a diverse range of services and solutions for wealth and fund management – especially in the Shariah space, given that both demand and regulations in this arena had become entrenched in Tanzania in recent few years.
Noting that Muslims make up almost 50% of its estimated 67 million Tanzanian population, Salum said the market potential is massive as Tanzania has migrated into a middle-class economy and looking to graduate into the upper bracket.
The economic transformation came with the 1970s natural gas discoveries in Tanzania, resulting in multibillion-dollar investments and job creation. Salum said further transformations taking place in the overall economy will translate into an increase in disposable incomes for all people, not just Muslims.
Adding that many people becoming aware of Islamic investment opportunities, including the managers of Tanzanian banks sitting on close to US$5 billion worth of assets, Salum said SSC Capital is seeking to partner with them all to provide wealth management services.
Leveraging off this domestic client base, SSC Capital plans to extend its services beyond Tanzania to become a Pan-African entity targeting Islamic AuM of US$100 million by the end of 2025.
