Several major Islamic fintech initiatives are underway in South Africa as the rainbow nation remains steadfast in the race to become the region’s torchbearer for Muslim-friendly finance.
Awaiting regulatory greenlight, two Islamic products, a working capital solution and a trade finance product, have been well received in the South African market following a successful test launch last October, according to Ismail Ibrahim Desai, CEO of Global Islamic Financial Services Firm (GIFS) and the Shariah advisor for multiple organizations.
“There has been a great uptake in the market for both products. The working capital solution alone, which is the first Islamic invoice discounting solution in Africa, has garnered approximately US$5 million since the launch,” shared Ismail.
The products will be offered on GIFS’s upcoming online Islamic investment platform, which will also house a number of other products including a fully digitized bill of exchange banking instrument, allowing consumers to secure the promissory note online.
The firm is also working on introducing a Shariah digital investment management services platform targeting the country’s 14.5 million millennials, which account for over a quarter of South Africa’s population.
“We are planning a full launch of the Islamic investment platform and a pilot test of the robo-advisor in March this year, following regulatory consent. The pilot for the robo-advisor will run for six months, and if it is successful and generates demand, we are gearing for an official launch in the first quarter of 2020,” said Ismail.
The initiative, when launched, will provide investment options and advice and also serve as a product distribution channel for partners looking to market their services.
Already home to one of the most sophisticated financial systems in the continent, Africa’s second-largest economy stands to benefit from these Islamic fintech initiatives. With a high fintech adoption rate at 35% which places it at ninth among 20 nations assessed by EY which projected that the figure could surge to 71% over the next few years, digital-enabled Shariah compliant solutions could make the proposition more accessible and palatable in the Muslim-minority country.