South Africa’s Financial Sector Conduct Authority has granted a license to US-headquartered Wahed Invest to offer Shariah compliant digital investment management in the country, an important milestone in the Islamic robo-advisor’s African expansion strategy.
Already licensed in eight other markets including the UK, the US, Malaysia, Mauritius, Kazakhstan and Bahrain, the South African approval comes at a time when the Islamic fintech company is pushing for international expansion, it said. The South African business will be led by General Manager Rashaad Kalla.
“Acquiring the new license has been a huge achievement for the fintech company, as it ramps up efforts to deliver investment services in the country. With this regulatory approval, Wahed will be able to locally launch its app, which makes it easy and affordable for customers to start investing locally and internationally,” the start-up said.
One of the largest economies on the continent, South Africa’s economy is considered one of the most diversified and technology advanced. With Muslims accounting for approximately 1.5% of its some 60 million population according to Pew Research, Islamic banking and finance penetration remains low, with many Muslims subscribing to conventional products due to the lack of Islamic investment and finance options.
Yet, the environment seems almost ripe for the picking as far as Islamic fintech is concerned. Despite ranking low in terms of technology access – 77th out of 82 nations as ranked by the World Economic Forum’s Global Social Mobility Index 2020 – and 78th according to Cisco Global Digital Readiness Index, South Africa is a promising fintech market. EY’s Global Fintech Adoption Index 2019 noted fintech adoption rate in the republic to be at 82%, one of the highest in the world after China and India and tied with Russia. Such fintech prospects open up doors for start-ups like Wahed to meet demand for inclusive and Shariah compliant financial services with tech-enabled solutions.
“South Africa is a key market for fintech expansion in Africa due to the severe economic inequality which still exists in large parts of the continent. When added to generally low levels of financial literacy, it is difficult for emerging investors to make informed decisions about money. Fintech solutions such as Wahed can help to leapfrog these challenges, with its focus on transparency, minimal transaction fees and financial inclusion,” it noted.
Across its global operations, Wahed has amassed a customer base of over 200,000 since its launch in 2017.