Tanzania's Alpha Capital launches first Shariah compliant fund

In a bold move to enhance investment opportunities in Tanzania, Alpha Capital has introduced a groundbreaking fund tailored to meet the rising demand for Shariah-compliant financial products. The Alpha Halal Fund promises to offer investors a diverse range of Halal investment prospects, catering to the EAC and SADC communities. CNBC Africa's recent interview with Imani Muhingo, the director of the fund and Head of Research & Financial Analytics at Alpha Capital, shed light on the intricacies of this transformative initiative. The primary objective behind launching the Alpha Halal Fund is to promote financial inclusivity by addressing the longstanding exclusion of the Islamic community in Tanzania's investment landscape. With only a few listed companies aligning with Sharia principles, Islamic investors faced limited options, particularly due to the prohibition of interest rates by Sharia law. Muhingo highlighted that out of the 22 listed companies, just seven were banks, leaving a meager selection of Halal stocks. Moreover, most collective investment schemes predominantly focused on treasury bonds, which posed challenges for the Islamic community seeking diverse investment avenues. Recognizing the need for greater inclusivity, Alpha Capital aimed to democratize finance and open up the capital markets for all investors, irrespective of their faith and beliefs. Muhingo emphasized the firm's commitment to simplifying the finance industry, making it more accessible to a broader audience. Since its establishment in 2022, Alpha Capital has strived to demystify financial markets through regular analysis reports, webinars, and newsletters to educate investors and debunk financial complexities. The launch of the Alpha Halal Fund represents a significant step towards bridging the gap in Tanzania's investment landscape and aligns with the government's financial inclusion objectives. The fund's minimum initial investment of 100,000 Tanzanian shillings aims to inspire commitment among investors, encouraging them to take a substantial stake in their investment journey. While the regulator initially proposed a million shilling limit, Alpha Capital revised it to enhance inclusivity and foster a culture of dedicated investment among participants. By setting a threshold that promotes commitment, the fund seeks to empower investors to take a proactive approach towards building their investment portfolios. Alpha Capital's rigorous screening and vetting process for Sharia compliance ensures that investments in the Alpha Halal Fund meet the highest ethical standards. Given the limited options for Halal investments in the market, the fund strategically targets opportunities in the EAC and SADC regions following the amendments to the Foreign Exchange Act. Partnering with Refinitiv, a subsidiary of Exchange Investment Assets, Alpha Capital leverages their expertise to filter and select Sharia-compliant assets for the fund's portfolio. An investment committee meticulously evaluates and approves assets based on Sharia principles, with regular reviews by a Sharia advisory board and Islamic auditor to uphold compliance. The fund's risk management strategies focus on mitigating foreign exchange risks and safeguarding performance by selecting Sharia-compliant assets that offer stability and long-term growth potential. Through stringent parameters and liquidity considerations, the fund aims to navigate market fluctuations and ensure sustainable returns for investors. Transparency and investor communication are paramount for the Alpha Halal Fund, with regular updates on performance data and fund management decisions. In adherence to capital markets regulations, the fund will publish net asset values daily on its website and weekly in national newspapers. Quarterly reports, annual financial statements, and shareholder meetings will further enhance transparency, providing investors with comprehensive insights into the fund's operations and performance. Additionally, the Sharia advisory board and Islamic auditor will issue annual reports on Sharia compliance, bolstering transparency and trust among stakeholders.