Islamic Fund Management
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4.5.2 Evolution of South Africa’s Islamic Finance and Islamic Fund Management
Industries
South Africa’s regulators have taken several measures to develop and promote its Islamic
finance industry, including amending tax laws to create an equitable and level playing field
for Islamic finance. Proposed tax amendments were announced in May 2010, which provided
tax parity treatment between Islamic finance products and conventional banking products in
terms of diminishing musharakah, mudarabah, murabahah and sukuk.
Other than that, Regulation 28, which was promulgated in 1962, aims to protect the pension
fund member by setting out prudent investment limits on certain asset classes in investment
funds and this regulation is enforced on both conventional and Islamic pension funds.
Regulation 28 was later amended in 1998 and 2011. The recent amendments were made in
February 2018 where the allowed maximum exposures to certain asset classes have been
revised to 75% for equities; 25% for property; 30% for foreign (offshore) and 10% African
assets shows the important milestones of Islamic finance in South Africa, followed
b which exhibits the regulatory timeline.
Table 4.22: Milestones of Islamic Finance in South Africa
Year Islamic Finance Milestone
1989  Al Baraka Bank was the first full-fledged Islamic bank granted a licence by the
SARB.
2003  Takaful was launched by Takaful South Africa.
2004  WesBank launched an Islamic window, i.e.the WesBank Motor Vehicle and Asset
Finance.
 First National Bank (FNB) launched an Islamic window offering Shariah-compliant
financing.
2006  Absa Islamic Bank was established.
2007  FTSE/JSE Shariah All Share Index was launched.
2008  FTSE/JSE Shariah Top 40 Index was launched.
2011  FTSE/JSE Capped Shariah Top 40 Index was launched.
 Takaful South Africa was acquired by Absa Group.
2014  Issued debut USD500.0 million sovereign sukuk.
Table 4.23: Regulatory Timeline of South Africa
Year Description
1962  Regulation 28 of Pension Fund Act was announced. It was amended in 1998, 2011
and February 2018.
2002  Collective Investment Schemes Control Act (CISCA)
 Financial Advisory and Intermediary Services Act (FAIS)
2010  Taxation Laws Amendment Act of 2010 (the Act), recognising arrangements such
as diminishing musharakah, murabahah and mudarabah .
2011  Amendment of Taxation Laws Amendment Act of 2010 (the Act),
introducin imited to the government.
2016  National Treasury proposed further amendments to tax laws to extend the current
legislation in respect of murabahah and sukuk to cover all listed companies.
 Twin Peaks model of financial regulation.
Source: RAM