Diversification of Islamic Financial Instruments
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3.4.4.4 Objectives of Government Sukuk in Sudan (SFS 2017)
 Allocate real savings for government financing to meet spending on development and
infrastructural projects.
 Contributing in filling part of fiscal deficit in the public budget which was usually
financed by borrowing from the Central bank.
 Managing liquidity at the macroeconomic level by using contractionary or
expansionary open market operations to control liquidity within the ambit of Shariah.
 Mitigating inflationary effects by providing stable and real financing for the
government in the form of commodities and services.
3.4.4.5 Corporate Sukuk in Sudan
A corporate Sukuk market is also present in Sudan. The primary market, largely composed of
the Sudan Financial Services Company (Ltd) (which markets and trades all government
securities). Security instruments are also traded on the Khartoum Stock Exchange, and around
40 brokerage firms operate on the market. Secondary market activity is limited to over-the-
counter trades, and is largely dominated by government securities. Access to securities
markets in open to local and foreign investors, including banks, corporate entities, financial
institutions, and individuals, with the exception of Ijarah Certificates which are restricted to
bank.
A special joint report between (CIBAFI and IRTI 2015) states that “The Sudanese Sukuk market
remains significantly untapped on the corporate side. As of today, there has only been one
corporate Sukuk issuance in Sudan despite regular issuances by the government. The assortment
of Sukuk structures can play a key role in developing the Sukuk corporate market...” (CIBAFI and
IRTI 2015). Therefore, although Sudan has developed a government Sukuk market, the
corporate Sukuk market is still very limited and that explains why Sudan’s issuance of Sukuk is
only 2.12% (December 2015) from the global Sukuk issuance in spite of its 100% Islamic
financial system.
To conclude, Sudan used Islamic bonds since 1998 as one of the monetary policy’s mechanisms
in the context of Open Market Operations (OMO). Therefore, investment certificates have been
used for liquidity management purposes in the economy, where such certificates are bought
when there is liquidity deficit in the economy and they are sold in the case of liquidity surplus.
Moreover, these investment certificates assist in spreading savings awareness, they contribute
in financing the budget deficit rather than borrowing from Banking sector (inflationary
finance), as well as they encourage the development of the regional capital market.
Furthermore, investment certificates are listed in the capital market (KSE); hence they could
be traded in the secondary market and that deepen the financial market in general by offering
different financial instruments for investors. With that it is believed that Sudanese experience
in issuing sovereign Sukuk is pioneer and could be applied in other OIC member countries
besides developing it in Sudan.