Sukuk in South Africa: What Exists, Who Can Buy It, and How to Get Exposure

Sukuk are the instruments that make halal portfolios whole. Conventional investors stabilise portfolios with bonds; bonds pay interest; interest is out. Sukuk replace the lending relationship with ownership-based structures, certificates conferring interests in real assets or ventures, whose returns are rent or profit rather than riba. South Africa is one of the few Muslim-minority countries with a genuine sovereign sukuk programme, and almost nobody outside institutional finance understands how it works or how to reach it. This is the map.

The 2014 international sukuk

In September 2014 the National Treasury issued South Africa's debut sovereign sukuk: USD 500 million over 5.75 years on an Ijara structure, priced at a 3.90% profit rate and 4.665 times oversubscribed. It was among the first sukuk from a non-Muslim-majority sovereign and the first dollar sukuk by an African state. Sold entirely to international institutional investors, it matured in 2020. Its lasting importance was the precedent: an asset-based Ijara structure using state property, and the legal plumbing (including specific tax amendments) that later domestic issuance reused.

The 2023 rand sukuk: the one that changed the market

In November 2023 the Treasury completed its inaugural domestic rand-denominated sukuk, raising R20.4 billion across four amortising tranches maturing between 2028 and 2035, against bids well above the offer. It was distributed through the primary dealer system to banks, insurers and asset managers, and Treasury signalled intent to make rand sukuk a recurring funding tool. For halal investors this issue mattered more than the 2014 one, because it created something South Africa never had: a liquid rand sovereign Shariah yield curve. Before it, Islamic income funds relied on bank placements, corporate paper and offshore instruments. After it, funds could hold high-quality rand government exposure, and both yields and durations in the halal income category improved.

The honest part: you cannot buy them directly

There is no mechanism for direct retail purchase of SA government sukuk. The domestic sukuk trades in the institutional debt market, and RSA Retail Savings Bonds, the government's retail channel, are conventional interest-bearing instruments with no Islamic variant as of our review. That is a real policy gap: a Muslim pensioner can buy an interest-bearing retail bond from the state but has no compliant equivalent. Until that changes, retail access to sovereign sukuk runs entirely through collective investment schemes.

The four funds that do it for you

• Camissa Islamic High Yield Fund (R2.73 billion, 0.58% TER): the clearest documented route. Sukuk have historically made up over 80% of the book, and the team publicly described buying longer-dated government rand sukuk at profit rates around 13.5% during the 2024 pre-election yield spike.
• Old Mutual Albaraka Income Fund (R2.0 billion, 0.59% B1 TER): local and offshore sukuk plus Islamic liquid instruments, with the strongest governance stack in the category; the range also participated in the first ESG sukuk of its kind in South Africa.
• Oasis Crescent Income Fund (R3.31 billion, 0.70% TER): about 15% in government issued sukuk at 31 March 2026 alongside non-interest placements and foreign income assets, with a 6.45% trailing distribution yield.
• 27four Shari'ah Income Prescient Fund (launched October 2024): multi-managed Shariah income securities targeting 110% of STeFI; young, with fees not yet published.

Balanced funds carry sukuk too: the Camissa Islamic Balanced and Old Mutual Albaraka Balanced funds both use sovereign and corporate sukuk as the defensive sleeve of their Regulation 28 mandates, and the Alexforbes Shariah portfolios run dedicated local and global sukuk manager sleeves. If you hold any serious SA halal balanced product, you already own sukuk. Our halal income funds comparison ranks the dedicated vehicles.

The tax detail worth knowing

Section 24JA of the Income Tax Act deems sukuk returns to be interest for tax purposes, without requalifying the contract's Islamic legal nature. That sounds strange but is good news: it means a sukuk investor is taxed no worse than a bond investor, including access to the interest exemptions available to natural persons. The provisions were first built for government issuance and later extended to state-owned and listed companies. We unpack the whole framework in our Section 24JA explainer.

What to do with this

If you need a defensive allocation or income stream, pick one of the funds above rather than waiting for a retail sukuk channel that does not exist yet. Understand what you are buying: sukuk funds carry duration and sovereign credit risk, so unit prices wobble in a way bank deposits do not, and current yields will compress as the high-profit-rate paper of 2024 matures. And when you compare funds, check the actual sukuk allocation in the latest fund document, because exposure is a genuine differentiator between them. All providers named here are graded on the Halal Money Index.

Quick answers

Can I buy government sukuk directly?

Practically, no: the 2014 dollar issue and the roughly R20.4 billion 2023 rand sukuk trade institutionally, with no retail sukuk platform in South Africa. Retail access runs through the income funds, where managers like Camissa (historically over 80% sukuk in High Yield) hold the instruments at scale.

Why do sukuk matter for retirement portfolios specifically?

Regulation 28 forces a defensive allocation and Shariah prohibits bonds, so sukuk are the compliant instrument that squares the two rulebooks. Every halal balanced fund's defensive sleeve leans on them, which makes sovereign issuance depth a retirement-savings issue, not just an investing one.