One of the questions we hear most often from Kenyans abroad is whether it is genuinely possible to invest at home without compromising on Islamic finance principles. The answer is yes. A fully Sharia compliant portfolio, built and managed from thousands of kilometres away, is not only possible but increasingly well supported by the instruments available in the Kenyan and wider East African market.
The instruments that make it possible
A compliant portfolio replaces conventional interest bearing instruments with alternatives structured to avoid Riba, Gharar, and investment in non-permissible activity.
- Sukuk. Certificates representing an undivided ownership interest in a tangible asset or project, used in place of conventional bonds.
- Murabaha placements. A cost-plus-profit sale arrangement, used as a Sharia compliant alternative to conventional money market deposits.
- Sharia screened equities. Listed shares that pass screening criteria excluding businesses engaged in impermissible activity, and excluding companies with excessive debt or interest income relative to their overall business.
The principles behind the screening
Every holding in a compliant mandate is reviewed against three core principles. Riba, or interest, is excluded entirely, which is why conventional bonds and interest bearing deposits have no place in the portfolio. Gharar, or excessive uncertainty, rules out speculative structures with unclear or undefined outcomes. And investment is restricted to Halal activity, meaning businesses involved in alcohol, gambling, conventional financial services, and other impermissible sectors are screened out before a holding is ever considered.
A compliant portfolio is not a smaller universe of second-best options. It is a disciplined universe, built on clearly defined principles applied consistently.
Oversight, not just selection
Screening at the point of purchase is only part of the picture. Compliance needs to be reviewed on an ongoing basis, since a company’s activities, debt levels, or revenue mix can change over time. At SIBK, this ongoing review sits with our Shariah Compliance Officer, independent of the portfolio management team, so that compliance is monitored continuously rather than assumed at the outset and left unchecked.
Managing it all from abroad
For diaspora clients, the practical management of a compliant mandate works the same way as any other portfolio management arrangement. Under a discretionary mandate, SIBK selects and manages compliant holdings within agreed parameters. Under a non-discretionary mandate, our team proposes compliant instruments and you approve each transaction. Either way, reporting is sent directly to you, and there is no requirement to be resident in Kenya, or even in the region, to hold a fully compliant portfolio.
If maintaining your investments in accordance with Islamic finance principles is important to you, our advisers can talk through how a compliant mandate would be structured for your specific circumstances, wherever you are based.