Johannesburg, Aug 25 (PTI) An Indian-origin financial expert's company in South Africa has come up with an innovative Shariah-compliant plan that aims to revolutionise support for the country's agricultural industry, which has been in dire straits since the collapse of century-old Land Bank.

The embattled state-owned Land Bank is trying to recover from decades of mismanagement, amid allegations of corruption, which has hindered its ability to fund South Africa's farming community.

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Giving details of the project at a briefing on Tuesday, 24Seven founder Fatima Vawda said her Shariah-compliant Agrarius investment scheme would soon be listed on the Johannesburg Securities Exchange (JSE), making it the first of its kind on the African continent.

Shariah-compliant funds are investment tools that are governed by the rules of the Shariah law of Islam. These are socially responsible investment funds in which any type of investment that harms an individual or the environment is not made.

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“The R10 billion note programme will be listed on the JSE sustainability segment. This will make it a listed investment, which comes with all the regulatory bells and whistles from a governance and compliance perspective,” Vawda said.

She said the proceeds from the bond issuance would be invested in the agriculture value chain.

“A quarter of the world's population follows Islam, but the amount and level of innovation in the level of investment opportunities in the Muslim community are limited for a growing investor base,” she explained, citing reasons for launching her new venture.

“The second reason is that between 10 and 15 billion rands of South African money is invested in unregulated Shariah products, so one of the biggest challenges the community has faced in South Africa was that a lot of unregulated solutions sprung up in the market and we had people invested in them with limited governance, compliance and regulation around these products,” she noted.

Vawda has worked extensively for more than two decades in the South African and international capital markets.

Prior to joining the corporate sector in 1997, she spent two years as a lecturer in applied mathematics at the University of the Witwatersrand.

“We wanted to bring something to the market where we can get capital and income growth so that you can sleep properly at night and know that your assets and your wealth is invested in something that is priced on a daily basis,” she said.

Vawda said they had seen a gaping opportunity after the collapse of the Land Bank. “We've got to eat, so food security is critically important from a sustainability perspective, but the opportunity from an investment perspective was there, so two years ago, we established an unlisted sukuk where we started investing in the agriculture sector as a debt financier on Shariah compliant product and we've been exceptionally successful with that,” she said.

Leading members of the farming community, experts in Shariah compliance finance and other relevant parties have been involved in the project.

“This is also to ensure that we only promote benefits to society and the environment. We prohibit any kind of practices aimed to cultivate unjust gains and speculation in the market. Everything must be done with transparency and the prohibition of any kind of manipulation. We don't invest in any goods or services that are harmful to humans or society,” Vawda added.

Altaaf Aboo, Bonds Specialist in the JSE's Capital Markets division, said there was an increasing interest from investors on sustainability with their investments, which led to the stock exchange establishing the sustainability segment.

"This allowed investors to invest in green, social and sustainable bonds. Any proceeds raised can only be used for a specific purpose. The beauty of these sustainable investments that we have been seeing is that now investors are able to get a financial return, just as they've always been getting, but also, they're seeing where their money is going; what purpose it's serving and what meaning their money is having," Aboo said.

"It's almost become a no-brainer for investors, because now they are getting a financial return, and they are creating this sustainable new world that they want to live in,” Aboo added.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)