A study on Sukuk as an alternate investment to conventional bonds in Kenya

Abstract

Islamic finance through products such as sukuk has become a popular source of financing especially in project finance. Unlike its substitute, the conventional fonns of financing, such as conventional bonds, it has experienced slow development based on multiple factors ranging from political, economic to social factors. The study aims to identify the potential Sukuk has to offer in the Kenyan economy such as on Public Private Partnerships initiatives in the development of infrastructure by analysing its financial perfonnance such as on yield/return on a global stage versus the perfonnance of conventional bonds listed in Kenya. The research is based on yields of sukuk from markets in Malaysia, Indonesia and Saudi Arabia and bond prices in the Kenyan listed market. The researcher will point out the advantages,disadvantages and challenges of the sukuk system with illustrations from the Kenyan context.