Africa’s biggest lender, Standard Bank, has launched the first-ever Shari’ah-compliant overdraft facility in Southern Africa, marking a transformative milestone for Islamic finance on the continent.

Designed to empower business owners with more Shari’ah-compliant solutions, Standard Bank says the product adds to a “long list of its innovative solutions to meet the unique needs of Africa’s growing demand for Islamic finance”.

Structured under the Shari’ah principle of Wakaalah, the Shari’ah overdraft facility is a non-interest-based alternative that provides businesses with instant access to short-term funding.

Linked to the Shari’ah Business Current Account, the new product will allow clients to draw down up to a pre-approved limit.

“This is not just a product launch, it’s a response to a critical gap in Africa’s Islamic finance ecosystem,” says Standard Bank Shari’ah Banking head Ameen Hassen.

“For too long, businesses that required Shari’ah-compliant financing options lacked fluidity of a working capital solution that an overdraft brings. This overdraft facility empowers entrepreneurs to manage cash flow fluctuations without compromising their values and need for Shari’ah compliance”.

With sub-Saharan Africa home to 18% of the global Muslim population but accounting for just 1% of worldwide Islamic finance assets, Standard Bank says its innovation arrives as the region seeks scalable, Shari’ah-compliant solutions.

The financial services firm says the overdraft facility will directly address working capital challenges faced by businesses.

Key benefits of the new product include competitive market-related pricing; direct linkage to the Shari’ah Business Current Account for streamlined operations; and certified compliance whereby the facility is certified by Standard Bank’s Shari’ah Advisory Committee.

While Shari’ah Banking adheres to Islamic principles such as Wakaalah bi al-Istithmar (agency-based investment), and the prohibition of interest (riba), Hassen notes that the bank’s offering transcends religious boundaries, with about 35% of Standard Bank’s South African Shari’ah clients identifying as non-Muslim.

“This isn’t just for Muslims, it’s for anyone seeking transparent, non-interest, asset-based or backed financial solutions,” says Hassen.