Kenya is preparing to allow the use of Islamic finance, and is even preparing to launch its first sukuk. Speaking at the International Islamic Finance conference of Africa in Nairobi on Monday, Treasury Secretary Henry Rotich said that the Kenyan government would adopt legislation that would make Islamic finance possible. The conference is intended to aid developing countries in Africa to tap into the $2.1 trillion market of Islamic finance, using it as a catalyst of economic growth. Kenya can learn about the application of Islamic finance by taking advice from Muslim countries, Rotich said. Policymakers’ business leaders and government officials spent Monday and Tuesday speaking on how Islamic financial principles can help combat poverty and alleviate poverty in Africa.
President Uhuru Kenyatta is hosting two leaders of Africa’s Ieading economies, Muhammadu Buhari of Nigeria and Abdel Fattah el-Sisi of Egypt. These visits are to be viewed within the prism of Uhuru’s broader strategy of economic, trade, and cross-cultural bridgebuilding. They underline his growing clout not just in trade and commerce, but also in the cut-throat arena of global geopolitics and nuanced national interests. The booming African Islamic economy provides an opportune vehicle to ameliorate the deprived conditions and lack of economic opportunity. It is a perfect fit for our infrastructure financing needs. Uhuru signed three agreements and four MoUs to promote trade between Kenya and Nigeria in June 2014 – on Trade and Agricultural cooperation, immigration and drug trafficking. A Joint Business Council was formed.
MicroDahab MFI, the microfinance subsidiary and corporate social responsibility initiative of the United Arab Emirates-based conglomerate Dahabshiil Group; and SolarGen Technologies, a Somalia-based distributor of renewable energy technologies, have announced a joint energy project in Somalia. The project will allow low-income Somali farmers and entrepreneurs to acquire a “solar-powered water pump” under a “lease to purchase” agreement. The African Enterprise Challenge Fund (AECF), a Kenya-based fund that promotes for-profit enterprises operating in Africa, has provided unspecified support to the initiative. MicroDahab will bear both the capital cost and risk of asset ownership, while its clients reap the benefits of using the water pumps, at minimal rents.
Customers wanting assurances their investments “will not be channelled into the typical sin industries” is one of the reasons cited for a growth in demand for Islamic finance in South Africa. That’s according to Amman Muhammad‚ the FNB Islamic Banking’s CEO. Over the last few years‚ the bank has seen a consistent rise in the number of South African citizens‚ irrespective of faith‚ who have approached them for various Islamic banking services such as investment accounts‚ vehicle and property finance, he stated. Muhammad said that personal principles are starting to influence the type of banking solutions people choose.
The United Nations Environment Programme (UNEP) and the Islamic Development Bank (IDB) today agreed on wide-ranging cooperation on environmental conservation in support of sustainable development and the fight against climate change. The Memorandum of Understanding, set to run until June 2018 initially, covers objectives common to the two organizations in the areas of climate change, agriculture and food security, eco-innovation and green economy, and Islamic finance. Capacity building in member countries in all these thematic areas will be supported. The overarching goal is to facilitate the implementation of both the 2030 Agenda for Sustainable Development and the Paris Agreement on climate change.
Togo has reportedly signed three funding agreements worth 194 million U.S. dollars with the Islamic Development Bank (IDB). The agreements were signed Wednesday in Jeddah during the visit to Saudi Arabia by Togolese President Faure Gnassingbe. The first agreement worth around 131 million U.S. dollars concerns the construction of Adoua-Kara road which links five regions in Togo. Its completion will enable Burkina Faso to have direct access to Lome port. The second funding agreement will go towards improving and expanding access to basic education as well as supporting concerned institutions. The third agreement concerns the energy sector. It will see 46 million dollars spent on electrification of 43 villages in northern Togo.
As the pressure on federal revenue mounts following steady decline in oil revenue, the Federal Government would be resorting to a Sukuk Bond for funding the widening budget deficit. The Debt Management Office, DMO, and Securities and Exchange Commission, SEC, are collaborating in an effort to issue the Nigerian sovereign Islamic bonds this year.Details of the expected revenue from the bond is not yet disclosed but officials said they expect significant bridging of the 2016 budget deficit which has exceeded the initial N2.2 trillion estimate. According to DMO issuing a sovereign Sukuk will attract significant amounts of affordable capital from the Gulf countries and other established Islamic markets around the world into Nigeria.
Nigeria's debt management office (DMO) and capital market regulator have agreed to collaborate on a debut issuance of sovereign Islamic bonds (sukuk) before the end of the year, the two bodies said. The move could spur wider issuance of sukuk in one of Africa's most liquid debt markets, following similar sovereign deals from Senegal and Ivory Coast. Issuing a sovereign sukuk will attract significant amounts of affordable capital from the Gulf countries and other established Islamic markets around the world into Nigeria, the DMO said in its statement on Wednesday. The statement did not give a potential size for a maiden sukuk deal, although the DMO is a regular issuer of five- and ten-year local-currency bonds.
Emir of Kano, Muhammad Sanusi II, has said Islamic Banking institution can revitalise the troubled Nigerian economy if well adopted. According to him, one of the major benefits of the system is to reduce poverty. He spoke yesterday at the Third Annual Holiday Convention of the Guild of Muslim Professionals (GMP) at the Administrative Staff College of Nigeria (ASCON), Topo, Badagry in Lagos State. The former Central Bank of Nigeria (CBN) Governor, who disclosed that non-Muslim countries including Cote d’Voire, Senegal and Gambia are picking interest in the Sukuk, the Islamic banking system, also called for increased awareness on the Islamic Banking system. He urged scholars to avail themselves of the opportunity of the training sessions organised by the Central Bank of Nigeria.
Financial inclusion in Uganda is expected to deepen following a move by Parliament to enact a new financial law hence paving way for Islamic banking in the country. The legislators passed the Financial Institutions (amendment) Bill 2015 on Jan.7, a decision that will see individuals who had been locked out of mainstream banking by virtue of their faith or religious affiliation able to access financial services with less hindrance, once signed into law. The law will also allow financial institutions to roll out agency banking as well as offer ‘bancassurance’ products. According to Bank of Uganda data, the country’s bank account holders stand at just four million — mainly from the urban areas — out of the bankable population of about 12 million people.
Plus de 67 milliards de Fcfa mobilisés hors Uemoa (45%), 55 milliards F cfa mobilisés en Côte d’Ivoire (37%) et 26 milliards de Fcfa dans l’espace Uemoa (17%). C’est le résultat de la première tranche de la levée de fonds sur la finance islamique, dénommée « Sukuk Etat de Côte d’Ivoire 5,75% 2015-2020 ». Lancée en novembre 2015, sous la présidence du Premier ministre Daniel Kablan Duncan, le Sukuk qui s’inscrit dans un programme quinquennal pour un montant de 300 milliards Fcfa, est repartie en deux phases de 150 milliards chacune. Arrangée par la Société islamique de développement (Sid), cette levée de fonds, qui affiche un titre minimum de 10.000 Fcfa pour un taux d’intérêt de 5,75% l’an, a permis à la Côte d’Ivoire d’être primée « Sukuk deal of the year » et « Africa deal of the year » par le journal Islamic Finance News.
Ivory Coast offers inaugural CFA 150 billion Sukuk. The Sukuk is an amortising Sukuk al-Ijara and is targeted at local banks and institutional investors. It mirrors the Senegal Sukuk that Hogan Lovells advised on in 2014. Hogan Lovells' team was led by Global Head of Islamic Finance, Rahail Ali and Partner Imran Mufti. They were assisted by Partner Baptiste Gelpi, International Debt Capital Markets, Paris and Lina Bugaighis, Dubai. Hogan Lovells worked togehter with ICD for the issue. Imran Mufti commented that more sukuk from African issuers are expected in the near future. Zaky Sow, Sukuk Project Manager for ICD added that the Sukuk opens up a whole new stream of investment into the country.
Hogan Lovells has advised the Islamic Corporation for the Development of the Private Sector (ICD), as arranger, on the inaugural CFA150 Billion sukuk offering by the Government of Côte d'Ivoire. The sukuk is an amortising sukuk al-ijara and is targeted at local banks and institutional investors. It mirrors the successful Senegal sukuk that Hogan Lovells advised on in 2014. Hogan Lovells' team was led by Global Head of Islamic Finance, Rahail Ali and Partner Imran Mufti. They were assisted by Partner Baptiste Gelpi, International Debt Capital Markets, Paris and Lina Bugaighis, Dubai. Hogan Lovells is an international legal practice that includes Hogan Lovells International LLP, Hogan Lovells US LLP and their affiliated businesses.
Al Baraka Banking Group (ABG) has announced that Islamic International Rating Agency (IIRA) has assigned national scale investment grade credit ratings of 'A- (SD)/A-2 (SD)' (A Minus/A Two) to Al Baraka Bank Sudan (ABBS or 'the bank'), its majority owned subsidiary in Sudan operating since 1984. Outlook on the assigned rating is 'Stable'. IIRA observed that ABBS maintains sizable liquid reserves, with solid liquidity and that asset quality indicators have improved and are better than the banking sector average. The bank achieved a general improvement in profitability, driven by consistent increase in gross revenue supported by low cost of deposit funding. The rating has taken into account the various economic and financial challenges faced by banks in Sudan.
Islamic International Rating Agency (IIRA) has assigned national scale credit ratings of 'A- (SD)/A-2 (SD)' (Single A Minus/A Two) to Al Baraka Bank Sudan (ABS). Outlook on the assigned rating is 'Stable'. Ratings derive strength from the bank's franchise and an overall conservative approach to business. Its retail presence in Sudan, is reflected in a cost effective deposit base. Ratings take into account the various economic and financial challenges faced by banks in Sudan. ABS derives strategic guidance from its parent's international experience and established banking processes and systems. The fiduciary score has been assessed in the range of '71-75', whereby rights of various stakeholders are adequately defined.
Islamic International Rating Agency (IIRA) has assigned national scale credit ratings of ‘A- (SD)/A-2 (SD)’ (Single A Minus/A Two) to Al Baraka Bank Sudan (ABS). Outlook on the assigned rating is ‘Stable’. Ratings derive strength from the bank’s franchise and an overall conservative approach to business. While impairment is high in absolute terms, overall asset quality indicators have improved on a timeline basis. The bank features general improvement in profitability, with revenues growing consistently. Capitalization levels remain notably higher than the minimum required and industry average. However, given risks in the general environment, reinforcement of capital as envisaged under the bank’s strategy would strengthen its risk profile and support future balance sheet growth.
Africa is expected to see a massive population boom, many of whom will grow up Islamic. As such, demand for Islamic products and services on the continent are expected to rise in the coming years. Financing projects through Islamic financial instruments has massive potential within the African region. One such instrument is sukuk. This is beneficial to projects that require long term financing. These opportunities are not only for delivering Sharia-compliant goods and services to the Muslim population. Even in countries with a low proportion of Muslims, the values and principles of Islamic financing—such as investment products that avoid alcohol or gambling, and no-interest lending—appeal to investors seeking ethical schemes or banking customers seeking alternative products.
Chairman, JAIZ Bank, Alhaji Umaru Abdul Mutallab has denied that the institution is distressed and called for more players in the Islamic banking system in a bid to compete favourably in Nigeria’s financial sector. He made the call in Kaduna while donating cash and non-food items to two foundations by the JAIZ Foundation, saying the bank’s deposit base was increasing astronomically. Engr. Garba Muhammad, Mutallab disclaimed text messages in circulation that the bank was in trouble and assured that it was growing day by day. The bank has recently got approval in principle for a national licence to operate in all regions of Nigeria, he added.
The Dubai Chamber of Commerce and Industry recently commissioned a study on the opportunities for Gulf investors in the African market. The research, conducted by the Economist Intelligence Unit (EIU), revealed growing commercial interests between the regions. While trade between the Gulf Co-operation Council (GCC) and Africa remains modest, foreign direct investment (FDI) is growing. For example, a number of African multinationals have set up their headquarters in Dubai, such as Mara Group and Atlantic Holdings. On the other side, the EIU’s research shows that between 2005 and 2014 Gulf firms injected at least US$9.3bn in FDI into sub-Saharan Africa, with a further $2.7bn in the first half of 2015 alone.
Nigerian financial operators have identified Sukuk Islamic bond as a major tool that can be used in closing the country’s gap on infrastructural deficit. Raising from the two days 2nd international conference on Islamic Finance which opened on the 30th Nov and closed 1st of Dec 2015 in Abuja, financial experts from the country’s public and private sector having exhaustively deliberated with their international global counter parts, resolved to urgently turn up the volume on enlightenment campaigns so as to create the required awareness to investors and operators on the potentials of Sukuk.