IslamicFinance.de

The crucial role of Islamic finance in financing China’s Belt and Road Initiative (BRI) pays homage to the Silk Road and symbiotic relationship between China and the Islamic world prior the 15th Century. Rightfully so, as BRI is the 21st Century’s New Silk Road. Introduced in 2013 by Chinese President Xi Jinping, BRI consists of overland roads and railway systems – The Belt – and maritime highways – The Road. It allows the seamless and efficient transportation of people, natural resources, products, and capital to flow to and from mainland China. The sheer magnitude of BRI finds itself in its financing. A crucial role exists for Islamic financial institutions due to the emerging market of the Middle East, Africa, and South-Asia (MEASA). Jiang Xiheng, Vice President at the China Center for International Knowledge on Development (CIKD), stated the importance of having the United Arab Emirates as a partner in BRI.

The Islamic Corporation for the Development of the Private Sector (ICD) is planning to increase its activities in Africa to widen the appeal of Islamic finance across the region. ICD chief executive Khaled Al-Aboodi said the ICD was helping develop Islamic finance channels, that is Islamic banks, investment and ijara companies, takaful and retakaful firms. Africa represents around 12% of the ICD’s cumulative investment approvals and this figure is expected to rise in coming years. Some of the projects will be led by Senegal-based Tamweel Africa, jointly owned by the ICD and Turkey’s Bank Asya. Tamweel already holds stakes in Islamic banks in Senegal, Niger, Guinea and Mauritania. Further Islamic banks will be established in Benin, Mali and Chad. In Tunisia, the ICD has teamed up with the newly created sovereign wealth fund, Caisse de Dépôts de Tunisie, to set up a $30 million (R315m) fund to support businesses. The ICD also hoped to improve access to sharia-compliant financing for small and medium-sized enterprises (SMEs) across Muslim countries, Al-Aboodi said.

South African power utility Eskom will look at new funding opportunities such as Islamic bonds to finance its capacity expansion projects. A lower than hoped for rise in power rates has left state-owned Eskom with an expected revenue gap of 225 billion rand ($22 billion) over the next five years. The associated decrease in projected revenues will materially affect operations, including ability to obtain funding for future capacity expansión. Funding for the next 12 to 18 months would be sourced from issuance of domestic and international bonds, export credit agency-backed financing, development finance institutions and the domestic commercial paper market. New opportunities from alternative funding sources and products such as Islamic funding (sukuk), preference share-type funding and project-based funding will also be explored.

Barclays and Absa maintain their interest in Africa as a target for Islamic insurance. There are plans to introduce the Takaful offering to the African continent. With a Muslim population of over 500 million, Africa represents a very good market perspective. The experience of Barclays and Absa in Africa shall be used in order to provide financial products that are suitable for each country.

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ALBARAKA Bank in South Africa was keen to list on the Johannesburg Stock Exchange, JSE, and would probably do so by the end of next year, Adnan Ahmed Yousif, the chairman said.

Al Baraka Banking Group (ABG), the parent company, is listed in Jordan, Bahrain, Egypt and Sudan.