IslamicFinance.de

The introduction of Islamic finance could be boon to development in Africa, say experts. Beyond the religious aspect, Islamic finance has been identified by many experts as a way to avoid the risks associated with speculation. Global ratings agency Standard & Poor’s (S&P) said in a recent report that new regulations and fiscal incentives could accelerate Islamic finance development in Africa, which could help the continent fund its infrastructural needs. Aware of the challenges, the African Institute of Islamic Finance has launched several initiatives aimed at developing the Islamic Finance sector. Besides, Ivory Coast is about to issue its first Sukuk in the amount of 350 billion CFA francs (roughly $700 million) with the support of the IDB.

La Cote d’Ivoire s’apprête, après l’Afrique du sud et le Sénégal, à souscrire son premier emprunt obligataire (Sukuk) en vue de mobiliser 350 milliards de FCFA (environ 534 millions d’euros). Le pays compte sur l’appui de la Banque Islamique de Développement (BID). En Côte d’Ivoire, le gouvernement travaille, en partenariat avec la Société islamique pour le développement du secteur privé (Sid), à l’élaboration d’un programme quinquennal de mobilisation de ressources sous forme de Sukuk. La première émission est prévue pour fin 2015.

Africa's strong demand for Islamic financial services and products was highlighted in the inaugural Africa Finance Forum 2015 held in Abidjan. Recent developments have seen African governments focusing more on creating a more enabling environment for sukuk issuances. Those that have not tapped into the sector have expressed keen interest in the market for infrastructure financing with legal frameworks underway to promote sukuk issuances. Although the Islamic financial services industry in Africa is currently dominated by the banking and sukuk segments, growth potential remains in the asset management and Islamic insurance. However, financial inclusion still remains the greatest challenge.

The Islamic Development Bank is set to invest $98 million (N19.5bn) in the educational project which will be implemented in nine Nigerian states. Ahmad Ali, who led the bank executives to host the meeting with the Emir of Kano on Saturday, September 19, in Saudi Arabia, said that this project had been successful in Niger and Chad republics where the Madrasa and Quranic schools were worked upon in such a way that it facilitated the graduates of the schools to enrol in public schools. The establishment of this program will help Nigeria overcome some of its education challenges like illiteracy. He said the board of the bank has approved the investment and is awaiting the final approval from Nigerian authorities.

Several African sub-regional central banks Monday commenced a two-day seminar in Banjul on building Islamic finance in Gambia. The forum, held at the Ocean Bay Hotel in Bakau, brought together participants from Nigeria, Malaysia, Sierra Leone and Gambia. In his opening statement, Abdoulie Jallow, permanent secretary at the Ministry of Finance and Economic Affairs, said the forum is the final activity of the project titled “Enhancing financial literacy and capacity building on Islamic instruments”. The project is funded by the Committee for Economic and Commercial Cooperation (COMCEC) of the Organisation of Islamic Cooperation (OIC).

Nasarawa State governor,Tanko Al-Makura has appealed to the chairman, JAIZ Bank for the establishment of the bank in the state. The governor made the appeal in Lafia when he received a delegation of the bank led by its chairman, Dr. Umar Abdumutallab at the Government House. Al-Makura explained that the benefits of establishing JAIZ Bank in the state are enormous and capable of turning around the economic fortunes of the citizenry. Earlier, the chairman of the bank, Dr. Abdumutallab assured the governor that the bank would establish branches in Nasarawa State.

Islamic Finance is an ideal tool of financial inclusion and can address the poverty issues in East Africa effectively, according to Mr. Zubair Mughal, the Chief Executive Officer of AlHuda Center of Islamic Banking and Economics (CIBE). He was addressing a gathering of the banking and financial industry of Tanzania in Dar es Salaam during an Islamic Banking and Finance event. The overall objective of the event was to create awareness, knowledge development and sharing the best practices of Islamic Banking and Finance with local financial market, so that the Tanzanian Islamic financial market could be established with solid footing using Shariah & technical expertise as concrete.

Africa Finance Corporation (AFC) has announced its acceptance of a US$50 million 15 year line of financing, with a 13 year six month repayment period, from the Islamic Development Bank (IDB). The funds will be used to finance projects located across the numerous African IDB member countries. The projects will be structured in a way that is compliant with Islamic Finance, focusing particularly on infrastructural and agricultural projects that promote the economic and social development of the communities concerned. AFC’s agreement with the IDB also establishes an intercontinental relationship, which may lead to further collaboration between African and Middle Eastern institutions in the future.

With the age-old funding challenges that Small, Medium scale Enterprises (SMEs) have to contend with and the steady ascendancy of non-interest banking, analysts x-ray the possibility of Islamic banking bridging the funding gap in the SME sector, writes Olaseni Durojaiye. Reacting to enquiries on capital markets as a source of access to fund by SMEs, Chief Executive Officer of Global Analytics Derivatives, Tope Fasua, had contended that the Nigeria Capital Market was not accustomed to providing financing for SMEs at the present and argued that this may be due to issues bordering on sharp practices on the part of some of the listed corporation and companies in the bourse.

Rating agency Standard and Poor's says regulation and fiscal incentives could speed Islamic finance development in Africa. The report further noted that African sovereigns have issued only about $1 billion of Sukuk instruments, compared with global Sukuk issuance of an average $100 billion per year over the past five years. Samira Mensah, an associate director at Standard and Poor's joins CNBC Africa to share more insight on this report. Watch the video on http://www.cnbcafrica.com/video/?bctid=4413568917001#.

Legislation gaps are really challenging African countries’ intent to effectively issue the sukuk, which could help fund the continent’s huge infrastructure needs, Standard & Poor’s credit rating agency said on Thursday, in a new report. To date, African sovereigns have issued just about $1 billion of sukuk instruments, compared with global sukuk issuance of an average $100 billion per year over the past five years, says S&P. In Nigeria, Osun State has issued a N10 billion ($51m) sukuk yielding 14.75 percent, the first and currently the only Islamic bond from the Africa’s largest economy. S&P believes that regulations and fiscal incentives could speed Islamic Finance Development on the continent.

Seychelles-based BMI Offshore Bank (BMIO), partly owned by BMI Bank Bahrain, is being converted into a Sharia-compliant bank, it has emerged. This follows a visit to Seychelles by a delegation from BMI Bank, a subsidiary of Al Salam Bank-Bahrain (ASBB), led by the parent’s executive committee chairman Hussein Mohammed Al Meeza along with a number of senior officials. The delegation called on Seychelles President James Alix Michel in the country’s capital Victoria. During the meeting, President Michel hailed initiatives undertaken by BMIO, in which BMI Bank owns a 50 per cent stake.

Nigeria’s Jaiz Bank has doled out N500 million to charity through its Jaiz Foundation. Mallam Ismail Adamu, the Group Head, Public Sector of the bank said that the bank had a capital base of N42 billion as of June, 2015 and a customer base of 139,977 with 73 per cent of them Christians. Adamu, who represented the bank’s Managing Director, Muhammad Nurul-Islam, said that the bank in 2014 made a profit of N157 million. He said that the bank renders several services ranging from Deposit, Mobile banking, Automated Teller Machine (ATM), Internet banking and other Islamic services, while all haram (Illegal) money’s are given out to charity through Jaiz Foundation.

Jaiz Bank Plc, the non-interest Islamic bank, is set to commence operations in Ibadan, Oyo State before the end of this year as it moves to expand its operations in the South West, according to the Group Head, Public Sector of the bank, Mallam Ismail Adamu. He said all documentation and other logistics to this end were already being put in place. Adamu said the bank made a profit of N157m in 2014 and gave out up to N500m in charity through an arm of the bank called JAIZ Foundation. Chairman of the Zonal Committee for the Operation, Alhaji Lasun Sanusi (SAN), said the bank was aware of the teething problems it would face, expressing optimism, however, it would survive because of the success it has so far recorded.

Ivory Coast will launch the first tranche of a previously announced Islamic bond programme this year, government spokesman Bruno Kone said on Wednesday. The local currency sukuk bond will be for 150 billion CFA francs ($252 million). In April, Ivory Coast announced that it would conduct a 300 billion CFA franc ($504 million) Islamic bond programme in two phases between 2015 and 2020. African countries are increasingly tapping the sukuk market for funding to take advantage of rising demand for Islamic paper among investors in the Middle East and southeast Asia.

It is proposed that the current legislation in respect of sukuk and murabaha financing will be extended to listed companies, within the 2015 Draft Taxation Laws Amendment Bill (TLAB) that South Africa's Ministry of Finance recently published for public comment. South African Sharia-compliant financing arrangements have been introduced in stages. Changes were made to the tax code to introduce sukuk bond financing arrangements, but these were restricted to the Government and public entities. This is now intended to be available to listed corporates from January 1, 2016. It is also proposed in the 2015 TLAB that it will be possible for listed companies (in addition to banks, as at present) to engage in murabaha financing.

The Bank of Zambia (BoZ) says it is working out modalities to roll out Islamic banking in the country after the central bank launched Islamic finance guidelines in 2013 to ensure strict adherence and compliance with the rules and principles of Sharia. BoZ governor Denny Kalyalya said the central bank is still doing some work on the Islamic banking. He noted that Islamic finance is a new way of doing business and a lot more needs to be done.
The BoZ has embarked on a process of developing a regulatory framework to facilitate the introduction of Islamic finance. The framework was reviewed by the Islamic Financial Services Board, which is the standard setting body in matters of Islamic finance.

A number of African countries have opted to issue sukuk, or Islamic bonds, as an alternative to raise funds for projects. Last year, South Africa became the first non-Muslim country in Sub-Saharan Africa to issue a sovereign sukuk. Valued at $500 million, it was readily taken up by Middle East investors. Gambia is a frequent issuer of local currency sukuk, while Senegal raised more than $200 million in a local currency Islamic bond last year to fund a number of infrastructure and energy projects. Deeper markets and a Middle-Eastern investor base more familiar with Africa should help to advance sub-Saharan Africa sukuk issuance in the nearer term.

Abu Dhabi Islamic Bank PJSC is considering entering markets in South East Asia and Africa to tap demand in countries with a large Muslim population. The bank has “looked closely” at Indonesia and Malaysia as well as Algeria, Morocco and Jordan, Chief Executive Officer Tirad Mahmoud stated. The bank may consider an acquisition next year as part of the plan, he said. ADIB in 2014 acquired the retail banking business of Barclays Plc in the U.A.E. for 650 million dirhams ($177 million). The bank was also among lenders that bid to buy the retail banking assets of Citigroup Inc. in Egypt this year, losing out to Commercial International Bank Egypt SAE last month. ADIB expects lending to grow by four percent to six percent this year, Mahmoud added.

Central Bank of Nigeria (CBN) has advised stakeholders in the financial services sector to adopt sustainable practices to strike a balance between economic development and the protection of the ecosystem. Speaking at a workshop on sustainable finance, CBN Governor, Mr. Godwin Emefiele, represented by his special adviser on sustainable banking, Dr. A'isha Usman Mahmood, tasked the stakeholders to include environmental protection in addition to maximising profit and returns on investments. The apex bank hinged its advice on the positive nexus between environmental, social management and improved economic performance, which it said were being keyed into by financial institutions worldwide.