IslamicFinance.de

Bitcoin (https://bitcoin.org) started to make the idea of a cryptocurrency popular. What is missing so far is an intense discussion among Sharia scholars.

What makes Bitcoin unique is, that it is a) created by a computer program b) that it is created and verified by a decentralised process, the so-called 'Blockchain' technology (https://en.wikipedia.org/wiki/Block_chain_(database)), which is solving a practical problem for the first time: To enable trust and accounting without a central ledger, such as a central bank. c) that it faciliates payments quick, efficient and discreet - while the latter leads to accusation of misuse, e.g. for gaming, drugs, terror finance etc.

How it can be seen from an Islamic perspective is not widely discussed, despite it deserves the attention. What we find in search engines are some discussions and also an initiative, which calls itself a bank (https://bitcointalk.org/index.php?topic=21732.0).

Bahrain based Ibdar Bank together with Dubai-based Palma Holding received the African Aviation Awards' "Aircraft Finance Deal of the Year" for their successful structuring of a 12-year agreement for acquiring four brand new Bombardier Q400 Next Gen aircrafts and leasing them to the Ethiopian Airlines. The African Aviation Awards were introduced by African Aviation Magazine in 1999 in order to give International recognition to those individuals, companies and organisations who have made significant contributions to Aviation Development in Africa. Valued at USD 100 million, Ibdar Bank contributed as investor with USD 22 million, while an amount of USD 78 million was secured through a funding agreement with Canada's Export Credit Agency "EDC".

The International Chamber of Commerce Nigeria(ICCN) is set to admit about 11 new members at its 16th annual general meeting billed for Lagos this month. ICCN secretary-general, Mrs. Olubunmi Osuntuyi, said in a statement that the new members are: Anu Eso & Co., Enterprise Transport & Logistics Ltd., Heritage Banking Company Ltd., Jaiz Bank Plc., Nigerian-American Chamber of Commerce, Nigerian Ports Authority, Norfolk Partners, Onwuamaegbu & Co., Rand Merchant Bank Ltd., Sola Ephraim-Oluwanuga & Co. and Strachan Partners. The statement said the AGM which would be sponsored by Sterling Bank Plc would feature the traditional Post- AGM Talk to be delivered by Bismarck Rewane.

The Islamic Corporation for the Development of the Private Sector and the Government of Cote d’Ivoire are co-hosting the Islamic Finance Forum on 17-18 September 2015. The event aims at stimulating development of the local and international market of Islamic finance in Africa and particularly in Côte d’Ivoire in line with government’s National Development Plan 2016-2020 and to explore cross border trades between international investors and African nations through opportunities made available through Islamic finance. This invitation-only event is designed for the benefit of local and international market players to explore the development opportunities in Islamic finance both in the Cote d’Ivoire, locally and regionally.

Jaiz Bank Plc, has declared a profit of N157.7 million for the financial year ended December 2014. By this, the bank has broken even after three years of operations as the first and only fully fledged non-interest bank in Nigeria. Chairman of the bank, Dr Umaru Abdul Mutallab said the profit was a feat considering that there was no platform yet for the bank to make income from its treasury management activities due to the absence of Sharia complaint liquidity instruments in the market. He therefore called for a national Sukuk bond, that would give them a wider range of investment opportunities. Shareholders of the bank called on the management to work seriously towards recapitalising it to fast-track its expansion to other parts of the country.

The government of Mozambique plans to access funding from the Islamic Development Bank (IDB) to finance various investment projects of small and medium-sized enterprises, the Deputy Minister of Industry and Trade, Osmar Mitha said. Mithá said the IDB reacted positively to this request from Mozambique, but said the country still faces some obstacles, notably the introduction of some legal improvements. The IDB has applied at least US$300 million in various sectors in Mozambique since 1995, the year the country joined the financial group. Currently, there are 22 ongoing projects valued at more than US$160 million in sectors such as agriculture, education, health and water supply.

The annual meeting of the Islamic Development Bank began in the Mozambique capital of Maputo on Sunday that would consider a report on the Medium-Term Sukuk Program for which the bank had already allocated $10 billion. The meeting will also consider the progress made so far in the implementation of its member country partnership strategic program; 20 member countries have so far signed up with the bank. In line with the four day official event, various activities will be organized on Thursday, one of which is a private sector forum where Islamic Corporation for Insurance of Investments and Export Credits will present the importance of export credit and investment insurance in Africa.

There is an ample scope of Islamic banking and finance in western Africa and Senegal can play a vital role in elevating it through the countries. This was said by Muhammad Zubair Mughal, Chief Executive Officer AlHuda Centre of Islamic Banking and Economics (CIBE) while attending an international seminar on Takaful. Delegates from Senegal, Mali, Ivory Coast, Mauritania, Guinea and other countries of western Africa participated in the stated seminar. Mr. Mughal added that AlHuda CIBE has chalked down a robust strategy to promote Islamic banking and finance in West African countries. He announced that AlHuda CIBE with its strategic partner AAMAS Africa will organize an international conference on Islamic banking and finance in Dakar in December 2015.

Michael Gassner, Editor of IslamicFinance.de presented on the 3ème Congrès International de la Finance Islamique “Les Banques Islamiques et le Financement des Entreprises: Pratiques et enjeux théoriques” en Marrakech, 25/26 Mai 2015.

The presentation discussed that exponential growth of debt in Islamic finance is ruled out, nevertheless, debt and equity finance exists. The specific significance of equity finance (musharaka, mudaraba) lies in need for solid debt/equity ratio, as Muslims shall never die being in debt. Still Islamic banks barely provide any equity finance and the reason often given are moral hazard costs. This is denied as debt as well as equity has specific moral hazard problems, and if anything, even conventional banks would offer a mixture of debt and equity. Rather the assumed reason appears to be in the regulation (capital weight) and taxation (interest deductibility), which makes equity financing from a bank 2-4 times at least more expensive than debt finance, and thus not worth being offered.

The attached presentation is in French.

Absa Islamic Banking business has seen growth across South Africa and the continent in recent years. The appointment of Uwaiz Jassat as the head of Islamic Banking will further help the Group to achieve its goals regarding Islamic Banking. Uwaiz has been in an acting role heading up Islamic Banking since October 2013. In this time Islamic Banking has enjoyed growth with more than 120,000 customers across the continent. Uwaiz joined Absa in 2009 and held a number of roles in the financial services industry in prior years. Apart from his leadership of the Islamic Banking team he brings with him additional skills having founded Takaful South Africa – an Islamic insurance offering.

With expanding economies and hundreds of million Muslims, Africa deserves to be a bigger part of Islamic finance. After a slow start, there are signs the sector is beginning to gain the crucial mass and legislative backing it needs. Senegal's CFAFr 100 billion ($200 million) debut last June was Africa's biggest,ever sovereign sukuk, attracting both local and international buyers. South Africa followed in September with a $500 million 5.75-year deal that was only the third-ever sukuk issued by a non-Muslim majority country. Those in the industry argue that Africa's new-found visibility as a market for Islamic finance is long overdue.

Mozambique will next month host the annual meeting of the Jeddah-based Islamic Development Bank (IDB), an event which is expected to be attended by 700 delegates. It will take place on 8 and 11 next June. Eduardo Macuà¡cua, Deputy Executive Director of the Confederation of Economic Associations of Mozambique (CTA) said that the private sector in coordination with the Government, through the Investment Promotion Centre, is already preparing to not only participate in meeting but also, and above all, present projects and business opportunities that the country offers, and perhaps form partnerships. To this end, the CTA is organizing the Private Sector Forum on 8 June, which discusses the role of the private sector in the development of the IDB member countries, particularly those in Africa.

To contribute effectively to the financing of microfinance projects at the grassroots level, the CBOS has signed microfinance contracts with 15 microfinance institutions from the first installment with 50% of the loan of the Arab Fund for Economic and Social Development (AFESD) of a total $ 50 million used mostly for funding microfinance projects. This loan will be used in the rural projects that contribute to combat poverty among the economically active poor classes.The first phase will fund small and micro projects through 4 microfinance institutions providing funds for customers in the localities of Khartoum State and 11 other state institutions that provide finance for microfinance customers in most of the other States of the Sudan.

After a slow start, there are signs Islamic finance is beginning to gain the crucial mass and legislative backing it needs in Africa. Amid a surge in sovereign debuts in the sukuk market last year, one region – perhaps unexpectedly – featured prominently: Africa. First to the market was Senegal, the biggest economy in sub-Saharan Africa with a majority Muslim population after Sudan. Its CFAFr100 billion ($200 million) debut last June was Africa’s biggest-ever sovereign sukuk, attracting both local and international buyers. South Africa followed in September with a $500 million 5.75-year deal that was only the third-ever sukuk issued by a non-Muslim majority country, according to Standard Bank, one of the lead managers.

Kenya's regulator has introduced new takaful rules which will allow the entry of conventional players into the sector. The rules will come into effect in June with firms required to adhere to the requirements by December, according to a document from Kenya's Insurance Regulatory Authority. This would see Kenya join the countries such as Pakistan and Indonesia in allowing takaful windows. Kenya's first full-fledged takaful firm was launched in 2011, Takaful Insurance of Africa. Islamic lender First Community Bank also operates a takaful scheme while Kenya Reinsurance Corp has developed a sharia-compliant reinsurance product of its own.

Kenya's regulator has introduced new takaful rules which will allow the entry of conventional players into the sector. The rules will come into effect in June with firms required to adhere to the requirements by December, according to a document from Kenya's Insurance Regulatory Authority. This would see Kenya allowing takaful windows, which enable firms to offer sharia-compliant and conventional products side by side. The rules require separate financial reporting requirements for takaful windows from their parent firm, and their operating model must be approved by a board of religious scholars. Operators must also maintain separate takaful funds for their general and life businesses.

President of the Nasrul-Lahi-L-Fatih Society of Nigeria (NASFAT), Abdulahi Yomi Bolarinwa, speaks on how uneducated many Nigerians are on Islamic banking, resulting in uninformed comments on the financial practice. About his expectations from the incoming administration, he said the incoming government should work hard to improve the economy. The government should retool whatever Nigeria has in the power supply, work on its oil industry and explore other sources of income so that the country does not depend on one product - oil. NASFAT recently celebrated its 20th anniversary. The organisation teaches Nigerians to respect other religions and live in peace.

Professor Shehu Usman Rano Aliyu, Director of the International Institute of Islamic Banking and Finance at Bayero University, Nigeria stated Islamic banking and finance is the best option for tackling challenges faced by the Nigerian economy. Meanwhile, Usman Hassan, CEO of Jaiz Bank, urged the Nigerian government to take a closer look at sovereign sukuk issuances to fund infrastructure projects. He stated that sukuk were very apt for Nigeria, as there are no failed projects and the financier (investor) will not allow abuse. He urged to government to look at the structure of sukuk to see how it can be of benefit to the economy as a source of FDI from a new diverse investor base.

Bill Gross, well known fixed income fund manager twittered (https://twitter.com/januscapital/status/590519759797530624) and moved markets with his idea to sell German sovereign bonds short (selling without having them) to buy them back later cheaper. He called it "The Short of a lifetime"; the only issue would be the "timing"...

Interest rates will be once raising again but will short seller stay solvent long enough to benefit? The German economy is doing fine, but other EURO zone countries do not perform as well and need low interest rates for a prolonged period of time. Japan has so far not convincingly ended their easy money policy.

A forensic audit of Nigeria’s state oil firm released on Monday confirmed the accusation by Emir Muhammed Sanusi that the NNPC withheld about $20 billion that it ought to have remitted to the national treasury. The report ordered released by President Goodluck Jonathan, more than two months after it was submitted by PriceWaterHouseCoopers confirmed that the NNPC illegally expended $18.53 billion on operational costs, kerosene and petrol subsidies, without authorisation from the National Assembly. Part of the money was also withheld by an NNPC subsidiary, without National Assembly authorisation.