IslamicFinance.de

A study by the Dubai Chamber of Commerce and Industry , has revealed that Gulf entities have provided at least US$30bn of funding, at current prices, to African infrastructure over the past decade. This amounts to between 7% and 10% of total inflows, of which approximately US$15bn in loans and grants from Gulf development agencies and approximately US$15bn in direct investments. The study also revealed that Gulf funding for African infrastructure has focused on North Africa. To date, there has been relatively little Gulf investment in the continent's fast-growing economies of Angola, Ethiopia and Nigeria which have attracted funding from other parts of the world.

For Islamic banking in Africa, the potential pool of customers is vast while the significant liquidity available within Islamic finance presents an ideal source of funding for Africa's huge infrastructure needs. Despite this evident potential, however, standalone Islamic banks are still comparatively rare across the continent. This is a consequence of the logistical difficulties and high-risk involved in setting up a new bank in Africa, together with the strict regulations involved in offering a Shari'ah-compliant solution, which have presented a double barrier to start-up Islamic banks in the continent. Offering an Islamic solution within an existing bank is a lower-risk way to access Africa's market potential.

With the growing size of private wealth in the Gulf, maximizing the returns on this wealth is today's most pressing need and challenge. This has triggered fierce competition among wealth management firms. Private wealth management services delivered to high-net-worth investors include advice on the use of various estate planning vehicles, business-succession or stock-option planning, and occasional use of hedging derivatives for large blocks of stock. The recent report issued by Boston Consulting Group (BCG) titled "Global Wealth 2014: Riding a Wave of Growth" said private wealth in the region will reach $7.2 trillion by the end of 2018, approximately a 3.6 per cent share of total global wealth.

Kuwait Finance House (KFH) has announced that the newly appointed Chief Executive Officer (CEO), Mazin Saad Al-Nahedh will officially commence his duties as of October 1st 2014 after having obtained the required regulatory approvals. Mazin Al-Nahedh has over 21 years of diversified banking experience and is a graduate of Business Administration (Finance) from the University of California USA. Before holding his position at KFH, Al-Nahedh served as Group General Manager - Treasury, General Manager - Corporate Banking Group, and Retail Banking General Manager at the National Bank of Kuwait (NBK). The appointment is in line with KFH's Board of Directors' directives and strategies towards improving business models, while paving the way for a younger generation of Kuwaiti professionals to hold leading positions at KFH.

The Islamic International Rating Agency (IIRA) has assigned international scale credit ratings to Gulf Finance House (GFH) at 'BB' (Double B) in the medium to long-term and at 'B' (Single B) in the short-term. On the national scale, ratings have been assessed at BB+/B (Double B Plus / Single B). The rating outlook for the Bank has been assessed as 'Positive'. IIRA has assessed the rating outlook for the institution as 'Positive' that hinges on developing a steady stream of core revenues and sustaining improvements to capital structure. The fiduciary score has been assessed in the range of '61-65'. Certain weaknesses of the bank's governance framework have been identified that require to be addressed.

The Thomson Reuters Global Sukuk Index is at 114.57474 points, down from 114.88023 at the end of last month but up from 109.78969 at the end of last year. The Thomson Reuters Investment Grade Sukuk Index is at 112.19700 points, against 112.59309 at end-August and 107.28036 at the end of 2013. Some of the sukuk issues in the global pipeline are the following: Turkiye Finans Katilim Bankasi plans to issue $50 million worth of ringgit-denominated sukuk in Malaysia by year-end. Luxembourg planned to meet fixed income investors starting on Sept. 21 ahead of a debut issue of five-year euro-denominated sukuk. The government of Oman is expected to issue 200 million rials ($520 million) of sukuk early next year.

Competitive pricing, product innovation and deeper liquidity have made Shariah-principled finance increasingly appealing as a funding source in the global financial industry, according to QInvest head of financial institutions and structured finance, Alex Armstrong. Finding that several issuers from outside the Islamic world - including the Hong Kong Monetary Authority and the UK government - have successfully raised funding through sukuk or Islamic bonds in recent months, he said, others are expected to follow suit. Investor demand for Islamic products is strong and QInvest fully expects demand to exceed supply for some time to come, he added.

Standard Bank has acted as Joint Lead Manager on the National Treasury of South Africa's debut Sukuk in the international capital markets. The US$500m 5.75-year Sukuk is the largest Sukuk issuance from Sub-Saharan Africa and only the third Sukuk to be issued by a non-Islamic country. The Sukuk will be used to fund South Africa's National Revenue Fund. It also creates a benchmark for the market which will assist state-owned companies to access diversified sources of funding from Islamic investors. The Sukuk is based on the Ijara principle.

The National Bank of Abu Dhabi (NBAD) has launched the NBAD Shariah MENA Dividend Leader Fund, which invests in dividend-paying companies traded on MENA equities markets. The Fund is inspired by and modeled after NBAD MENA Dividend Leader Fund (MDL) which was recently voted Newcomer Fund of the Year 2013 by Zawya. The NBAD Shariah MENA Dividend Leader Fund will invest in bourses of Saudi Arabia, UAE, Qatar, Oman, Kuwait, Egypt, Jordan, Morocco and Tunisia. The Fund is actively managed by the Equity desk of NBAD 's Asset Management Group. NBAD Shariah MENA Dividend Leader Fund is UCITS IV compliant - regulated by the Central Bank of Ireland. Northern Trust Group acts as the Fund's administrator and custodian.

Dubai, Kuala Lumpur and even London aspire to be hubs for Islamic finance, but Bahrain still has a strong and respected role in this sector. The International Islamic Liquidity Management Corporation has put in place sound standards for a global liquidity management platform. There have been significant developments, like the successful restructuring of a number of Islamic wholesale and retail banks, including Venture Capital Bank, GFH, Bank Alkhair and Bahrain Islamic Bank, which were badly affected by the global financial crisis of 2008. In the coming years, more momentum in the area of real estate funds is expected to take place.

Tanzania has big potential for Islamic Finance and could be the Islamic banking hub for east African countries, Muhammad Zubair Mughal, the Chief Executive Officer of AlHuda Center of Islamic Banking and Economics said during the concluding ceremony of "African Islamic Banking and Finance Road show". This road show was conducted in 6 African Countries for the Promotion of Islamic Finance on the African continent. He stated that Islamic finance is not only taking root in North African countries e.g. Tunisia, Morocco and Algeria etc, as potential exists in all African countries. Islamic Banking and Finance is growing rapidly in Nigeria, Libya, South Africa, Kenya and Morocco, while Egypt, Sudan, Tanzania, Tunisia have already taken good initiatives in the mentioned field.

Qatar has expressed its willingness to set up an Islamic bank in Tajikistan, which would be the first Shariah-based financial institution in the Central Asian country. The establishment of a full-fledged Islamic bank under Qatari-Tajikistan partnership was discussed when Ezdan Holding chairman Sheikh Dr Khalid bin Thani bin Abdullah al-Thani called on Tajikistan President Emomalii Rahmon in the country's capital Dushanbe last week. Sheikh Dr Khalid said the Qatari business community was viewing the Tajikistan market with great interest and willing to invest in the country, besides sharing its knowledge and expertise with local businessmen in different sectors, particularly Islamic banking. He termed as "extremely positive", the Tajikistan government's decision to enact necessary legislation required for Islamic banking.

As the bank will be soon marking its first year of operations, Alizz Islamic Bank's performance has been in line that of other Islamic banks operating in Oman. Alizz Islamic Bank last week signed an MoU with Pride Home and Max Electronics (Home Centre & Emax) for personal asset finance (goods murabaha) services. As a result of this MoU, Alizz Islamic Bank will be a preferred Islamic banking financier for personal asset finance, encompassing both home furniture buyers and electronic retail and corporate buyers. All account holders will be entitled to home finance at Home Centre and Emax at an interest rate of 5.25 per cent, on purchase of good worth over RO 1,000. Besides, the bank also plans to have agreements with hospitals and travel agencies and this is the first step in this direction.

Tanzania has big potential for Islamic Finance and could be the Islamic Banking hub for east African countries, Muhammad Zubair Mughal, Chief Executive Officer of AlHuda Center of Islamic Banking and Economics said during the concluding ceremony of "African Islamic Banking and Finance Road show". This road show was conducted in 6 African countries to promote Islamic Finance on the African continent. He stated that Islamic finance is not only taking root in North African countries, as potential exists in all African countries. Islamic Banking and Finance is growing rapidly in Nigeria, Libya, South Africa, Kenya and Morocco, as well as Egypt, Sudan, Tanzania, Tunisia. The total volume of Islamic finance in Africa is an estimated 78 Billion USD, which is less than 5% share of the global Islamic finance industry.

The Islamic Corporation for the Development of the Private Sector ( ICD ) and Perbadanan Tabung Amanah Islam Brunei (Perbadanan TAIB), signed a memorandum of understanding to explore the launch of a Shariah- compliant leasing/Ijarah business in Brunei Darussalam. The Partnership plans a number of other COLLABORATIONS with the support of the Ijarah Management Company (IMC). Established in November 2011, IMC has successfully managed to set up and operate more than eight leasing companies globally including CIS, MENA and West Africa countries.

Islamic financial institutions (FIs) drove the Malaysian bond and sukuk markets in 1H 2014. With AmIslamic Bank paving the way with the issuance of the world's first Basel III-compliant Tier-2 Sukuk Murabahah in February, a host of RAM-rated Malaysian Islamic FIs - such as Maybank Islamic, Public Islamic Bank and Hong Leong Islamic Bank - have been tapping the domestic sukuk market for very competitively priced funding. Driven by this, the Malaysian bond market remained focused on Islamic finance in 1H 2014, with a strong showing in sukuk issuance- representing 73% of the overall corporate bond market in the same period - grossing RM42.2 billion of new issues.

About four-fifths of Middle-Eastern businesses are seeking external finance, while three in five have previously offered equity in their business to external investors, according to a new KPMG International survey. The survey found that in Qatar, banks are willing to lend to family businesses; however, the report identifies that High Net Worth Individuals (HNWIs) are an untapped resource in the region. Survey results show that the top priorities of HNWIs and Family Owned Businesses align. However, it seems the biggest challenge to family businesses in the Middle East is the thorny issue of management interference. All Middle East respondents felt that HNWIs would get heavily involved in management decisions.

On 24 July, under the auspices of the Prime Minister Dr Abdullah Ensour, Jordan officially inaugurated regulations for the issuance of Sukuk. The inauguration ceremony was organized by the Jordan Securities Commission ( JSC ) and followed its conclusion of the preparation of all legislation and instructions required by the Islamic Finance Sukuk Law No. 30/2012 and legislation governing the issuance process of Sukuk for all economic activities in both the public and private sectors alike. Available structures include Ijara, Mudaraba and Musharaka. The Central Bank of Jordan (CBJ) is a regular player in the bonds market. A clear signal to local financiers and corporates would be an Islamic issuance by the CBJ, now that the legal framework is in place.

Egypt's Wethaq Takaful Insurance has purchased EGP 17 million worth of investment certificates to fund the new waterway along the Suez Canal, said General Manager of Financial and Administration Affairs Abd El Aziz Labib. Labib referred to the Suez Canal investment certificate as a guaranteed saving pool, at an interest rate of 12%, which is higher than those invested in the Treasury bill and bonds. Furthermore, the Egyptian official said Wethaq Takaful's portfolio of total investments reached EGP 230 million by end of last fiscal year 2013/2014. The company plans to boost its investment portfolio to EGP 250 million by end of the current fiscal year.

MARC has assigned a final rating of AIS to Bank Muamalat Malaysia's Islamic Senior Notes Programme (Senior Sukuk) of up to RM2.0 billion under the Islamic principle of Wakalah Bi Al-Istithmar with a stable outlook. Upon review of the final documentation of the Senior Sukuk, MARC is satisfied that the terms and conditions of the Senior Sukuk have not changed in any material way from the draft documents on which the earlier preliminary rating of AIS was based. The full details on the assigned rating have been provided in Bank Muamalat's preliminary rating announcement on June 24, 2014 which can be accessed at www.marc.com.my.