Islamic Development Bank to support Africa sovereigns to diversify funding

The Islamic Development Bank (IDB) is actively involved in supporting African governments’ efforts to diversify funding through Islamic capital markets, according to Kodeidja Malle Diallo, director, group risk management department of IDB. n addition, the IDB Group and group entities are committed in supporting development projects and capital market linked Islamic fund raising efforts. IDB Group’s portfolio investments in sovereign sukuks will be purely driven by credit worthiness of issuing sovereigns. Despite the strong potential for developing Islamic capital markets in Africa, the plans are moving at a slow pace. At a political level, many countries are yet to agree on what state assets should become collateral (underlying) for a sukuk issue. Additionally, relatively low yields in conventional bonds could also emerge as a challenge for sukuk issues in these markets.