IslamicFinance.de

The Islamic Development Bank wants to use Islamic bonds to help finance the reconstruction of countries ravaged by conflict, with the World Bank as a potential joint issuer, the head of the multilateral lender said.
Refugee and reconstruction financing is a priority for the Jeddah-based IDB, which last month launched an initiative with the World Bank and United Nations to help more than 15 million people displaced across the region.
Work is now underway to identify specific projects for the initiative, with a priority on war torn Yemen, which could see the IDB and World Bank as issuers of the sukuk.
"We need to finalize this with the World Bank, but most likely it will be a joint issuance", IDB president Ahmad Mohamed Ali said on the sidelines of an industry conference in Kuwait.
The IDB, which operates to promote economic development in Muslim communities, has 56 member countries including Saudi Arabia, Libya and Iran as its largest shareholders.

An estimated 20 percent of Libya’s $67bn-plus sovereign wealth fund, the Libyan Investment Authority (LIA), has yet to be fully traced since the death of Colonel Gaddafi. The LIA appointed Deloitte in 2012 to conduct an audit of all of its assets – many of which are tied up in investments outside the country. The auditor’s report was sent to the LIA in 2013 but has never been made public. The only detail the LIA released was the fund’s total value, estimated by Deloitte to be around $67 billion. The audit involved sourcing, verifying and valuing the assets of a fund its chairman Hassan Bouhadi describes as a “big black hole” whose contents are unknown to all but a few.

North Africa is moving towards the development of the Islamic financial industry as a response to the protests in several countries of the Arab world. Although there are some difficulties to overcome like low banking penetration and limited development of retail banking in general, there ist still potential for growth and progress. However, until a more stable political environment is provided, Shari'ah-compliant banking will be a niche market in North Africa.

The euphoria of the Arab Spring has turned to disappointed expectations because building Arab democracies with open economies has proved to be much harder than expected. Countries like Tunisia, Egypt and Libya are stuck in a situation of instability which hampers economic recovery. Meanwhile, lack of growth and jobs nurtures instability. If the vicious circle is not broken, it is highly probable that radical Islamists will become more active. Thus, modernity would be rejected and a relapse to the corrupt crony-state systems would threaten to become reality. That is why an altered mini-version of the Marshall Plan could play the role of the necessary bigger and more focused effort.

Central Bank of Libya's work on plans for the introduction of Sharia-compliant banking in the country's financial sector go on. According to Fatih Aqoub, a consultant engaged on the bank's project, rapid progress has already been made. Since January a special committee has been working on the issue and searching for best practice from other Islamic countries. Amendments to the banking laws were formulated aiming to enable Sharia banking for an interim period before separate legislation is enacted.

Notable growth in the takaful industry from Islamic countries in North Africa is expected due to the changes in the political environment there. Islamic governments in countries like Libya, Tunisia and Egypt will most probably make a huge contribution to the global takaful market. Needless to say, conventional insurance will be overruled. With $11.8 million, the African takaful industry already ranks third worldwide.

The future financial regulation of Libya will face some new challenges and advantages. The question remains however, whether the absence of political stability and security will have a positive effect on the adoption of Islamic finance. The new Congress elected in July this year will appoint an interim government and a constituent authority to prepare the draft of the country's new constitution. On one hand, the Congress is influenced by liberals considerably more than by islamists. On the other hand, the liberals have vowed to accept and include Islamic principles in the new constitution.

Islamic finance has considerably grown in North Africa, with many Middle East financial institutions investing in the region. There has also been significant development in the south of the continent. Though there is a low Muslim population in South Africa, the government has been one of the front-runners to make it a centre for Islamic finance in Africa. South Africa is the most advanced African nation in terms of robust legislative structures, strict governance structures, and regulations. This gives it an advantage in implementing Shariah-compliant financial systems.

Various providers stated that the demand for Shariah-compliant PRI in MENA countries has increased significantly. Ravi Vish, director and chief economist of MIGA, also confirmed that request for political risk insurance (PRI) has increased to unprecedented levels, with PRI supply by members of the Berne Union remaining robust and pricing reflecting a buyer's market.
In the Arab Spring countries investors are waiting to see what the future will bring.
Moreover, a 2011 survey by MIGA-EIU showed that the turmoil in the Arab countries did have a significant impact on investor intentions. Violence and government instability are major factors putting off investors, who confirmed that they have not forseen the events in Egypt, Tunisia and Libya which frankly took them by surprise.

The effects of the ‘Arab Spring’ in North Africa may have presented fantastic opportunities for Islamic finance according to Patrick AbiHabib of Arab Banking Corporation.
He explained that the transitional authorities in Libya, Tunisia and Egypt have expressed their support for the Islamic banking sector, and Libya had set about changing the country’s financial regulation to give permission to the new government to raise money from the Islamic capital markets, taking the country’s Islamic banking regulations to the next level.

Although Libya is Africa's biggest oil producer, it will still have to borrow money for the reconstruction of its infrastructure and one source the new government is considering to be the Islamic capital markets.
Bloomberg stated that the financial regulator has, under instruction from the interim government, arranged a committee with the country's leading banks to change the financial laws to grant permission to the issue of Sukuk.

Libya’s central bank is arranging a law to give permission to lenders and issuers to sell Islamic bonds as part of its efforts to evolve banking services after the fall of Muammar Qaddafi.
Mustafa Abdel Jalil, an Islamic jurist and former justice minister who heads the ruling National Transitional Council, stated that Libya’s banking industry will be made Shariah-compliant.
Bloomberg shows that global sales of sukuk climbed to $18.9 billion in 2011, compared with $13.5 billion in the same period last year.

In its new publication, Islamic Banking and Finance in North Africa, the African Development Bank assesses the state of Islamic banking in the region and explains why its use has been limited. The report considers the future potential of Islamic finance, including its possible alignment with North Africa’s development goals, particularly its ability to increase the diversification of funding sources.

The report takes into consideration the effect of Islamic banking’s focus on the equitable distribution of risk and returns between suppliers and users of funds. Islamic Banking and Finance in North Africa goes further by exploring whether Islamic-style finance contracts could contribute to the development objectives of North African countries.

full report for free download: http://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operati...

The Bahrain Bourse decreased a quarter percent and closed at 1,144.29 points.
Islamic Bank Al Baraka Banking Group underlined that it has not yet got a license to organize a private bank in Libya and the public and shareholders will subsequently be notified once the license is obtained.

It is possible that the departure of Moammar Gadhafi will help Islamic banking in Libya.
It seems that Gadhafi refused to develop the banking industry without having a reason. He was central bank governor before he ran out of Libya.
The regulator gave Doha-based Qatar Islamic Bank the only license to operate a Shariah-compliant bank a month before the start of the fighting.

Barwa Bank and National Petroleum Services Group (NPS) made an agreement to refinance an existing syndication and support its expansion and working capital. All this will be worth QR529m.
NPS group provides drilling and well services to customers in the oil, gas and petrochemical industries in the Middle East, North Africa, Far East, and Europe.
Its state-of-the-art equipment and sectorial services are embracing Qatar, Saudi Arabia, United Arab Emirates, Bahrain, Syria, Brunei, Malaysia, Singapore, Libya, and Iraq.

Islamic bonds, led by securities in the Arabian Gulf, underperformed emerging-market debt in February as spreading unrest across the Middle East caused the biggest monthly rise in yields since May.
Investors are shunning Middle East assets as protests expanded to Oman, Bahrain, Yemen and Libya, holder of the largest proven oil reserves in Africa. Moody’s Investors Service and Abu Dhabi Commercial Bank say Islamic bonds aren’t likely to recover unless demonstrations that have toppled Tunisia’s and Egypt’s rulers and killed hundreds end soon.

The political conflict that has spread to Bahrain, Libya, Yemen and Morocco will make it more expensive for companies to issue Islamic bonds in the region and in Malaysia. The Asian nation is attractive to borrowers because of its lower yields.
But spreading unrest across the Middle East may be encouraging Shariah-compliant investors to increase purchases of Asian assets and will spur sales of Islamic bonds.

Gumhouria Bank has selected ITS to help drive the transformation of seven branches to Islamic windows.
After conducting a rigorous selection process in which a number of leading suppliers were considered. Gumhouria bank selected ETHIX core banking, ETHIX financial solution and ETHIX branch automation to support and automate its Islamic business transformation.