IslamicFinance.de

While Middle Eastern and Asian countries are leading the Islamic economy, Sub-Saharan Africa remains under-serviced. However, West Africa is seeing a marked uptick in Islamic finance, especially in the issuing of sukuk. Sukuk is increasingly being used to finance development projects, as well as to increase domestic capital reserves and financial inclusion. 2016 has seen a host of new sukuk issuances in West Africa. On August 10th, Togo’s initial CFA 150 billion ($263 million) sukuk offering closed. This comes after Senegal launched its second $263 million round at the end of June. As a result of sukuk’s unique traits, the IMF is promoting the regional adoption and inclusion of sukuk into African government debt strategies.

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.