TFD Stocks Overview

Islamic banking in Africa


Muhammad Arif
(Chairman CAIF)

Access to finance and infrastructure funding can help Africa’s economic development journey. Islamic finance can increase access to finance and can help bridge the infrastructure gap in Africa. The G20’s German Presidency introduced a new initiative for sustainable economic development in Africa known as the G20 African Partnership. The partnership offers various tools and strategies for Africa’s development and the rapid growth of Islamic finance in Africa offers a great opportunity to support it.
The G20 Antalya Summit supported Islamic finance “to facilitate better intermediation for SMEs and infrastructure investment”, referring to it as asset-based finance. B20’s Infrastructure and Financing Growth Taskforce Policy Paper 2017 considers Islamic finance to be one of the key tools that can help boost sustainable economic development in Africa. It is already a $2 trillion industry and most global financial institutions are part of this niche market. With its unique asset-oriented structure, Islamic finance is quite relevant to the financing of large infrastructure projects in Africa.
Islamic finance transactions do not include interest but instead, use risk sharing to justify earning of profit. Other main considerations include avoiding businesses that could be deemed as harmful, such as tobacco, liquor, pornography, and those that deal with excessive uncertainty, such as gambling. Islamic finance investments also avoid highly leveraged businesses as payment of interest is one of the main financial activities for such businesses.
Christine Lagarde, Managing Director of the International Monetary Fund, has said that: “Islamic finance’s underpinning principles of promoting participation, equity, property rights and ethics are all universal values.” She said she regards inclusivity and stability as the main reasons behind the appeal of Islamic finance and noted its potential to support an underserved population, SMEs, start-ups and infrastructure investments. Lagarde has also highlighted the risk-sharing and asset-backed features of Islamic finance that help to reduce leverage and contribute to greater stability.
Access to finance and financial services leads to economic growth and the lack of it is one of the main challenges faced by Africa. For instance, 350 million Africans do not have a bank account. An IMF Working Paper notes that in Sub-Saharan Africa, only one in four adults have a formal bank account In comparison to other developing countries where twice as many people do. The paper further notes that in Sub-Saharan Africa household are micro-enterprises, and small and medium enterprises lack access to credit, which “is a major obstacle in promoting growth and employment”.
There are other factors that limit access to finance in Africa. The World Bank estimates that 30% in Sub-Saharan Africa do not use formal financial services owing to religious reasons. This proportion is 32% in the Middle East and North Africa.
Africa is home to more than 250 million Muslims and Islamic finance is present in more than 21 African countries. Kenya, Morocco, Niger, Nigeria, Senegal, South Africa, Sudan and Uganda have recently established legal frameworks for Islamic finance. There are more than 50 Islamic finance institutions across Africa.
Islamic finance has grown rapidly across Africa. Initially two Islamic banks commenced operations in South Africa in 1989. Barclays launched the first Islamic banking product in Kenya in 2005. By 2010 Kenya had updated its laws to accommodate Islamic investments. Islamic banking in Tanzania started in 2010.
More recently, capital markets transactions have been on the rise. In 2014, after Senegal raised $200 million, South Africa raised $500 million by issuing its first sovereign Sukuk (or Islamic bond). The global Sukuk Report of July 2017 by International Islamic Financial Market reports 246 issuances valuing more than $21 billion. These issuances have come from Gambia, Ivory Coast, Nigeria, Senegal, South Africa, Sudan and Togo.
The African Development Bank reports several infrastructure projects that have been funded through Islamic finance. Other policy materials suggest that Islamic finance could not only help with financing large infrastructure projects across Africa, but also help to strengthen the SME and microfinance sector. The fast-paced growth of Islamic finance across Africa already suggests that Islamic finance is helping to improve access to finance throughout the continent. The liquidity in the Islamic finance market is constantly looking for bankable project pipelines and the G20 Africa Partnership provides a perfect opportunity to connect this demand and supply.
With its growth in Africa and beyond, Islamic finance seems to fit well with several other initiatives for African development, such as the G20 Initiative on Supporting Industrialization in Africa.
The objectives of the G20 Africa Partnership and Islamic finance are aligned naturally, and an express strategy for integrating Islamic finance as one of the tools for developing Africa would seem to be the right next step.
In the recent past, news about various Islamic finance initiatives in Africa made it on the business pages across the world, indicating that the continent is gearing up for a new form of banking. The Economist in a July article even called Africa “Islamic banking’s new frontier,” and the Malaysia International Islamic Finance Centre (MIFC) in June came up with a compact update on the state of Islamic finance in Africa and an outlook on the opportunities it could bring. Additionally, consulting firm Ernst & Young (EY), which operates an Islamic finance centre in Johannesburg, South Africa, and the international Monetary Fund (IMF) are putting the issue regularly on the cards.
It turns out that Islamic finance in Africa is driven by four components: Firstly, economic growth in many African nations supported by improving fundamentals, growing domestic demand and stronger regional integration. Secondly, it’s demographics. With a population of about 1.2bn people, Africa is currently developing a middle-class segment of its population expected to boost demand for Islamic retail banking, Takaful and Islamic funds.
Additionally, financial literacy is improving across the continent, including on Shariah-compliant financial products, which are seen as one driver for financial inclusion.
But, and this is the most important aspect, Islamic finance in Africa is also heavily backed by the continent’s urgent demand for new and alternative ways to fund the much-needed infrastructure, which has been a big challenge in the past for almost all African countries.
Experts state that, notably, sukuk could play a potential role in funding large infrastructure projects, mainly new airports, power plants, roads and railways. With sukuk, the IMF noted, African nations could tap into growing Islamic financial markets to meet infrastructure financing needs instead of using conventional financing from international finance institutions such as the World Bank or the African Development Bank; or relying on borrowed Chinese money. Instead, by opening doors to Islamic finance, Africa can seek to attract capital from Gulf Cooperation Council countries and other Muslim nations or institutional or private investors.
Another avenue for Islamic finance in Africa is funding of small and medium enterprises (SMEs), as well as microfinance, both instruments to increase financial inclusion on the continent.
The MIFC in its recent report points out that Islamic finance in Africa has started to gain attraction from 2013 onwards, when several countries began to successfully issue sukuk, followed by establishing a regulatory framework that allowed and supervised the operation of Islamic banks and financial institutions. It started with a $63mn-sukuk issued by the Nigerian state of Osun in 2013, saw other sukuk being issued in Senegal, South Africa, Cote d’Ivoire and Togo.
Kenya revamped its Islamic finance laws to allow for the first sovereign sukuk issuance in the budget year 2017/18, while Nigeria stands ready to issue its first government sukuk later this year. In addition, the Africa Finance Corporation, a pan-African multilateral lender based in Nigeria, in June 2017 issued a three-year $150mn sukuk – the first African government-backed entity to do so – which was oversubscribed by more than 50%. “The core values of Islamic finance and the need to invest ethically in assets that have a tangible positive social impact made a sukuk issuance a natural choice for us,” said Andrew Alli, Africa Finance Corporation’s CEO, adding that “we offer global investors the chance to be involved in high-impact infrastructure projects that not only promote social and economic development across Africa but also generate economic returns for our investors.”
As per mid-2017, Nigeria, Sudan, South Africa and Senegal, Kenya, Morocco and Niger, among others, have put in place necessary legal and regulatory frameworks to enable domestic Islamic banking, while countries such as Uganda, Ethiopia and Zambia are currently exploring and developing the system. According to the MIFC, there are now more than 50 fully-fledged Islamic financial institutions in Africa, while a considerable number of conventional banks have opened Islamic windows to address the new target group of Islamic banking clients.
Some countries are already in an advanced stage: For example, Kenya, the largest economy in East Africa and the continent’s ninth-largest, is working towards the goal to become a regional hub for Islamic finance products after the country’s treasury ministry presented a roadmap to fully integrate Islamic financing in the country’s financial system as an effort to stimulate economic growth and support infrastructure financing.
As for future potential, the MIFC report noted that Africa has almost 60% of the world’s uncultivated land and vast unexploited natural resources, particularly in Sub-Saharan Africa where large oil, gas and mineral deposits are waiting to be tapped. Africa is also currently the second most populous continent on earth, and the number of people is expected to double by 2050. This makes a case for Islamic finance to foray not just into infrastructure, but also in the commodity sector, as well as to provide access to financial services for the widely unbanked population. That way, it would additionally help alleviating poverty by creating opportunities through Islamic microfinance for the underprivileged, who would be enabled to set up and economically maintain micro, small and small and medium-sized enterprises, the pillar of a healthy domestic economy.

xosotin chelseathông tin chuyển nhượngcâu lạc bộ bóng đá arsenalbóng đá atalantabundesligacầu thủ haalandUEFAevertonfutebol ao vivofutemaxmulticanaisonbetbóng đá world cupbóng đá inter milantin juventusbenzemala ligaclb leicester cityMUman citymessi lionelsalahnapolineymarpsgronaldoserie atottenhamvalenciaAS ROMALeverkusenac milanmbappenapolinewcastleaston villaliverpoolfa cupreal madridpremier leagueAjaxbao bong da247EPLbarcelonabournemouthaff cupasean footballbên lề sân cỏbáo bóng đá mớibóng đá cúp thế giớitin bóng đá ViệtUEFAbáo bóng đá việt namHuyền thoại bóng đágiải ngoại hạng anhSeagametap chi bong da the gioitin bong da lutrận đấu hôm nayviệt nam bóng đátin nong bong daBóng đá nữthể thao 7m24h bóng đábóng đá hôm naythe thao ngoai hang anhtin nhanh bóng đáphòng thay đồ bóng đábóng đá phủikèo nhà cái onbetbóng đá lu 2thông tin phòng thay đồthe thao vuaapp đánh lô đềdudoanxosoxổ số giải đặc biệthôm nay xổ sốkèo đẹp hôm nayketquaxosokq xskqxsmnsoi cầu ba miềnsoi cau thong kesxkt hôm naythế giới xổ sốxổ số 24hxo.soxoso3mienxo so ba mienxoso dac bietxosodientoanxổ số dự đoánvé số chiều xổxoso ket quaxosokienthietxoso kq hôm nayxoso ktxổ số megaxổ số mới nhất hôm nayxoso truc tiepxoso ViệtSX3MIENxs dự đoánxs mien bac hom nayxs miên namxsmientrungxsmn thu 7con số may mắn hôm nayKQXS 3 miền Bắc Trung Nam Nhanhdự đoán xổ số 3 miềndò vé sốdu doan xo so hom nayket qua xo xoket qua xo so.vntrúng thưởng xo sokq xoso trực tiếpket qua xskqxs 247số miền nams0x0 mienbacxosobamien hôm naysố đẹp hôm naysố đẹp trực tuyếnnuôi số đẹpxo so hom quaxoso ketquaxstruc tiep hom nayxổ số kiến thiết trực tiếpxổ số kq hôm nayso xo kq trực tuyenkết quả xổ số miền bắc trực tiếpxo so miền namxổ số miền nam trực tiếptrực tiếp xổ số hôm nayket wa xsKQ XOSOxoso onlinexo so truc tiep hom nayxsttso mien bac trong ngàyKQXS3Msố so mien bacdu doan xo so onlinedu doan cau loxổ số kenokqxs vnKQXOSOKQXS hôm naytrực tiếp kết quả xổ số ba miềncap lo dep nhat hom naysoi cầu chuẩn hôm nayso ket qua xo soXem kết quả xổ số nhanh nhấtSX3MIENXSMB chủ nhậtKQXSMNkết quả mở giải trực tuyếnGiờ vàng chốt số OnlineĐánh Đề Con Gìdò số miền namdò vé số hôm nayso mo so debach thủ lô đẹp nhất hôm naycầu đề hôm naykết quả xổ số kiến thiết toàn quốccau dep 88xsmb rong bach kimket qua xs 2023dự đoán xổ số hàng ngàyBạch thủ đề miền BắcSoi Cầu MB thần tàisoi cau vip 247soi cầu tốtsoi cầu miễn phísoi cau mb vipxsmb hom nayxs vietlottxsmn hôm naycầu lô đẹpthống kê lô kép xổ số miền Bắcquay thử xsmnxổ số thần tàiQuay thử XSMTxổ số chiều nayxo so mien nam hom nayweb đánh lô đề trực tuyến uy tínKQXS hôm nayxsmb ngày hôm nayXSMT chủ nhậtxổ số Power 6/55KQXS A trúng roycao thủ chốt sốbảng xổ số đặc biệtsoi cầu 247 vipsoi cầu wap 666Soi cầu miễn phí 888 VIPSoi Cau Chuan MBđộc thủ desố miền bắcthần tài cho sốKết quả xổ số thần tàiXem trực tiếp xổ sốXIN SỐ THẦN TÀI THỔ ĐỊACầu lô số đẹplô đẹp vip 24hsoi cầu miễn phí 888xổ số kiến thiết chiều nayXSMN thứ 7 hàng tuầnKết quả Xổ số Hồ Chí Minhnhà cái xổ số Việt NamXổ Số Đại PhátXổ số mới nhất Hôm Nayso xo mb hom nayxxmb88quay thu mbXo so Minh ChinhXS Minh Ngọc trực tiếp hôm nayXSMN 88XSTDxs than taixổ số UY TIN NHẤTxs vietlott 88SOI CẦU SIÊU CHUẨNSoiCauVietlô đẹp hôm nay vipket qua so xo hom naykqxsmb 30 ngàydự đoán xổ số 3 miềnSoi cầu 3 càng chuẩn xácbạch thủ lônuoi lo chuanbắt lô chuẩn theo ngàykq xo-solô 3 càngnuôi lô đề siêu vipcầu Lô Xiên XSMBđề về bao nhiêuSoi cầu x3xổ số kiến thiết ngày hôm nayquay thử xsmttruc tiep kết quả sxmntrực tiếp miền bắckết quả xổ số chấm vnbảng xs đặc biệt năm 2023soi cau xsmbxổ số hà nội hôm naysxmtxsmt hôm nayxs truc tiep mbketqua xo so onlinekqxs onlinexo số hôm nayXS3MTin xs hôm nayxsmn thu2XSMN hom nayxổ số miền bắc trực tiếp hôm naySO XOxsmbsxmn hôm nay188betlink188 xo sosoi cầu vip 88lô tô việtsoi lô việtXS247xs ba miềnchốt lô đẹp nhất hôm naychốt số xsmbCHƠI LÔ TÔsoi cau mn hom naychốt lô chuẩndu doan sxmtdự đoán xổ số onlinerồng bạch kim chốt 3 càng miễn phí hôm naythống kê lô gan miền bắcdàn đề lôCầu Kèo Đặc Biệtchốt cầu may mắnkết quả xổ số miền bắc hômSoi cầu vàng 777thẻ bài onlinedu doan mn 888soi cầu miền nam vipsoi cầu mt vipdàn de hôm nay7 cao thủ chốt sốsoi cau mien phi 7777 cao thủ chốt số nức tiếng3 càng miền bắcrồng bạch kim 777dàn de bất bạion newsddxsmn188betw88w88789bettf88sin88suvipsunwintf88five8812betsv88vn88Top 10 nhà cái uy tínsky88iwinlucky88nhacaisin88oxbetm88vn88w88789betiwinf8betrio66rio66lucky88oxbetvn88188bet789betMay-88five88one88sin88bk88xbetoxbetMU88188BETSV88RIO66ONBET88188betM88M88SV88Jun-68Jun-88one88iwinv9betw388OXBETw388w388onbetonbetonbetonbet88onbet88onbet88onbet88onbetonbetonbetonbetqh88mu88Nhà cái uy tínpog79vp777vp777vipbetvipbetuk88uk88typhu88typhu88tk88tk88sm66sm66me88me888live8live8livesm66me88win798livesm66me88win79pog79pog79vp777vp777uk88uk88tk88tk88luck8luck8kingbet86kingbet86k188k188hr99hr99123b8xbetvnvipbetsv66zbettaisunwin-vntyphu88vn138vwinvwinvi68ee881xbetrio66zbetvn138i9betvipfi88clubcf68onbet88ee88typhu88onbetonbetkhuyenmai12bet-moblie12betmoblietaimienphi247vi68clupcf68clupvipbeti9betqh88onb123onbefsoi cầunổ hũbắn cáđá gàđá gàgame bàicasinosoi cầuxóc đĩagame bàigiải mã giấc mơbầu cuaslot gamecasinonổ hủdàn đềBắn cácasinodàn đềnổ hũtài xỉuslot gamecasinobắn cáđá gàgame bàithể thaogame bàisoi cầukqsssoi cầucờ tướngbắn cágame bàixóc đĩaAG百家乐AG百家乐AG真人AG真人爱游戏华体会华体会im体育kok体育开云体育开云体育开云体育乐鱼体育乐鱼体育欧宝体育ob体育亚博体育亚博体育亚博体育亚博体育亚博体育亚博体育开云体育开云体育棋牌棋牌沙巴体育买球平台新葡京娱乐开云体育mu88qh88

Leave a Reply