‘Is­lamic fi­nance key to African in­fra­struc­ture’

The Pak Banker - - FRONT PAGE -

DUBAI: The de­vel­op­ment of an Is­lamic fi­nance in­dus­try in Africa could help plug the re­gion's large in­fra­struc­ture gaps over the com­ing decade, Stan­dard & Poor's Rat­ings Ser­vice said in a re­port pub­lished to­day en­ti­tled "Reg­u­la­tions And Fis­cal In­cen­tives Could Speed Is­lamic Fi­nance De­vel­op­ment In Africa".

How­ever, a frame­work of reg­u­la­tion and fis­cal ad­just­ments will be nec­es­sary to foster African sukuk mar­kets, pro­vide wider in­vest­ment op­tions for po­ten­tial Is­lamic in­vestors and at­tract a pool of Is­lamic liq­uid­ity, it said.

To date, African sov­er­eigns have is­sued about $1 bil­lion of sukuk in­stru­ments, com­pared with global sukuk is­suance of an av­er­age $100 bil­lion per year over the past five years. Mean­while, widen­ing fis­cal deficits and large in­fra­struc­ture gaps will likely re­quire multi­bil­lion-dol­lar ad­di­tional fi­nanc­ing needs over the next decade. Ex­pe­ri­ence in South Africa and Sene­gal has shown that a sig­nif­i­cant amount of time can elapse be­tween gov­ern­ments' an­nounce­ment of in­tent to is­sue sukuk and their ef­fec­tive is­suance, as gov­ern­ments gauge mar­ket in­ter­ests and try to ad­dress the le­gal hur­dles and cost of is­suance.

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