Nigeria, Ivory Coast follow Senegal’s move into Islamic bonds

NIGERIA and Ivory Coast were looking to emulate Senegal’s successful move into the market for Islamic bonds, the head of the Islamic Corporation for the Development of the Private Sector (ICD) said.

Despite strong growth in the Middle East and south-east Asia, Islamic finance has lagged in Africa, home to a quarter of the world’s Muslims, presenting an opportunity for the ICD, the private sector arm of the Jeddah-based Islamic Development Bank.

It helped arrange Senegal’s debut 100 billion CFA francs (R2bn) Islamic bond, also known as sukuk, last June.

“We are actually exploring with Nigeria and Ivory Coast,” Khaled Al-Aboodi, the chief executive of ICD, said, speaking on the sidelines of the Africa CEO Forum in Geneva.

Nigeria, which has the largest Muslim population in sub-Saharan Africa, is trying to establish itself as the African hub for Islamic finance. Senegal, meanwhile, is discussing another sukuk.

“The issuance by Senegal has opened up the whole region. We will… hopefully support at least two countries in 2015 to issue a sukuk,” Al-Aboodi said.

Nigeria’s neighbour Niger has signed up for a sukuk programme worth 150 billion CFA francs, although the timing has yet to be determined.

“Our preference and I think the government’s intention is to try to do this before the end of the year,” Al-Aboodi said, adding that the tenor depended on its structure and investor appetite.

Niger’s sukuk may broaden the market further as it is a project financing format known as istisna, whereas Senegal used a sale-and-lease-back structure known as ijara.

More sovereign sukuk could encourage companies to use Islamic finance too, Al-Aboodi said, although only deals of $200 million (R2.5bn) or more were economically viable. South Africa also issued a sovereign sukuk last year, a $500m (R6.2bn), five-year bond.

ICD is planning its own sukuk this year as part of its $1.2bn borrowing programme and is obtaining a second credit rating after Fitch Ratings gave it an AA rating in November.

“We will be announcing our medium-term notes programme for this, because we want to issue not just one time, because we will have to come back again to the market.”

ICD is expanding in Africa via its Tamweel Africa Holdings subsidiary, which has stakes in Islamic banks in Senegal, Niger, Guinea and Mauritania, and plans to set up new banks elsewhere.

“The board approved to expand to Mali and Benin, so we are working now to go and establish this, and Ivory Coast may be coming as well,” Al-Aboodi said. – Reuters