Africa is shifting its economic focus away from the west to the Middle East and Asia as a primary source of capital raising. This shift in alignment partially explains the forthcoming issue of a number of Sukuk across the continent in 2012.
South Africa, Senegal, Nigeria and Kenya have all announced sovereign Sukuk to raise capital for their budgets, a marked move away from aid and loans from the economies of Europe and the US and a move broadly welcomed by sovereign wealth and Islamic finance institutions - especially in the GCC.
"The Middle East is seen as having accessible capital, unlike the west. So the [African nations are] designing financial instruments that allow [them] to tap Shari'ah compliant money," said Patrick Mweherire, the CEO of Renaissance Capital in Kenya.
"It's a trend likely to continue across much of the continent but as fund managers we want to see how countries will break the ground and then we'll take it from there," he added.
Senegal will issue a $200m Sukuk, initially planned for this year but now most likely for early 2012. Finance minister Abdoulaye Diop said proceeds from the Sukuk will be used for budgetary support.
Khaled Mohammed al-Aboodi [above], CEO of the Islamic Corporation for the Development of the Private Sector, which together with Citi is working on the Sukuk, said the county will meet investors this month ahead of the issue of the dual-currency offering in Senegalese francs and possibly Euro.
Last week, South Africa's National Treasury asked banks to submit proposals by December 21 for the issuance of its sovereign Sukuk and short-listed bidders will be informed by January 20.
"There is a great interest in the Sukuk market and this is the first step towards meeting the growing appetite for government-backed Shari'ah compliant investments," said Lungisa Fuzile, DG of the National Treasury, in a statement. The successful bidder will advise the Treasury on structuring, managing, and coordinating issuance activities and drafting all required contracts.
South Africa, one of the largest economies on the continent, is seen as a relatively low-risk debtor, with a Moody's Investors Service rating of A3 expected to make it attractive to Middle East investors seeking to diversify their investments.
In Kenya, East Africa's largest economy, the Capital Markets Authority is currently reviewing the procedures recommended for issuance of Sukuk, with its planned $500m sovereign bond expected to have a Sukuk component.
"The CMA has recommended a Sukuk component in the upcoming [sovereign] bond issue. We also recommended the establishment of a national Shari'ah advisory board to provide guidance on product authenticity for the Kenyan Islamic finance industry," Stella Kilonzo, CEO of the CMA told The Islamic Globe.
The governor of the Central Bank of Nigeria, Lamido Sanusi announced in October that the country wants to issue its first Sukuk within 18 months.
© The Islamic Globe 2011
