The Senegalese government would sell the sukuk in cooperation with the Jeddah-based Islamic Corporation for the Development of the Private Sector (ICD), an affiliate of the Islamic Development Bank, the institutions said.
"This project is the beginning of an ambitious programme which could lead to the financing of innovative infrastructure and energy projects through sukuk issuances," a statement quoted Economy and Finance Minister Amadou Ba as saying.
A sovereign sukuk from Senegal would be an important step in developing Islamic finance in sub-Saharan Africa; so far, sukuk issuance has been small. Gambia has been selling small amounts of Islamic debt for years and Nigeria's Osun State last month sold a local currency sukuk worth $62 million.
Governments in countries including South Africa, Kenya, Nigeria and Senegal have been considering sukuk issues as a way to attract cash-rich Islamic funds from the Gulf and southeast Asia. Senegal has been studying the possibility of an issue since at least 2011.
Khaled Al-Aboodi, chief executive of the ICD, said the Senegalese sukuk would be the first of a series of regional programmes that would be offered to West African states.
The ICD, which promotes the economic development of its 51 member countries by financing private sector projects, has also been trying to expand the consumer base of Islamic finance in Africa by helping to establish institutions in countries such as Mali and Benin.
The Central Bank of West African States, which serves countries in the region, has in principle accepted that the Senegalese sukuk could be used in its repurchase operations, Aboodi said. This could make it an attractive investment for banks operating in the local money market.
(Reuters / 13 Oct 2013)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com