Jan 25 The central bank of West Africa's CFA-franc zone has signed an agreement with the private sector arm of the Islamic Development Bank to help finance small and medium-sized businesses through a $100 million Islamic fund.
The deal follows a debut 150 billion CFA francs ($247.5 million) Islamic bond issued by the Ivory Coast last month, the second such transaction in the eight-nation Economic and Monetary Union of West Africa (UEMOA).
The Jeddah-based Islamic Corporation for the Development of the Private Sector (ICD) will commit an intial $30 million for the SME fund and would help seek additional investors to increase its size to $100 million, a joint statement said.
UEMOA comprises Benin, Burkina Faso, Ivory Coast, Mali, Guinea-Bissau, Senegal, Niger and Togo. They share a regional central bank and the CFA franc currency, which is pegged to the euro.
Despite strong growth in the Middle East and Southeast Asia, Islamic finance has lagged in Africa, home to a quarter of the world's Muslims, presenting an opportunity for ICD which is exanding its activities across the region.
The Ivory Coast's sukuk, which was arranged by the ICD, saw a 38 percent allocation to investors from the Middle East region. In 2014, Senegal issued the region's first Islamic bond, a 100 billion CFA franc deal.
Niger has also signed up for a sukuk programme worth 150 billion CFA francs, although a timing has yet to be determined.
The central bank also committed to support SMEs by providing incentives to credit institutions, as well as developing complementary leasing and venture capital instruments.
(Reuters / 24 January 2016)---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com