Islamic finances face massive demand boom in Africa

Africa is expected to see a massive population boom, many of whom will grow up Islamic. As such, demand for Islamic products and services on the continent are expected to rise in the coming years. Financing projects through Islamic financial instruments has massive potential within the African region. One such instrument is sukuk, which is a form of bond between the issuer and issuee, whereby risks are shared, while no interest is charged on the issued amount. This is beneficial to projects that require long term financing.

The ‘Islamic economy’ refers to a wide range of commercial activities and geographies that span the world. Islamic derived Sharia-compliant bonds, halal food, travel and fashion all make up components of the wider global market that spans from Niger to the financial centres of Kuala Lumpur, which was valued at $3.6 trillion in 2013. The Islamic finance side of the equation was in 2014 valued at $1.8 trillion by BearingPoint, and is project to grow to $3 trillion by 2018.

Recent research by the Economist Intelligence Unit (EIU), a consultancy that provides business analysis for decision making, concerns itself with the value of Islamic financial propositions for both the Islamic and non-Islamic players in the Sub-Sahara African region. The EIU research report, titled ‘Mapping Africa’s Islamic economy’, was commissioned by the Dubai Chamber and used desk research and interviews with experts as its basis.

(Consultansy.UK / 04 January 2015)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

RAM Ratings reaffirms AA3/Stable rating of BGSM Management’s Sukuk for 2016

"Despite heightened competition, Maxis’ restructuring efforts and new product offerings are beginning to bear some fruits in its last three financial quarters ending September 2015. Maxis has regained its leadership in terms of subscribers base in the beginning of this year with 35.2 per cent of the total 37 million mobile subscribers as at end-September 2015. Maxis is also the largest mobile operator by revenue and profitability, commanding 37.5 per cent of the total RM17.14 billion of total revenue registered by incumbents and 41.1 per cent of cumulative MYR 7.71 billion of operating profit before depreciation, interest and tax (OPBDIT) for 9M 2015. Further, Maxis maintained its sturdy cashflow-generating ability, underpinned by its strong profitability, with an OPBDIT margin of 48 per cent in 9M FY 2015 – the highest among local peers.

"Given that the cellular telephony sector is saturated, with a mobile penetration rate of 144.8 per cent (end-June 2015), local telcos are expected to face continuous decelerating subscriber growth, increasing price competition and heavier spending on capex that could further compress their margins. Nonetheless, the mobile-broadband segment still has ample room for growth, in line with the current voice-to-data shift underscored by still-low household and population broadband penetration rates of 70.2 per cent and 68.3 per cent respectively.

"While Maxis had lifted its performance and market position in 2015, the sustainability of such progress remains to be seen, in view of the heightened competition in the sector. Going forward, Maxis will continue to prioritise capex which could reduce dividend payouts. We envisage BGSM Management (at group level) to register strong funds from operations debt coverage of 0.23-0.27 times between 2016 and 2018."

(C P I Financial / 03 January 2015)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com