Moody’s expects US$1b of sukuk from Africa


London • The amount of sukuk African sovereigns issue will probably increase as they seek to diversify their funding base, Moody’s Investors Service said in a statement.

Egypt, Algeria, Morocco and Sudan have expressed interest in issuing sukuk this year or next.

Increasing financing needs and global investors becoming more comfortable with the legal structures of Islamic debt securities will drive growth of Islamic finance in Africa.

Desire for stronger investment links with the fast-growing Gulf economies and Asia, that have large Muslim populations with large pools of capital, will help drive sukuk from the continent, according to Akin Majekodunmi, VP and senior credit officer.

Africa’s large, predominantly unbanked Muslim population will also help drive growth of Islamic assets.

African banking assets will rise to over 10% over in the next five years, from its current level of below 5%.

Since 2014 there has been US$2.3 billion (RM9.52 billion) of African sukuk issues, providing new funding sources for sovereigns and financial institutions; African sukuk makes up just 0.5% of the global sukuk issuance.

Moody’s has identified 18 African countries that have the greatest growth potential for sukuk issuance, as well as Islamic banking, including Egypt, Morocco, Senegal, Nigeria, Sudan and Kenya. — Bloomberg