Islamic financing steps up profile

STRATEGIC: Ekra and Al Aboodi sign the deal last week in Manama, Bahrain, but no specific figures were mentioned.

By John Sambo
Tuesday, March 10, 2015

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Some African business people will soon be able to tap into a wider pool of cash sourced from Islamic banks after the signing of an agreement in Manama, Bahrain last week.

Under the terms the Islamic Corporation for the Development of the Private Sector (ICD) and the African Export-Import Bank (Afreximbank) will cooperate in the development of the private sector in ICD member countries in Africa. However, Uganda is the only member ICD country in the East African Community.

Other African countries Cameroon, Chad, Gabon, Gambia, Guinea, Mozambique and Senegal.

In 2014, Afeximbank provided about $4.5 billion in credit.

ICD is the private sector arm of the Islamic Development Bank Group (IDB). Its role is similar to the International Finance Corporation (IFC) of the World Bank Group.

“Africa and the Islamic finance industry are key strategic directions for ICD and we hope, via this partnership, we will increase our presence in the continent,” Khaled Al Aboodi, the Chief Executive Officer of ICD said at the signing ceremony.

Jean-Louis Ekra, the President of Afreximbank said, “We are greatly encouraged at this opportunity to collaborate with ICD in growing the African private sector. ICD’s leadership and experience in promoting the establishment, expansion, and modernization of private enterprises complements Afreximbank’s longstanding commitment to using the private sector as the growth engine in achieving its mandate of promoting and financing intra- and extra- African trade.”

According to the agreement, ICD and Afreximbank will share information on projects and business opportunities in Africa and on participation in the arrangement of syndications or investment in funds.

The two will also cooperate in structuring sukuk/debt capital market transaction opportunities, co-invest in Islamic leasing companies and support local financial institutions in Africa through the raising of capital via lines of finances.

In addition, they will exchange information aimed at upgrading knowledge and expertise about Islamic finance, environmental assessment, project finance and advisory services. The agreement also covers exploration of opportunities for cooperation in financing projects in the construction, energy, manufacturing and leasing sectors in African countries.

ICD was established in November 1999 to promote economic development of its member countries in accordance with the principles of the Sharia through private sector development.

ICD encourages the establishment, expansion and modernization of private enterprises through financing private sector enterprises or projects.

Projects are selected on the basis of their contribution to economic development considering factors such as creation of employment opportunities and contribution to exports.

ICD also provides advice to governments and private sector groups on policies to encourage the establishment, expansion and modernization of private enterprises, development of capital markets, best management practices and enhance the role of market economy. ICD operations complement the activities of the IDB.

Afreximbank is reputedly the foremost Pan-African multilateral financial institution devoted to financing and promoting intra- and extra-African trade.

The Bank was established in October 1993 by African governments, African private and institutional investors, and non-African investors.

Since 1994, Afreximbank has approved almost $35 billion in credit facilities for African businesses.

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