Article 7.6 South Africa to issue maiden sukuk

By Javier Blas

Financial Times August 28, 2014

South Africa aims to become the world's second non-Muslim country to issue a sukuk, announcing on Thursday plans for at least a $500m sharia compliant sover­eign bond to be issued as early as next month.

Britain in June became the first western country to issue an Islamic bond, attract­ing orders of more than £2bn from global investors for its sale of sharia-compliant debt.

Luxembourg and Hong Kong have also announced plans for a sukuk and interna­tional companies in western countries have issued them too.

The move represents a potentially significant boost for the profile of Islamic finance in Africa. Until now, Gambia and Sudan have been the only countries on the continent to issue a sukuk - and they were only for tiny sums. But African countries are keen to issue sukuk in order to attract cash-rich Middle Eastern and Asian investors to finance their large infrastructure programmes.

Africa is home to roughly 400m Muslims, about a quarter of the world's total. But until now a mix of financial, legal and political factors have deterred most coun­tries in the continent from tapping the Islamic market.

West African country Senegal, where the majority of the population is Muslim, earlier this year raised 100bn CFA francs ($208m) via its first sukuk.

The use of Islamic finance on the continent could grow further as several north and sub-Saharan African countries - including Morocco, Nigeria, Tunisia and Kenya - are laying the legal groundwork to be able to issue sukuk.

FT

Source: Blas, J. (2014) South Africa to issue maiden sukuk, Financial Times, 28 August.