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Stakeholders At AICIF 2019 Urge For Expansion of Sukuk, Waqf and Takaful

Islamic Finance	3315 VIEWS
Islamic Finance
3315 VIEWS

Thursday, November 08, 2019 / 1:13 PM / Bukola Akinyele for Proshare WebTV / Header Image Credit: WebTV

Stakeholders at the just concluded 4^th edition of the African International Conference on Islamic Finance, AICIF, agreed that there should be conscious steps to broaden the Sukuk, Waqf and Takaful finance and insurance options to improve infrastructure development, financial inclusion and economic prosperity in Africa.

The submission of session speakers covered some key topics at the event.

Mr. Abdulkadir Thomas, Chairman Sharia Board, Sterling Bank, speaking on "Managing Risk and Capturing Opportunities in Sukuk Market," said Malaysia is the global leader when it comes to Sukuk-based projects.

He listed the various segments of the Sukuk and its interventions to include;

The Public-Private Partnership approach
Investments in roads, energy and other infrastructure
Introduction of Retail Sukuks recently approved by the regulator
Most project Sukuks are big-ticket items and target institutional investors

Abdulkadir noted the fact that Sukuks have not been used to mobilize small investments for projects that matter locally to the investors.

Using Malaysia as a case study, Abdulkadir called on other markets especially emerging ones to explore crafting dual tranche sukuks, that can attract the pension and insurance markets (Takaful).

Giving further perspective on the "Regulatory and Cross Border Issues Affecting the Utilization of Sukuk." Mr Ammar Ashraf Director, Financial Services Consulting Price Waterhouse Coopers, Luxembourg highlighted the fact that Sudan is the leader in the African Sukuk issuance.

Speaking further Ashraf identified the considerable challenges Africa is facing to develop a robust Sukuk market, which include;

Regulatory Tax & legal frameworks
Cost of issuance on conventional loans and
Lack of transparency.

According to Ashraf the volume for Sukuk in Africa is estimated at about $19.516bn at the domestic level and about $130bn at the international level.

Ashraf also noted that the total number of Sukuks issued so far in the region is 36.

He singled out Luxembourg as an emerging leader in the adoption of Islamic Finance, noting that the country is the 5^th in the globe, when it comes to shariah compliant funds.

Speaking further, Ammar said that, there has been a robust public private partnership (PPP) in Luxembourg to attract Islamic Finance players.

He highlighted some of the recent developments in the country to include;

Adaptation of a Tax & Legal Framework for Shariah complaints, products and services
Guidelines published by local Regulator (CSSF)for Sukuk and Shariah-compliant investment funds
Best practices published by ALFI (Luxembourg Association for Investment Funds) for setting-up and servicing Islamic funds.

Assistant Professor, American University, Washington DC, USA, Amin Mohseni-Cheragholu, also gave insight into the "Trust Waqf (Endowment), Asset Management and Socially Responsible Investments".

Cheragholu an American-based scholar described Waqf as a self-sustaining financing mechanism which can complement government taxation/revenue in addressing the pressing needs of the society.

The value of Waqf assets according to him currently ranges from $100bn to $1trn as stated by the 2019 report of the World Bank, INCEIF, and ISRA.

Giving an overview of Waqf, Cheragholu said it played a central role during the Golden Era of Islamic Civilization, as it was an important financing mechanism for building, operating, and maintaining mosques and religious centers, learning and research centers, hospitals, bath houses, water canals, wells and caravansaries across the Muslim World.

Speaking further, Professor Cheragholu noted that the estimated size of Waqf in Africa is about $13billion per year, which is 12% of the infrastructure finance deficit in the region.

For Nigeria he stated that the estimated size of Waqf cash in Nigeria was $3billion per year which is 10% of the country's infrastructure finance deficit.

He believed Waqf can play a central role in Africa and Nigeria's infrastructure finance. Cheragholu emphasized the value of blockchain technology and believed it can improve technology, transparency and accountability of the Waqf administration, which can increase public participation

The Chairman of the Board of United Insurance Company, Mr Tarig Khalil Osman in his presentation on "Takaful in Africa, the view from micro to macro" said Sudan was recognized as the best Takaful compliant nation in Africa, at the 2018 London takaful summit.

Speaking on the prospects for Africa and Islamic finance, Osman noted that Islamic finance can be one of the most important vehicles for developing Africa and Takaful insurance can provide the mitigation of risk as well as providing cross border services.

He estimated that the Takaful global size is currently over $20b is growing at double digit growth and is projected to become $44b by 2024.

According to him there are currently less than 1,000 companies that are engaged in Takaful.

In her vote of thanks at the Conference on Islamic Finance, the Managing Partner, Metropolitan Law Firm and Conference planning committee Chairperson, Ummanhani Amin said the forum was organized to educate and create awareness on Islamic finance and was not seeking to Islamize Nigeria or any other country.

Ummanhani Amin said Islamic Finance is a Non-Interest Financing model that can serve as a platform for deepening financial inclusion, eradicate poverty, promote infrastructure development, create a basis for Public Private Partnerships (PPPs) to incentivize financial institutions and promote economic growth.

This was the first time Nigeria was hosting the African International Conference on Islamic Finance, since its inception.