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African countries have issued USD 5.52 billion in sovereign sukuks to date, representing just 0.7% of the global sukuk market, according to a report released in May by Abbas Chérif, an independent Islamic finance consultant.
African countries have issued USD 5.52 billion in sovereign sukuks to date, representing just 0.7% of the global sukuk market, according to a report released in May by Abbas Chérif, an independent Islamic finance consultant. The report notes that the global total of these Sharia-compliant bonds has reached USD 788 billion, making up about 17% of the overall Islamic finance market. Sukuk issuances worldwide have grown significantly, from USD 53 billion in 2010 to over USD 182 billion in 2022.
In Africa, interest in Islamic bonds has been rising for nearly a decade. Nine African countries have issued a total of 773 sukuks: The Gambia, Côte d’Ivoire, Nigeria, Senegal, South Africa, Sudan, Togo, Mali, and Morocco. The Gambia stands out with the highest number of issuances, totaling 730 operations for modest amounts. The West African country has raised USD 446 million through short-term sukuks with maturities ranging from 3 to 12 months. South Africa has mobilized the largest amount, USD 1.54 billion, followed by Nigeria with USD 1.43 billion, Senegal with USD 985.4 million, and Côte d’Ivoire with USD 460 million.
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Sukuk (Islamic bond or “Sharia-compliant” bond) is an Islamic financial certificate that represents a portion of ownership in a portfolio of eligible existing or future assets. They can be considered as an Islamic version of conventional bonds. Sharia (Islamic law) prohibits lending with interest payments (riba), which is considered usurious and exploitative. Thus, bonds are forbidden in Islamic finance.
Sukuk does not represent a debt obligation. Upon its issuance, the issuer sells certificates to investors. Then, the issuer uses the proceeds from the certificates to purchase the asset, and investors receive partial ownership of the asset. The investors are also entitled to part of the profits generated by the asset.
