It's January, so it must be time to dust off the story that there are growing signs that Africa is ready to embrace Islamic finance in a big way. As before, the early signs are there but the green shoots seem to want to remain green shoots and refuse to grow into a larger plant. So what are these green shoots? Last year saw Nigeria became the first big economy in sub-Saharan Africa to look at Sukuk when Osun state in the southwest of the country issued a $62m tiddler Sukuk. Senegal followed swiftly by announcing plans for its own Sukuk this year. And then South Africa suggested that it would do the same. Finance minister of SA, Pravin Gordhan , says "We are very close". Morocco , Tunisia and Kenya are said to be laying the legal groundwork to be able to issue Sukuk. But still no cigar. Gambia and Sudan have issued Sukuk but they were very much 'toe in the water' issues of a small size and with short tenors. One of the core problems is the legislative and regulatory framework required to issue and sell Sukuk. Sukuk need a robust legal framework covering their issuance and trading and many jurisdictions are presently found wanting in this regards. The truth is that it would be tough to develop an Islamic debt capital market when there is no real conventional debt capital market to speak of yet. Africa as a whole is still at the start of this particular curve. The only nation to try to make this leap straight into Islamic debt capital market in the past has been Brunei and the results speak for themselves.
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