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Sukuk Market was created as an alternative to the ordinary bonds. This is because the latter offers interest while Sukuk offers profits. Therefore, we can say that Sukuk is sharia compliant and most acceptable by the Muslim countries.

Currently Malaysia is the largest Sukuk Market. Saudia Arabia, United Arab Emirates have most recently issued the Sukuk bonds. This is issued mostly by the Islamic Finance Institutions because it has sharia aspects.

In fact the Sukuk market is currently very tiny.  There are some African countries which have been experimenting with the Sukuk market. These are: Kenya, Nigeria, Senegal and Ivory Coast. The problem is that the process involved in issuing Sukuk bonds is a barrier to full adoption.

Below is a quote from Kenya’s Budget Statement Speech for Financial Year 2017/2018 delivered by Cabinet Secretary  for Finance Mr. Henry Rotich on 30th March 2017 at the national Assembly of Kenya.

“I intend to amend the Public Finance Management Act to provide for issuance of Sukuk bond (Islamic bond) as an alternative source of financing our development projects. I also intend to amend the tax statutes to provide for equivalent tax treatment of these new financial products…”

By Henry Rotich, Kenya Cabinet Secretary for Finance

The International Monetary Fund (IMF) has been encouraging majority stakeholders to issue more and in other cases incorporate Sukuk.

The ICD is assisting many African Countries to enter into this new market (Senegal and Cote d’ivore (Ivory Coast). The negotiation process involves the Sharia lawyers.

Benefits of Sukuk: African Sukuk has a capacity of adding diversification. For instance in 2014, Hong Kong generated USD$ 1 billion as a result of Sukuk.

Read more about Sukuk here.

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