DUBAI (Reuters) - The Islamic Corporation for the Development of the Private Sector (ICD) plans to open two new Islamic banks in Mali and Benin next year as part of efforts to expand the industry’s consumer base in Africa, its chief executive said.
“The issue for Islamic banking in Africa is not on the demand side which is potentially massive, but rather it is a supply side issue,” Khaled Al-Aboodi said in a speech in Djibouti this week.
The Jeddah-based ICD, a private sector arm of the Islamic Development Bank, a multilateral institution, will seek to establish Islamic financial institutions including banks and takaful insurers on the continent, Aboodi said.
He did not elaborate on how the Mali and Benin banks would be set up, but the ICD established Tamweel Africa Holding (TAH) in 2009 as a vehicle to establish, acquire and manage Islamic financial institutions in West Africa.
Senegal-based TAH, jointly owned by the ICD and Turkey’s Asya Bank, currently holds shares in Islamic banks in Senegal, Niger, Guinea and Mauritania.
In the last two years the ICD has extended $184 million in financing to borrowers in African countries including Mauritania, Sudan, Gabon, Gambia and Mali.
It is also advising governments of some member countries on how to issue sovereign sukuk. The Senegal government is planning a $200 million sukuk, which would help local Islamic lenders manage their liquidity, Aboodi said without specifying when the issue might occur.
“We see sukuk as the jewel in the crown of Islamic finance and we are currently working on the structuring issues for several African countries. This is a development we see as providing a tremendous boost for African Islamic infrastructure finance.”
Established in 1999, the ICD supports the economic development of its 51 member countries by financing private sector projects which follow Islamic principles.