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ISLAMIC FINANCE & CAPITAL MARKETS

Sukuk Issuance in Egypt Expected to Reach EGP 7.5bn During 2021

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Egypt will witness sukuk issuances worth over EGP 5bn before the end of this year, bringing the total expected outstanding of Islamic bonds to more than EGP 7.5bn in 2021, Sayed Abdel Fadeel, head of Central Department for Corporate Finance at Egypt’s Financial Regulatory Authority (FRA) told Daily News Egypt on Monday.

Abdel Fadeel’s remarks defied previous official expectations of EGP 20bn worth sukuk issuances.

Contact Financial Holding launched the only sukuk issuance YTD in Egypt, with a value of EGP 2.5bn. Noteworthy, FRA still has sukuk offerings on the table, according to Abdel Fadeel.

Hassan Allam Holding, Palm Hills Developments, Wadi Degla, Amer Group, and an agricultural reclamation company considered offering sukuk during the coming period, the most likely of which were by Palm Hills and Wadi Degla.

Abdel Fadeel revealed that Amer Group’s sukuk offering is expected to be postponed to the beginning of next year. The company aims to adopt a mixed formula in issuance that consists of two types of sukuk formats, which will take more procedures and time. 

Egypt saw only three sukuk issuances in the first year of approval (2020), with a total value of EGP 5.1bn. 

FRA Chairperson Mohamed Omran said in an earlier statement that the authority sought to develop the sukuk market in 2021, once economic conditions improve and the need for new investments arises.


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ISLAMIC FINANCE & CAPITAL MARKETS

UAE Mega Projects Fuel Sukuk & Bond Market Expansion

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Ever wondered how a nation can build towering skyscrapers and a greener tomorrow? The UAE is proving it’s possible. It’s not just about flashy architecture; it’s a strategic play. A wave of ambitious UAE Mega Projects, from futuristic cities to groundbreaking solar farms, is transforming the landscape and igniting a Sukuk and bond market boom. This isn’t just construction; it’s a carefully crafted vision, weaving sustainability into the very fabric of the UAE’s economy, a vision poised to reshape global finance for generations. Ready to see how they’re pulling it off?

From the inspiring legacy projects of Expo 2020 Dubai, which continue to evolve into thriving communities, to futuristic smart cities pushing the boundaries of urban living and pioneering green energy infrastructure setting new global standards, the UAE is setting ambitious targets that are not only diversifying its economy but also demonstrating a powerful and unwavering commitment to global climate goals. This pervasive focus on sustainability has become an integral part of these large-scale ventures, with green and sustainable bonds rapidly gaining traction as the preferred financing tools, attracting responsible capital from around the world.

A Blueprint for Development

The UAE’s strategic blueprint for national development places sustainability at its very core. This isn’t a recent trend or a fleeting initiative; it’s a deeply rooted, long-term commitment that permeates all levels of government and industry. The nation has strategically prioritized the development of a robust green economy, aligning its national policies with global climate accords, such as the Paris Agreement, and setting ambitious targets for emissions reduction, renewable energy adoption, and sustainable resource management. The remarkable and highly visible success of transformative initiatives like the Mohammed bin Rashid Al Maktoum Solar Park, one of the world’s largest single-site solar projects, and the Barakah nuclear energy plant, the first nuclear power plant in the Arab world, vividly showcases the UAE’s tangible and unwavering commitment to diversifying its energy mix, reducing its reliance on fossil fuels, and transitioning to cleaner and more sustainable energy sources.

These landmark projects have garnered significant international attention and acclaim, not just for their sheer scale, engineering prowess, and technological innovation, but also, and perhaps more importantly, for their unwavering environmental focus and their contribution to global efforts to combat climate change. These projects are not isolated initiatives; they are integral components of a comprehensive and interconnected national strategy, a testament to the UAE’s long-term vision for a sustainable future. The UAE’s commitment to sustainability is not just a talking point; it’s a powerful driving force behind its economic development, shaping its investment priorities, and influencing its policy decisions. This commitment is woven into the very fabric of the nation’s long-term plans, driving innovation, fostering entrepreneurship, and attracting responsible global investment.

The Rise of Sustainable Finance

As the UAE government strategically pushes forward with its ambitious plans to transition toward a more diversified, knowledge-based economy, the crucial and increasingly important role of sustainable investments cannot be overstated. These forward-thinking and strategically aligned initiatives are fueling the rapidly growing demand for increasingly sophisticated financial instruments, including Sukuk and bonds, particularly those that adhere to stringent Environmental, Social, and Governance (ESG) principles.

This surge in demand for sustainable financing is not only creating exciting and lucrative opportunities for investors seeking both financial returns and positive social impact but also driving innovation and transformation within the global financial sector. The UAE is not only building a sustainable future; it’s also actively building a robust and resilient sustainable financial ecosystem to effectively support that future. This carefully crafted ecosystem is specifically designed to attract responsible capital from around the world and facilitate the financing of projects that contribute to both long-term economic growth and demonstrable environmental sustainability.

Global credit rating agencies, including Standard & Poor’s and Fitch Ratings, have consistently projected a significant and sustained rise in Sukuk and bond issuances, driven by the UAE’s increasing and strategic reliance on alternative sources of funding for its portfolio of mega-projects. The global appetite for sustainable investments, particularly those aligned with ESG criteria, is growing rapidly, and the UAE is perfectly positioned to capitalize on this powerful and transformative trend. The concerted push towards green and sustainable financing has contributed significantly to the rising prominence and appeal of the Sukuk market, as investors increasingly seek to align their portfolios with ESG factors and contribute to a more sustainable future.

The UAE has emerged as a clear and recognized leader in this dynamic space, particularly with the strategic and timely issuance of green Sukuk and bonds, which attract a growing and increasingly diverse pool of international investors eager to back projects that adhere to stringent ESG criteria and demonstrate a commitment to environmental responsibility. This is not just a regional trend; it’s a global shift in investment priorities, a fundamental change in how investors evaluate risk and return. This shift is driven by a growing awareness of the interconnectedness of economic prosperity and environmental sustainability, the increasing recognition of the importance of sustainable development, and the understanding that ESG investments can offer both competitive financial returns and positive social and environmental impact.

Bashar Al Natoor, Managing Director and Global Head of Fitch Ratings’ Islamic Finance Group has highlighted the fact that while traditional financing methods continue to play a role in funding mega-projects, these large-scale developments are simultaneously stimulating demand for more innovative and sustainable funding approaches, particularly those that align with evolving investor preferences and ESG considerations. “Sukuk issuances have gained significant traction in parallel with the rise in green projects, which have generated substantial interest from both local and international investors,” Al Natoor explained.

The increasing issuance of green bonds and Sukuk is not only fully in line with the UAE’s ambitious environmental goals and its commitment to a green economy but also reflects a broader trend in global financial markets where sustainable financing is rapidly becoming mainstream, moving from a niche area to a core component of investment strategies. The UAE is not just participating in this powerful trend; it’s actively setting the pace, driving innovation, and shaping the future of sustainable finance. This recognized leadership position is attracting global attention, solidifying the UAE’s reputation as a leading hub for sustainable finance, and encouraging other nations to follow its example.

Infrastructure Development and Financial Market Growth

The growing and sustained popularity of Sukuk as a preferred financing tool in the region is a direct and strategic response to the UAE’s dynamic and forward-thinking shift toward sustainable infrastructure development. Global investors are becoming increasingly sophisticated in their investment strategies and are showing a heightened and discerning interest in projects that offer not only attractive financial returns but also contribute tangibly to sustainable development, positive social impact, and environmental protection.

This significant shift in global investment preferences has aligned perfectly with the UAE’s forward-thinking and strategically aligned economic objectives, creating a symbiotic and mutually reinforcing relationship between large-scale infrastructure expansion and the robust and sustained growth of its financial markets. The UAE is not just building infrastructure; it’s strategically building a sustainable and resilient economy, one that is capable of withstanding global economic shocks and adapting to the challenges of a rapidly changing global landscape.

The UAE has long been a pioneer in developing a robust, innovative, and internationally recognized Sukuk market in the region, and it is now confidently and strategically leading the charge in structuring and issuing green and sustainable Sukuk to effectively meet both its substantial and growing financing needs and its ambitious and unwavering sustainability objectives. This proactive, strategic, and forward-thinking approach has allowed the country to attract investment from a broader, more diversified, and increasingly global pool of capital, as international investors increasingly seek out opportunities that contribute to not only strong and sustainable financial growth but also demonstrable environmental sustainability and positive social impact.

The UAE is not just attracting capital; it’s strategically attracting responsible capital, the kind of investment that makes a positive difference. This responsible capital is crucial for ensuring that the UAE’s portfolio of mega-projects is not only financially viable and profitable but also environmentally and socially responsible, contributing to the long-term well-being of the nation and its people.

Fostering Innovation and Attracting Investment

The UAE’s commitment to innovation and sustainable development extends beyond just project development and implementation. It’s also clearly evident and strategically implemented in its approach to financing these critical projects. The country has proactively created a supportive and enabling regulatory environment that actively encourages the issuance of green and sustainable Sukuk, making it significantly easier and more attractive for companies to raise the necessary capital for environmentally friendly and socially responsible projects.

This carefully crafted and supportive regulatory framework is a key and crucial factor in the UAE’s remarkable success in attracting substantial international investment for its portfolio of mega-projects. The UAE is not just building projects; it’s strategically building a sustainable and thriving financial ecosystem, one that fosters innovation, encourages entrepreneurship, and attracts responsible investment in sustainable technologies, green initiatives, and environmentally sound projects.

The positive impact of these transformative UAE Mega Projects extends far beyond just economic growth and environmental sustainability. They are also creating numerous jobs, driving technological innovation across various sectors, and significantly improving the overall quality of life for residents of the UAE. These strategically designed projects are transforming the UAE into a global hub for innovation, a center of excellence for sustainable development, and a model for other nations to emulate. The UAE is not just building a nation; it’s strategically building a sustainable and resilient model for urban development, one that balances economic progress with environmental protection and social well-being.

The Future of Sustainable Finance in the UAE

The future of the UAE’s dynamic and evolving financial landscape is inextricably and inextricably linked to the continued success, timely completion, and sustainable operation

…and long-term viability of these strategically important mega-projects. As the country continues its strategic investments in sustainable infrastructure, green technologies, and environmentally responsible development, the demand for green and sustainable financing, particularly in the form of Sukuk and bonds, will only continue to grow and intensify.

The UAE is exceptionally well-positioned to capitalize on this powerful and accelerating trend, further solidifying its position as a recognized global leader in sustainable finance, a pioneer in green initiatives, and a champion for responsible investment. The UAE is not just building for today; it’s strategically building a prosperous, sustainable, and resilient future for generations to come. This future is one where economic growth and environmental sustainability are not viewed as mutually exclusive objectives but rather as mutually reinforcing goals, two sides of the same coin. The UAE is demonstrating to the world that it is indeed possible to achieve both, creating a compelling and inspiring model for other nations to follow and emulate.

The ongoing development and refinement of the regulatory framework governing sustainable finance, coupled with the increasing sophistication and awareness of global investors regarding ESG factors, will further drive the growth, depth, and sophistication of the sustainable finance market in the UAE. This sustained and robust growth will not only support the financing of future mega-projects, ensuring their timely completion and long-term viability but also encourage the widespread adoption of sustainable practices across all sectors of the economy, from manufacturing and energy to transportation and real estate.

The UAE’s mega-projects are more than just buildings; they’re a blueprint for a sustainable future. Pioneering green energy and a thriving green finance system are key to this vision. This commitment to innovation and a green economy sets a new standard for responsible development. The UAE proves that economic progress and environmental stewardship go hand in hand. This holistic approach positions the UAE as a global leader in sustainable prosperity.


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ISLAMIC FINANCE & CAPITAL MARKETS

Sukuk’s Role in Islamic Finance – 4th AlBaraka Forum Highlights

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Ever wondered how money can do more than just make a profit? Imagine investments that not only grow your wealth but also contribute to a better world. That’s the magic of Sukuk, a rising star in the world of Islamic finance. At the heart of exploring this exciting financial tool is the AlBaraka Forum Regional Conference. This gathering of experts, policymakers, and thought leaders dives deep into how Sukuk is reshaping the financial landscape, driving sustainable economic growth, and opening doors to ethical investment for everyone. Want to learn more about how Sukuk can build a brighter future? Keep reading to discover the key takeaways and insights from this important event.

Leading experts and policymakers gathered to discuss its role. They discussed its role in building a more ethical future. This event highlighted Sharia-compliant finance’s positive impact. It offers innovative solutions to pressing challenges. These challenges are economic and environmental.

A Gathering of Visionaries

The AlBaraka Forum Regional Conference attracted a diverse audience. It included prominent figures from finance and development. Central bankers, regulators, Sharia scholars, investors, and academics attended. The presence of Saleem Ullah and Akif Saeed emphasized regulatory importance. They highlighted its importance for Islamic finance’s sustainable growth. Justice Syed Mansoor Ali Shah offered a legal perspective. This perspective is on Pakistan’s transition to Islamic banking.

Key leaders like Ahsan Iqbal and Zafar Masud shared insights. Iqbal stressed collaboration between key stakeholders. These stakeholders include the government, Islamic banks, and the Shariah fraternity. This is needed for research, product development, and navigating the banking conversion. He emphasized a unified approach for a smooth transition. This collaboration addresses challenges and maximizes opportunities.

Yousef Hassan Khalawi described Sukuk’s true essence. They are more than financial instruments, he emphasized. They embody a commitment to sustainable, ethical development. They align with Islamic finance’s core values. Khalawi noted Sharia-compliant finance’s global impact. It offers solutions to economic and environmental challenges. He expressed optimism about Sukuk’s transformative potential. It can reshape investment and drive meaningful change.

Muhammad Atif Hanif discussed sovereign Sukuk for state budgets. He also discussed their role in empowering SMEs. The conference highlighted Sukuk’s role in financing responsible projects. Renewable energy, green infrastructure, and sustainable transportation were highlighted. This focus on sustainability addresses climate change. It also promotes inclusive economic growth. The AlBaraka Forum explored how Sukuk can attract investment. It explored investment in these vital sectors.

Navigating the Sukuk Landscape

The AlBaraka Forum addressed market challenges and opportunities. Discussions focused on standardized structures and transparency. These are needed for investor confidence and growth. Participants examined international case studies for best practices. The conference discussed regulatory and legal frameworks. These frameworks impact Sukuk issuance. It emphasized an enabling environment for Islamic finance. This included the role of credit rating agencies and secondary markets.

The conference highlighted Pakistan’s transition to Islamic banking. This move sets a precedent and underscores Islamic finance’s growth. The AlBaraka Forum facilitated discussion on this decision. It discussed its implications and shared best practices. Discussions covered converting conventional banks to Islamic operations. Staff training, product development, and IT system adaptations were included.

An AlBaraka Forum video provided insights into Sukuk’s origins. It showed their evolution into a major financial product. The video highlighted Pakistan’s Ijarah Sukuk issuance. This issuance demonstrates Sukuk’s potential for infrastructure projects. It touched on Islamic finance’s historical context. It also touched on global Sukuk market growth. The market’s increasing sophistication and appeal were noted.

Actionable Recommendations

The AlBaraka Forum produced recommendations for advancing Sukuk. The recommendations focused on standardization and transparency. They also focused on innovation. Participants emphasized capacity building and education. This was to enhance understanding of Islamic finance and Sukuk. The conference fostered dialogue for a more ethical future. It aimed for a more sustainable financial landscape.

Ms. Aalia Jafar emphasized the AlBaraka Forum’s commitment. The commitment is to innovation and ethical practices. It is a commitment to ethical practices in Islamic finance. The AlBaraka Forum promotes dialogue and knowledge sharing. Its initiatives raise awareness of Islamic finance’s potential. It can address global challenges and promote development. The forum’s work shapes finance’s future. It ensures ethical, profitable practices contribute to well-being.

The Future of Sukuk: A Promising Outlook

The AlBaraka Forum explored Sukuk’s transformative potential. It explored its potential for sustainable growth. It also explored its potential for financial inclusion. Discussions highlighted Islamic finance’s growing recognition. It is a viable alternative offering solutions to challenges. These challenges are global. Sukuk’s future is promising with rising investor demand. As regulations evolve, Sukuk will play a greater role. They will finance sustainable projects and promote growth. This growth is inclusive. The AlBaraka Forum’s contributions are invaluable.

They provide guidance and foster collaboration. This unlocks Sukuk’s potential. Continued dialogue is essential for realizing this potential. It is essential for building a more sustainable economy. This economy is global. The conference’s insights will shape Islamic finance’s future. They will shape its role in the 21st century. The AlBaraka Forum remains a vital force for positive change.

The forum’s commitment to innovation and ethical practices is vital. It is vital in Islamic finance. It makes the forum a key player in the global landscape. It provides a platform for thought leaders and experts. They can share practices and develop strategies. These strategies promote Islamic finance’s growth. The AlBaraka Forum’s focus on Sukuk is important. Sukuk mobilizes capital for sustainable projects. It promotes financial inclusion and economic empowerment.

The AlBaraka Forum facilitates knowledge sharing and capacity building. It educates stakeholders about Islamic finance. This fosters understanding and wider adoption. This educational role builds a foundation for Islamic finance’s growth. This growth is global.

Muhammad Atif Hanif discussed sovereign Sukuk for state budgets. He also discussed their role in empowering SMEs. The conference highlighted Sukuk’s role in financing responsible projects. Renewable energy, green infrastructure, and sustainable transportation were highlighted. This focus on sustainability addresses climate change. It also promotes inclusive economic growth. The AlBaraka Forum explored how Sukuk can attract investment. It explored investment in these vital sectors.

Pakistan’s Pioneering Move: A Beacon

The conference highlighted Pakistan’s transition to Islamic banking. This move sets a precedent and underscores Islamic finance’s growth. The AlBaraka Forum facilitated discussion on this decision. It discussed its implications and shared best practices. Discussions covered converting conventional banks to Islamic operations. Staff training, product development, and IT system adaptations were included.

An AlBaraka Forum video provided insights into Sukuk’s origins. It showed their evolution into a major financial product. The video highlighted Pakistan’s Ijarah Sukuk issuance. This issuance demonstrates Sukuk’s potential for infrastructure projects. It touched on Islamic finance’s historical context. It also touched on global Sukuk market growth. The market’s increasing sophistication and appeal were noted.

The AlBaraka Forum plays a vital role in nurturing the growth of Islamic finance by acting as a central hub for knowledge and education. Throughout this article, we’ve explored how the Forum’s Regional Conference highlighted Sukuk’s potential for sustainable development, financial inclusion, and ethical investment. We’ve also examined the key discussions surrounding regulatory frameworks, the empowerment of SMEs through Sukuk financing, and Pakistan’s pioneering move towards a fully Islamic banking system.

Furthermore, we touched upon the historical evolution of Sukuk and the actionable recommendations that emerged from the conference, all geared towards standardizing Sukuk structures, increasing transparency, and fostering innovation within the market. Ultimately, the AlBaraka Forum’s commitment to educating stakeholders – from investors and financial professionals to regulators and the general public – is fundamental to broadening understanding and acceptance of Islamic finance. This educational mission is essential for laying a strong foundation for the continued expansion of Islamic finance on a global scale, paving the way for a more ethical and sustainable financial future. Interested in learning more? Explore the AlBaraka Forum website for resources and upcoming events.


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ISLAMIC FINANCE & CAPITAL MARKETS

How African Countries Can Utilize Zakat to Combat Poverty

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Baba Yunus Muhammad

Africa, with its population surpassing 1.4 billion people, is home to an estimated 44% of the global Muslim population, predominantly residing in sub-Saharan and North African regions. While rich in resources and cultural diversity, the continent continues to grapple with persistent poverty, which afflicts approximately 34% of its population as of recent estimates. Utilizing Islamic social finance instruments, such as Zakat, can offer significant potential for poverty alleviation and sustainable economic development across the continent.

Poverty in Africa: An Overview

Despite economic advancements in some parts of Africa, poverty remains a daunting challenge. According to the World Bank, over 489 million Africans live below the poverty line of $1.90 per day. Nigeria, the most populous African nation and home to a significant Muslim majority in its northern region, accounts for a staggering 87 million people living in extreme poverty. In other nations like Somalia, Chad, and Sudan, poverty rates are exacerbated by protracted conflicts, limited economic opportunities, and fragile state structures. Meanwhile, the lack of access to basic education, healthcare, and employment perpetuates the cycle of destitution.

Zakat: A Pillar of Islamic Economic Justice

Zakat, the third pillar of Islam, mandates eligible Muslims to give at least 2.5% of their qualifying wealth annually to assist the needy and marginalized. It is not only a form of worship but also a socio-economic mechanism designed to redistribute wealth, reduce inequality, and foster solidarity within society. In Africa, where millions live in deprivation, the proper utilization of Zakat could create pathways to uplift the poor, particularly in predominantly Muslim communities.

Current Zakat Trends in African Countries

Across Africa, the practice and institutionalization of Zakat vary widely. Countries such as Sudan, Somalia, and Nigeria have traditional Zakat systems managed either by government agencies or community organizations. However, challenges such as poor governance, limited institutional capacity, and lack of awareness have constrained the optimal use of Zakat.

Nigeria

Nigeria’s National Zakat Board has recorded incremental progress in mobilizing Zakat funds. However, the country’s potential remains largely untapped. An estimated annual Zakat fund of over $1 billion could be mobilized if compliance and systems were improved.

Sudan and Somalia

In countries like Sudan and Somalia, Zakat institutions have been instrumental in providing relief to impoverished households. For instance, the Sudanese Zakat Chamber distributed funds to nearly 700,000 individuals in 2022, focusing on food security, education, and medical aid. Yet, limited scalability and weak data management hinder impact.

Lessons from Global Practices

Africa can draw inspiration from other regions where Zakat is systematically utilized to address poverty. In Indonesia, for instance, Zakat collection steadily rose from $855.8 million in 2021 to $1.97 billion in 2023. Similarly, Malaysia integrates Zakat with national socio-economic planning, leveraging it to fund affordable housing and educational scholarships. These examples demonstrate the importance of regulatory frameworks and innovative approaches in maximizing Zakat’s impact.

Key Strategies for Strengthening Zakat in Africa

National and Regional Zakat Roadmaps: Governments, in collaboration with Islamic scholars and financial experts, should develop structured roadmaps. These frameworks should include specific targets for Zakat collection, transparency in distribution, and monitoring mechanisms.

Digital Platforms for Collection and Distribution: Leveraging technology to enhance Zakat systems can streamline the process. Mobile money platforms, widely used across Africa, can facilitate contributions and ensure funds reach deserving beneficiaries.

Expanding the Definition of Zakat Beneficiaries: Aligning with contemporary interpretations, Zakat could be used to address modern forms of enslavement such as human trafficking, indebtedness, and rehabilitation for individuals affected by substance abuse.

Capacity-Building for Institutions: Training personnel in Zakat management and ensuring robust financial tracking can enhance the credibility and efficiency of Zakat distribution.

Empowerment Through Zakat: Beyond immediate relief, Zakat should be invested in sustainable development programs. Providing capital for microenterprises, agricultural ventures, and vocational training can empower individuals to attain self-sufficiency.

Partnerships with International Organizations: African Zakat bodies can collaborate with global institutions such as Islamic Relief and the Islamic Development Bank to adopt best practices and access additional funding.

The Role of Education and Advocacy

Public awareness campaigns to educate Muslims about their religious duty to pay Zakat can significantly enhance compliance rates. Additionally, integrating Zakat education into religious curriculums can instill the principles of economic justice and responsibility from a young age.

A Vision for Poverty-Free Africa

If effectively implemented, Zakat has the potential to transform Africa’s socio-economic landscape. For example, if only 1% of Africa’s Muslim population paid Zakat on wealth averaging $10,000 per capita, over $14 billion could be generated annually. This amount, when strategically allocated, could fund healthcare systems, build schools, and provide livelihoods for millions.

Zakat embodies the spirit of collective responsibility and social justice. By harnessing its full potential, African countries can take significant strides toward eradicating poverty and fostering equitable growth, creating a future where every individual has access to opportunities and dignity.

Baba Yunus Muhammad is the Africa Islamic Economic Forum


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