Africa Hotspots
Stakeholder Panel
Cover
Presented By
Kazim O. Yusuf
Chief Executive Officer
Kord Capital Limited
1
Is Africa Really The Next Big Thing In
Islamic Finance?
Is
Africa
really
the
next
big
next
______________________________________
big thing in Islamic finance?
• The African market is rich in man power
• Improving stability in the region
• Demand for specialized Islamic financial products
• Large percentage of Sub Saharan Africans are Muslims
• Willingness of African governments such as Nigeria,
Kenya and Senegal to embrace Islamic finance
2
What Is The Potential For developing
theInpotential
for
IslamicWhat’s
Finance
African Markets?
_____________________________________
developing Islamic finance in
•
African
markets?
Long term and partnership type of investments needed
on the continent.
• Willingness of African governments such as Nigeria,
Kenya and Senegal to embrace Islamic finance
• Opportunity to reduce huge volume of debts in Africa
3
How
will
the
Islamic
finance
and
How will the Islamic finance and
investment market develop in Egypt
investment
market
develop
in
post regime change?
Egypt post regime change?
___________________________________________________________________________
• Egypt's volatile economy will need long term real sector
class of investments typical of Islamic finance
• Majority Muslim population and likely hood of a positive
sentimental bias
4
• Proliferation of laws supporting the development of
Islamic finance, adoption of transparency and Egypt’s
vantage position in the MENA region
Proliferation of laws,
adoption of tranparency
• Islamic finance will assist in developing its recently
volatile stock market through various offerings such as
Sukuk and portfolio Islamic investments.
5
The cart before the horse: Does
the conventional
banking
The cart
before the horse:
does the
conventional
banking
industry
industry need
to achieve
higherneed
to achieve
higher
levels ofbefore
penetration
levels of
penetration
before an Islamic finance market will
Islamic finance market will start
start to develop?
to
develop?
_______________________________________
• Islamic finance is an alternative, not a comparative
option to conventional finance.
6
•
•
Salam is an Islamic
Simple contracts such as Murabaha, Salam and Ijarah
are Agricultural
well suited to existing
rural structures.
financial
instrument
independent
of
conventional
Islamic finance does not need conventional banking to
develop. Salam is abanking
classic example of Agricultural
financial instrument
• African markets are in need of long term equity or
partnership capital ideal to Islamic finance
7
Can
CanIslamic
Islamicbanking
bankingprinciples
principlesbe
bea
catalyst
to bring
masses
a catalyst
to unbanked
bring unbanked
into the banking population?
masses into the banking
__________________________________________________
population?
• Distinction between the unbanked and the inadequately
banked?
• Inadequately banked due to :
 Sophistication of conventional banking system
 Religious and ethical sentiments
8
 Rural in-accessibility
 Illiteracy
 Huge wealth gap between rich and poor
UN report – 65% of Africans
are unbanked
• Islamic banking is positioned to bridge the gap not only
between the banked and unbanked but also between the
banked and inadequately banked.
• A recent UN report rates banking penetration in Africa
low with over 65% of the population unbanked
9
• Using Nigeria as a case study,
it has the largest
population of Muslims in Sub Saharan Africa with over
78million Muslims, making up 5% of the world Muslim
population –Pew Report, 2009
Pew Report – 5% of world
Muslim population are Nigerians
• Nigeria has a high unbanked population which can be
bridged by Islamic finance, more so Islamic microfinancing for rural areas.
10
Percentage (%) of African Muslim
Population
11
A survey conducted by EFinA revealed the following
Statistics on Nigeria
EfinA
survey
–
64
million
74 percent of adults (64 million) have never been banked
Nigerians
are
unbanked
21 percent of adults (18million) have bank accounts
Men have better access to finance; only 15 percent of
women currently have bank accounts
71 percent (9.6 million) of salaried workers vs. 15 percent
(4.3 million) of farm employees are banked
86 percent of rural adults are currently unbanked
12
What
developments
are
needed
in
What developments are needed
corporate
governance
and
in
corporate
finance
and
transparency before Islamic finance
transparency before Islamic
will progress?
finance will progress?
__________________________________________________________
• Training of regulators and Islamic finance professionals
• Robust Shari’ah Advisory Board
• Enforcement and compliance with professional code of
ethics
13
Will
Islamic
capital
markets
see
Will Islamic capital markets see
African governments issuing Sukuk
African
governments
issuing
over the coming five years?
Sukuk
over
the
coming
five
_______________________________________
years?
• Yes. Sukuk are suited for Public Private Partnerships
which are ‘economically en-vogue’ in most emerging
economies e. g
Nigerian MMA2 Domestic
Airport,
Housing Scheme in Lagos State, BRT Metro- Transport in
Lagos State .
14
• Political stability, transparency and viable Islamic finance
frameworks are conditions precedent to successful
African government issuance of Sukuks
Sukuks are re-assuring to
investors
• Sukuks are re-assuring to investors as they are project
specific
• Disclosure and transparency nature of Sukuk mitigates
risks dealing with governments with poor track records
15
Will investor
interest
be sufficient
to
Will Investor
interest
be
make these issues successful?
sufficient to make these issues
_______________________________________
successful?
• Yes, increasing growth opportunities in Africa’s
commodity and resource rich emerging market is
sufficient to sustain interest of investors
• Sukuk have competitively better risk assessment profile
16
• Kenya is currently working to issue a full sukuk to
attract foreign investors and passing legislation to
boost it by eliminating tax barriers – Reuters
website Feb 2011
African governments
working towards issuing Sukuk
• CBN governor confirmed that Nigeria will issue its
first sovereign sukuk within 18-months to boost
Islamic finance in the economy and Africa – Reuters
website June 2011 (at a conference in Senegal)
17
Who We Are?
________________________________________________________
Kord Capital Limited is an emerging market driven,
Who we are?
Shari’ah compliant investment company focused on
providing private equity investments and venture capital
services
consistent
with
the
ethical
investment
principles of investors.
• We are project based Private Equity firm.
18
Contact Us
___________________________________________________________
Contact Us
Telephone: +234 1 8418148, +234 8191207772
Fax: +234 1 2707024
Website: www.kordcapital.com
Kazim Yusuf - kazim.yusuf@kordcapital.com
Dare Ogunbona - dare.ogunbona@kordcapital.com
19
Thank you
Thank You
20