A recent study conducted by the International Monetary Fund (IMF) has explored the possibility of using Islamic finance for increased financial inclusion; whilst the conclusion of the report was mixed, the potential impact of adopting sharia financial practices could be significant.
Sharia compliant finance, in essence, is comprised of five ‘pillars’ which include profit and loss-sharing, risk avoidance, a ban on financing immoral activities, as well as the more well-known ban on interest payments.
Governments in Kenya and South Africa have both recently issued a sukuk, with South Africa notable for attempting to raise $500 million from its maiden bond issuing and for Moody’s Baa1 rating (the same as the rand.)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com