North Africa takes fresh look at Islamic banking at African Development Bank conference
On 14 December, the African Development Bank hosted a panel discussion on the potential of Islamic finance in North Africa. Focus was on the Bank’s capacity to promote the development of the region following the financial strain North Africa has undergone as a result of this year's political instability.
Professor Rodney Wilson of Durham University was the keynote speaker and led the discussion. Wilson is an expert on Islamic finance, and is a member of the Organisation for Economic Cooperation and Development (OECD) taskforce on corporate governance for stock exchanges in the Middle East and North Africa region. He also serves on the Islamic Financial Services Board’s working group on Sharia compliance.
The debate emphasised the prospect of Islamic finance in the Tunisian context – a country that has been home to numerous initiatives in this area over the last several months. Tarek Mrad, a Tunisian journalist, moderated the debate. Panelists included Amen Bank CEO Ahmed Karam; Slaheddine Kanoun, interim administrator of Banque Zitouna; Karaouli Habib, CEO of , Banque d’affaires de Tunisie; and Hatem Saigh, asset management director at, Tunisie Valeurs.
The panel considered the state of Islamic banking in North Africa, examining why it had failed to take-off in Tunisia. It speculated on the potential contributions of Islamic banking for economic development. Although there has been some capital market development in North Africa, with stock markets in Egypt, Morocco and Tunisia, there has been only limited issuance of, and trading in, Islamic sukuk securities. The panel argued that sovereign and corporate sukuk could attract investment funds from the Gulf Cooperation Council and could provide a useful instrument for the liquid holdings of Islamic banks operating in North Africa.
The panel considered the rationale for Islamic finance as a tool for development on the basis that there were consumers whose demand for sharia compliant products were not being met. It was stated that once sharia compliant financing facilities become available, it funds that otherwise might not be available could be harnessed for both commercial and development projects. Professor Wilson explained that in addition to diversifying funding sources, Islamic finance could ensure better monitoring of how funds are deployed, improving the effectiveness of financial intermediation.