BCEAO accepts Islamic bonds at refinancing windows

Mar 10, 2014

The Monetary Policy Committee decided last Wednesday that Islamic obligations that the Senegalese government is planning to issue on the regional financial market will now be admissible at the refinancing windows of the Central Bank of West African States (BCEAO).

The Monetary Policy Committee decided last Wednesday that Islamic obligations that the Senegalese government is planning to issue on the regional financial market will now be admissible at the refinancing windows of the Central Bank of West African States (BCEAO).

Thiemoko Meyliet Koné, the governor of the BCEAO, said that
"it is not only the states which have raised the issue of Islamic finance, the highest authorities of the Union also wanted Islamic finance - along with traditional finance - to take over for the financing of certain activities," newspaper Le Soleil reports.

This decision aims to promote new financing instruments for EU economies while diversifying products able to boost the deepening of the regional financial market and attract investors.

Senegal will thus be able to issue Cfaf100 billion (€152.5 million) in Islamic bonds (sukuk) in 2014, as announced a few months ago.

Although Islamic finance has seen the greatest growth over the past decade in south-east Asia and the Middle East, institutions offering sharia-compliant financing are making increasing inroads into African markets as well

The Islamic Development Bank (IDB) and its private sector arm, the ICD, have invested in several West African markets. They
cut
acquired a 68.7 per cent stake in the Islamic Bank of Senegal in 2009, according to the Oxford Business Group.

Interest-free loans offered by Islamic banks are expected to increase access to formal banking for low-income households, due to a large majority of the population being Muslim (94 per cent).ADNFCR-2976-ID-801701617-ADNFCR