BCEAO and IDB in partnership to promote Islamic finance in West Africa
The Central Bank of West African States (BCEAO) and the Islamic Development Bank (IDB) signed on September 7th a cooperation agreement to promote Islamic finance in the West African Economic and Monetary Union (WAEMU)."The BCEAO is committed to implement the necessary reforms in order to better take into account the specificities of the Islamic financial industry," said BCEAO governor Tiemoko Meyliet Koné, quoted by Le Soleil newspaper.
BCEAO, which funds the development of Islamic finance, will benefit from the IDB expertise regarding the opportunities offered by this alternative method of financing.
IDB will also facilitate the relationship between the BCEAO and various institutions in charge of developing industry standards for Islamic finance in the region.
However, much work remains to be done to develop this type of finance, which does not charge interest on loans, in the WAEMU.
While its growth is important on the global stage, with total assets reaching 1300 billion dollars in 2011, its penetration in West Africa remains weak.
"The WAEMU represents less than 0.01 percent of Islamic finance market, despite high demand,'' said Mouhamadou Lamine Mbacké, CEO of the Institute of African Islamic Finance (IAFI), as quoted earlier this year by APS news agency.
With a banking rate situated between three and seven per cent, the WAEMU should benefit from alternative methods such as Islamic finance to improve people's access to credit.