S&P calls on North Africa countries to develop Islamic finance
Standard & Poor's has urged North African countries to promote the development of Islamic finance in a bid to loosen the financing constraints they currently face.Standard & Poor's has urged North African countries to promote the development of Islamic finance in a bid to loosen the financing constraints they currently face.
The ratings agency believes that post-Arab Spring economic factors play in favour of the development of Islamic banks in Egypt, Tunisia and Morocco, provided that regulators, politicians and banks establish a climate of trust, Ecofin news agency reports.
While Islamic finance is popular in the Gulf countries, in north Africa, the penetration of Islamic finance remains low, accounting for only five per cent of bank assets, according to S & P. Therefore, the agency does not expect major development in this industry for two to three years.
According to a report by the African Development Bank, entitled "Islamic Banking and Finance in North Africa", these low figures are partly attributable to the lack of supply, the low awareness of Islamic finance products and the lack of government support.
Several recent initiatives have been introduced to reverse this trend, including a partnership between the French Development Agency (AFD) and the Islamic Development Bank (IDB), created earlier this year.
The IDB will expand its range of financial tools to the Islamic finance sector, particularly in Morocco, Tunisia and Egypt.
This cooperation will revolve around microfinance products and will include the sharing of experiences, studies and pilot projects. Through this partnership, the AFD hopes to contribute to improving access to credit in North Africa.