Central Bank of Egypt to host IFSB seminar on Sukuk

This one-day seminar is designed to provide an interactive environment enabling speakers and participants to explore the prospective role of Sukuk in social and economic development. To this end, the Seminar will offer perspectives of Sukuk that will revolve around a number of key issues. Firstly, tax, legal and regulatory issues on the development of the Sukuk market will be considered as well as the lessons from recent experience. Secondly, the potential role of the Sukuk market in addressing the global infrastructure funding gap, both in the developed and developing world, whilst tapping into the ethical investor market. Thirdly, the manner by which governments can harness the Sukuk market to overcome their fiscal constraints and the ways the Sukuk market can help to trigger greater financial sector development and capabilities for risk management by both private and public sector entities. Finally, the Seminar will discuss the potential for synergy in the roles of policy-makers, regulators and market players in helping to deepen the Sukuk market.

The topics of discussion in the Seminar are:

• Development of the Sukuk Sector: Legal and Regulatory Considerations
• Sukuk for Budgetary and Financial Sector Support: Structures and Country Examples, which includes a Special Presentation by the Islamic Development Bank
• Sukuk for Infrastructure Financing: Prospects and Case Studies
• Panel Discussion on Building Synergies for Sukuk Issuances

Chairpersons and speakers confirmed in this Seminar are:

• Jaseem Ahmed, Secretary-General, IFSB
• Dr. Ahmed Al Gebali, Director, Islamic Financial Services Department, Islamic Development Bank
• Ashraf Mohamed, Assistant General Counsel, Asian Development Bank
• Zainal Izlan Zainal Abidin, Executive Director, Islamic Capital Market, Securities Commission Malaysia
• Neil Miller, Partner and Global Head of Islamic Finance, Linklaters LLP, United Arab Emirates
• Dr. Mohamed Damak, Director, Global Head of Islamic Finance, Standard & Poor’s Ratings Services, United Arab Emirates
• Professor Dr. Ashraf Md. Hashim, Senior Researcher / CEO ISRA Consultancy Sdn Bhd, The International Shari’ah Research Academy for Islamic Finance

(C P I Financial / 12 March 2016)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Faisal Islamic Bank of Egypt to focus on MSMEs in new lending policy

Faisal Islamic Bank of Egypt finalised a plan to increase the percentage of loans granted to micro, small and medium enterprises (MSMEs) to 20% of the bank’s total loans portfolio by the end of 2019, according to deputy general manager of local investment, Sabri El-Bendary.

Faisal Islamic Bank of Egypt informed the Banking Supervision Department at the Central Bank of Egypt (CBE) at the end of last month, in accordance with the CBE’s instructions issued in January 2016, according to El-Bendary.

In January, the CBE launched an initiative to finance SMEs, and obliged banks to provide a minimum of 20% of their total loans portfolio to this sector within four years. Moreover, the CBE mandated that banks must submit a comprehensive outline indicating how they will implement the CBE’s recommendation. The deadline for banks to inform the CBE’s Banking Supervision Department of their implementation plan was the end of February 2016.

Faisal Islamic Bank of Egypt provided approximately EGP 1bn to MSMEs at the close of December 2015, approximately 13% of its total EGP 7bn loan portfolio, according to El-Bendary.

The CBE has provided allowances for banks to correct their plans from the time of submission until next.

Following the CBE’s proscription, Faisal Islamic Bank of Egypt created a MSME department, began training a staff to specifically handle MSME business, and has launched a risk management department.

El-Bendary expects Faisal Bank to begin granting loans to MSMEs next July, in accordance with the new CBE initiative .

Faisal Islamic Bank of Egypt recently withdrew the EGP 1m from the CBE to finance the purchase of housing for the first five middle and low-income homebuyers who had been approved to be financed. This came as part of the real estate financing initiative launched by the CBE in February 2014.

Faisal Islamic Bank recently obtained approval from the Egyptian Financial Supervisory Authority to use Murabaha (non-interest bearing loans) contracts to finance real estate development, allowing Islamic banks to finance this sector in accordance with Islamic law.

Faisal Bank allocated EGP 200m for this purpose, an amount it may increase. The bank’s funding comes under the parameters of contract signed with the Mortgage Finance Fund.

(Daily News Egypt / 06 March 2016)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Egypt takaful industry set for 20% growth in 2016

Islamic insurance has been gaining ground in Egypt as customers seek out sharia-compliant products.

The takaful industry in Egypt is expected to growth around 20% in 2016 as more players enter the market to meet robust demand for Islamic insurance products and services, the chairman of the country's insurance watchdog said.

Abdel-Raouf Kotb, chairman of the Insurance Federation of Egypt (IFE), said that growth has also been fueled by the introduction of new products to meet customer needs, such as insurance against risks from political violence as well as credit insurance, which had proven popular especially after local banks expanded their lending policies.

"The micro insurance instrument is expected to be issued soon to insure the production tools of lower income segments against theft and fire. It also aims to bridge the micro enterprises funding gap in Egypt," Kotb told Zawya.

Takaful insurance companies accounted for 12% of Egypt's insurance market during the period from January to August 2015, compared with a share of 8.75% for the whole of 2014, according to a report issued by the Egyptian Financial Supervisory Authority ( EFSA ) last November.

EFSA said that premiums of new and existing life takaful insurance certificates rose 38.7% to USD 1 billion at the end of October 2015, compared with USD 900 million a year earlier. New and renewed issues of property insurance witnessed slight growth of 1.1% during the period to reach USD 639 million.

Kotb said the number of takaful companies in Egypt has risen to nine with the entry of Emirate Egyptian Takaful Life Insurance Co., a subsidiary of SALAMA (Islamic Arab Insurance Company), last year.

"Growth in the takaful insurance sector is due to the acceptance it enjoys from large segments of clients looking for products that comply with the rules of Shariah, as well as from the Islamic finance sector's expansion in Egypt."

"Premiums of takaful insurance on properties amounted to USD 62 million as of the end of June 2015, which represents about 15.4% of the total insurance premiums worth around USD 385 million during the same period," said Kotb, who is also managing director of Egyptian Saudi Insurance Home (ESIH).

MARKET EXPANSION

Kotb said the ESIH has been strengthening its financial position in anticipation of the market's expansion by raising its capital to EGP 120 million (USD 15.3 million) after a recent injection of EGP 20 million.

"The premiums of ESIH stood at EGP 190 million in 2015, registering an increase of 4% compared with the year before, which was EGP 182 million. The company is targeting a growth of 13% in its direct premiums in 2016, which amounts to EGP 215 million," he said.

ESIH's total investment portfolio grew 11.6% to EGP 432 million in 2015, up from EGP 387 million by the end of June 2014.

Established in 2003, ESIH is the first takaful insurance company in Egypt and is backed by Gulf Arab investors, with contributions from Saudi and Emirati investors in the company estimated at 86.5%.

According to the Egyptian Financial Supervisory Authority , overall investments of insurance companies and cooperative insurance societies amounted to USD 7 billion in 2015 distributed across various investment channels, namely fixed bank deposits (26.1%), treasury bonds and government securities (23.8%), securities for sale (18.2%) and loans against insurance documents (1.3%).

(Zawya / 05 January 2015)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Egypt Signals Sukuk Intent While Preparing Foreign Bond Comeback

The pieces are falling into place for Egypt’s first Islamic bond sale, as Abdel-Fattah El-Sisi’s government grapples with foreign currency reserves near the lowest in 20 months and debt to overseas oil companies.

The Arab nation’s sukuk law is likely to be ready by the start of the new fiscal year in July, according to Finance Minister Hany Kadry Dimian, who told reporters in Cairo on Thursday the government will sell dollar-denominated Shariah-compliant notes once the rules are in place. Egypt also said last week it’s preparing to issue its first conventional international bond since 2010.

Dimian’s comments are the strongest signal yet the government of El-Sisi, the former army chief elected in May after the ouster of Islamist President Mohamed Mursi, endorses Islamic finance. Egypt’s currency savings have dwindled by more than half since the 2011 uprising against Hosni Mubarak, leaving the Arab World’s most populous nation largely dependent on handouts from oil-producing Gulf Arab neighbors to keep its economy afloat.

“Given improvements in the economy, they feel there might be appetite for their paper,” Ahmed Shehada, the head of advisory and institutions in Abu Dhabi at NBAD Securities LLC, the brokerage of the biggest bank in the United Arab Emirates, said by phone on Sunday. “I’m sure they will find enough interest regionally to make it worthwhile.”

Reserves Slump

Saudi Arabia, the U.A.E., Kuwait and Oman pledged more than $12 billion at a conference this month to help Egypt’s reconstruction projects, half of them as deposits in the central bank. The $300 billion economy has been growing at near the slowest rate in two decades, according to data compiled by Bloomberg. Egypt’s foreign reserves dropped to $15.5 billion at the end of February, compared to about $33 billion four years earlier.

“The country has stabilized, they want to start implementing the projects, that’s why they’re trying to accelerate the sukuk law,” Montasser Khelifi, a Dubai-based senior manager at Quantum Investment Bank Ltd., said by phone yesterday. “Receiving aid is a good thing, but increasing the self-financing of the country would be a great step for them.”

Egypt had been moving toward a sale of sukuk two years ago under Mursi, whose Muslim Brotherhood administration planned to boost the Shariah-compliant industry with an initial issue of $1 billion of notes. A sukuk law approved by the government in 2013 was never implemented. “Nobody wants to touch it,” Sherif Samy, the chairman of the Egyptian Financial Supervisory Authority, said as recently as August last year.

Oil Companies

Egypt has hired banks including Morgan Stanley, BNP Paribas SA and Natixis SA for a $1.5 billion non-Shariah compliant bond sale, Dimian said last week.

The cash raised will be partly used to pay dues to foreign oil companies, according to Investment Minister Ashraf Salman.

The sukuk sale will probably also be used to finance “mega-projects that have been approved by the government during the investment conference” in Sharm El-Sheikh this month, Walid Hegazy, secretary general of the Egyptian Islamic Finance Association and managing partner at Hegazy Law & Associates, said by phone from Cairo on March 29. Egypt signed agreements for a total of $60 billion in investments during the summit, including $18.6 billion worth of engineering, procurement and construction system projects.

The yield on Egypt’s $1 billion of conventional notes due April 2020 dropped 21 basis points this year through Friday to 4.58 percent, according to data compiled by Bloomberg. That compares with a 19 basis-point decline in the yield of Middle East bonds on average, according to JPMorgan Chase & Co. indexes.

“You want to start building a yield curve that’s independent of the aid and support,” Shehada said. “It’s a step in the right direction.

(Bloomberg Business / 30 March 2015)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Egypt sovereign sukuk law still mired in uncertainty

DUBAI/CAIRO - Development of Egypt's Islamic economy continues to be hampered by ambiguity surrounding sukuk, and greater legislative and political clarity is required for the country to tap into the Islamic bonds market, banking industry officials and experts said.

They said new financial instruments were needed to fund mega projects that would help revive an economy hammered by three years of turmoil while keeping the budget deficit and government debt under control.

"The solution lies in Islamic bonds, which are still facing obstacles in the Egyptian market. The (sukuk) file should be revived and projects that can be financed by sukuk should be identified," Mohamed Ashmawi, chairman of The United Bank, which is 99% state-owned, told Zawya.

The government of President Mohamed Mursi had approved a draft bill authorizing issues of sovereign Islamic bonds, but the legislation was deactivated after Mursi's ouster last year.

Religious scholars have raised concern over possible government abuse of public assets under the bill. Sharia law bans payment of interest, and sukuk must be underpinned by physical assets, with investors receiving revenue from assets.

The draft law is now under review by the finance ministry ahead of submittal to a new parliament, for which elections are expected to be held at the end of 2014.

"The law has been stalled due to differences over formation of the legislative committee; how many members, whether to include sharia scholars from outside Egypt, whether there will be a single authority to oversee all projects or whether each project should have a legislative committee," Ashmawi said.

Lack of clarity

Basant Fahmy, professor of banking and finance at the French University, said the controversy surrounding public assets was still an issue due to lack of clarity from the government on how much it sought to raise from sukuk issues, how the funds would be invested, and how investors could exit from assets.

"The biggest hurdle is lack of clarity from the government in specifying suitable entry and exit (of investors) for those sukuk," she told Zawya, adding that projects financed by sukuk should be listed on the stock market.

"The Egyptian government needs to define the purpose of sukuk issues. Are they investment tools or debt instruments? If the aim is to increase liquidity, then it would be better to issue (conventional) bonds," she added. "Egypt's credit ratings cannot serve as a guarantee for large investments."

Western consultants helping Egypt with its economic reform plan have estimated that the country will need at least USD 60 billion of investment to reach GDP growth of 5% by 2018 and the same amount again to bolster foreign reserves, Reuters quoted senior officials as saying on Wednesday.

Egypt's budget for the 2014/2015 fiscal year projects a deficit of around EGP 240 billion, or 10% of gross domestic product. Gross domestic debt rose 17% to reach EGP 1.7 trillion, or 83% of GDP, in March from a year earlier, according to central bank data released in June.

"In Egypt's case, public debt can be reduced if sukuk issues are used to finance infrastructure projects, which are sukuk friendly because they are backed by a physical asset. The role of the government would then be to manage the sukuk program and oversee and coordinate between investors and the project without burdening the state budget," said Bassel Nadim of Tanmia Capital.

Ashmawi said one viable option was the renewable energy sector, particularly solar energy projects that would help address frequent power shortages in the Arab world's most populous country.

The governor of Faisal Islamic Bank of Egypt, Abdel Hamid Abu Mousa, said the sukuk law would boost the market and that FIB was among banks prepared to participate in financing projects launched under a state sukuk program

Corporate sukuk

The Egyptian Financial Supervisory Authority (EFSA) has submitted a separate corporate sukuk law to the finance ministry.

The sovereign sukuk law aims to organize financing of the state budget, national projects and public institutions, while the corporate sukuk law was put forward for the financing of firms and private institutions, EFSA head Ashraf ElSharkawy said in remarks published in local media in January.

He said parliament could decide to merge the two proposed laws. "Current stock market law regulations allow the trading of sovereign and corporate sukuk as ordinary financial instruments. If their trading required any modifications to the registry rules, we would do that," he was quoted as saying.

A senior official at Emaar Misr for Development told Zawya earlier this year that the firm would like to consider sukuk to develop projects in Egypt, because availability of funds from commercial banks was limited. But he said that lack of clear legislation had made it difficult to reach agreement on a sukuk issue.

Analysts said development of a sukuk industry would help broaden investment for both the public and private sector by attracting Gulf Arab investment.

"European states are racing to enact sukuk legislation to attract Gulf and Arab capital to finance big projects," Fahmy said.

Malaysia, the United Arab Emirates and Saudi Arabia still dominate the global sukuk market.

KFH Research Ltd, a unit of Kuwait Finance House, said sukuk issues by sovereign entities accounted for 68.6% of new issues worth USD 31.2 billion in the first quarter of 2014.

(Zawya / 17 July 2014)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Egypt zakat house to promote transparency

The Egyptian government has taken new measures to regulate zakat, ensure funds donated to help the poor during the holy month of Ramadan reach their intended recipients and prevent them from reaching extremist groups.

In a June statement, the presidency announced the establishment of the Egyptian House of Zakat and Charity, an independent body run by Al-Azhar that will oversee the collection and disbursement of zakat funds across Egypt.

Al-Azhar has started to lay the groundwork for the zakat house, meeting with experts a few weeks ago to work on a draft law to regulate the house's work and its organisational structure.

The zakat house is intended as a "safe and reliable entity through which Egyptians can distribute charity to deserving recipients, such as the poor, students and those who are ill, based on legitimate disbursement channels, in a bid to prevent the waste of these funds on non-deserving recipients", said deputy imam of Al-Azhar Abbas Shuman.

Al-Azhar's legal advisors are now drafting the law as well as the statutes of the house to ensure it is independent from the government and under the supervision of Al-Azhar, he added.

Egyptians donate up to 17 billion pounds ($2.4 billion) each year in zakat funds, according to Al-Azhar University's Saleh Kamel Centre for Islamic Economy.

ZAKAT UNDER STRICT CONTROL

Last year, the Ministry of Endowments called for zakat funds to be placed under the strict control of state institutions and called for transparency in the announcement of budgets, expenses and bonuses to ensure funds are not used to serve the interests of political parties or extremist groups.

The ministry also called for the establishment of an independent body that could work with the Ministry of Social Solidarity to create a network linking beneficiaries to disbursers and civil society organisations, in order to guarantee funds reach the intended recipients.

"Given the increasing danger posed by takfiri groups, a mechanism must be created to prevent zakat funds from reaching extremist groups and being used towards murder or acts of intimidation," said Al-Azhar Islamic Research Academy member Sheikh Abdul Aziz Hegazi.

"Therefore, an institution must be established to fulfil this role under the auspices of Al-Azhar, the largest religious institution in the Islamic world," he told Al-Shorfa.

This is something Egypt has lacked in the past decades, he added.

"This institution will develop mechanisms and strict controls for the collection of zakat funds and ensure they are not disbursed to undeserving recipients or used for purposes other than those for which they were collected, such as political propaganda or diverting them to extremist groups," he said.

Improving the zakat collection and disbursement process has been urgently needed, but the new process will need time to succeed as huge databases will need to be developed, he said.

EGYPT CAN BENEFIT FROM OTHERS

Thirteen Arab countries have a system in place for the collection and disbursement of zakat funds in order to use them as effectively as possible to fight poverty and improve human development, Al-Azhar University Islamic studies professor Amna Noseir told Al-Shorfa.

Egypt can benefit from the experiences of zakat houses in other Arab countries, she said.

Egypt's new zakat house should establish a link to the databases of non-governmental charity organisations "in order to create an integrated system for the elimination of poverty, and to avoid duplication in charitable projects", she said.

(Al-Shorfa.Com / 09 July 2014)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Egypt intensifies efforts to regulate zakat

These efforts include regulating the work of charities and intensifying public awareness campaigns conducted via imams and mosques, officials told Al-Shorfa.

The Ministry of Endowments banned the collection of zakat donations in mosques last Ramadan, but the decision only went into effect this year.

The ministry issued a list of penalties for violators, and is moving, in co-ordination with Al-Azhar and security agencies, to prevent unauthorised donation boxes from being placed in mosques and gathering places, said Mahmoud Metwalli, a member of Egypt's Zakat Committee.

Zakat collection is restricted to Ministry of Endowments and Al-Azhar offices, as well as to around 14,000 licensed, nationally-recognised charitable organisations that receive zakat funds to disburse to the needy, Metwalli said.

"These organisations are subject to supervision and monitoring and are fully transparent with regard to the disclosure of collections and disbursements to the poor and the salaries of their employees," he told Al-Shorfa.

Zakat funds are disbursed each year by Al-Azhar and the endowments and social solidarity ministries to an approved list of eligible recipients, including the sick, orphans, widows and the poor, Metwalli said.

The disbursements are paid out directly or through post offices, in which case the payment dates are announced in the media, he said.

This year, an electronic link will be established between organisations that collect zakat, civil society organisations and the Ministry of Social Solidarity to monitor the funds and verify the beneficiary lists, he added.

EFFORTS TO PREVENT ABUSE

In some cases, unlicensed or fictitious organisations that have no defined budgets are collecting funds, Metwalli said, and "thus, the fate of the money they collect is unknown".

Additionally, he said, some individuals go from house to house to collect money, claiming to represent a legitimate organisation.

To stop this type of abuse, Al-Azhar and the Ministry of Endowments are conducting awareness campaigns at mosques around Egypt on the need to restrict zakat payments to authorised parties.

"The awareness campaigns also include the circulation of the names of ministry representatives and licensed organisations and institutions, with emphasis that citizens need to check the ID cards of those who try to collect funds," Metwalli added.

"The state of lawlessness that prevailed in the past period allowed some suspicious individuals to once again infiltrate Egyptian society," said Al-Azhar University sharia professor Nayef Abd Rabbu, who serves as an advisor to the Ministry of Social Solidarity.

"These individuals belong to terrorist groups that wreak havoc in Egyptian territories and require financial support to maintain their existence, and the month of Ramadan represents a favourable opportunity for them," he said.

In response, he said, agencies concerned with the collection and disbursement of zakat are tightening their control over the process to prevent these funds from reaching the coffers of "terrorist groups".

ZAKAT IS MEANT FOR THE NEEDY

Zakat funds are distributed based on lists of eligible recipients which are researched, vetted and compiled in advance, Abd Rabbu said, noting that Al-Azhar works with civil society organisations and charities to prevent beneficiaries from making multiple claims on these funds.

"The amount of money paid by Egyptians for zakat may reach up to 15 billion Egyptian pounds ($2 billion)," Abd Rabbu said.

Sheikh Abdullah Abdelradi, imam of al-Mustafa mosque in Dokki district, said he has been active in raising public awareness against giving zakat to non-officially licensed parties.

"There are many who exploit the surge in donations during the month of Ramadan to support some extremist and terrorist groups," he told Al-Shorfa.

The Ministry of Endowments is working to eliminate this practice by prohibiting mosques from accepting zakat and cash donations, he said.

"I personally, and other imams, ask citizens who wish to donate to mosques to donate in kind, that is to bring to the mosque equipment it needs" such as air conditioning units, fans, loudspeakers, prayer rugs and other necessities, Abdelradi said.

In-kind donations also can include maintenance work or joining the mosque's charitable organisation to organise evening banquets, or Rahman tables, during the month of Ramadan, he said.

"This way, [the handling of] funds is restricted to official parties only," he said.

In his religious sermons and speeches, Abdelradi said he stresses the need to refrain from giving money to unknown individuals or organisations, "especially those who go door to door to collect donations and zakat for a particular cause or project".

He also suggests that in lieu of cash, those who wish to donate more than the required amount of zakat could pay for student textbooks or tutoring or offer to pay the debts of a struggling family.

(Al-Shorfa.Com / 13 June 2014)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Egypt Shariah Loans Rise on Record Sugar Deal

Egypt’s biggest Islamic loan, signed yesterday by Al Nouran Sugar, is adding to evidence borrowers are turning to Shariah-compliant funding in a country that ousted its Islamist government less than a year ago.

The company signed a 1.5 billion Egyptian-pound ($215 million) loan to build a factory, according to Al Nouran’s Chief Executive Officer Ashraf Mahmoud. That topped Egyptian Steel’s 1.1 billion-pound facility, which was the North African country’s biggest Islamic loan when it was agreed six months ago, according to data compiled by Bloomberg.

Islamist President Mohamed Mursi was overthrown in an uprising in July, derailing plans for a debut sovereign sukuk sale from the most populous Arab state and stalling the development of its Shariah-compliant financial regime. Borrowers are using Islamic funding options to tap an industry growing at 17 percent a year and set to be valued at $2.7 trillion by 2017, according to PricewaterhouseCoopers.

“The perception of Egypt is changing with political risk coming down,” Montasser Khelifi, senior manager for global markets at Dubai-based Quantum Investment Bank Ltd., said by phone yesterday. “For Egyptian borrowers, it allows them to tap into Gulf Cooperation Council funds since there are some institutions here that only deal in Islamic financing.”

Muslim Majority

Banque Misr, along with the local units of Lebanon’s Bank Audi and Abu Dhabi Islamic Bank (ADIB) were the lead arrangers for Al Nouran’s 8.5 year deal. The loan was priced at 4.25 percent more than the Egyptian “mid-corridor” rate, which is half way between the overnight deposit and lending rates and currently stands at 8.75 percent, Mahmoud said. Egyptian government bonds due April 2022 are yielding about 15 percent, according to data compiled by Bloomberg.

The company also agreed a $30 million mezzanine facility, or debt that’s convertible to equity in case of default, from the Islamic Corporation for Development of the Private Sector, a unit of Jeddah, Saudi Arabia-based Islamic Development Bank, according to Mahmoud.

“We saw that ICD is a AAA rated institution with a firm commitment to invest in Egypt,” Mahmoud said by phone yesterday. “They were the first on board and we had no problem with Islamic financing so it made sense to accommodate them.”

Egypt’s share of the estimated $1.7 trillion in current global Islamic banking assets remains negligible. There are three fully Shariah-compliant banks in Egypt with combined assets of about 80 billion pounds, according to data compiled by Bloomberg, or less than 5 percent of the country’s total banking assets. The country announced a plan to issue Sukuk during the one-year presidency of Mohamed Mursi, before the military seized power.

Thirteen Egypt-based banks took part in Al Nouran’s financing for the plant, which will be built in the Sharkiya province of the Nile Delta and produce 500,000 tons of sugar annually. ICD and Kuwait-based Arab Fund for Economic and Social Development also bought $25 million equity stakes each, Mahmoud said.

“We may be seeing a landmark deal that opens the door for other corporates to consider this kind of financing,” Khelifi said.

(Bloomberg / 28 April 2014)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com