Sub-Sahara Africa’s Infrastructure Funding Gap: Potentials from Sukuk Financing
DOI:
https://doi.org/10.52962/ipjaf.2018.2.4.53Keywords:
Sub-Sahara Africa, Infrastructure deficit, SukukAbstract
Sub-Sahara African (SSA) region as a large part of the African continent suffers huge infrastructure deficit mainly as a result of the vast funding gap. The negative impact of the infrastructure deficiency continues to constrain socio-economic development and the general well-being of the people of the region. Heavy reliance on the traditional sources of funding by many of the countries in the region has failed to meet ever-growing demands for infrastructural development of the region. Potentials presented by Islamic finance are yet to be exploited by a large number of countries in the region. This study evaluates the depth of utilisation of Islamic capital market using Sukuk instruments as another source of funding to fill the observed funding gap for infrastructure development. This study finds that the use of Sukuk as a long-term financing instrument is still at its infancy stage in the region. The paper, therefore, suggests that the SSA countries can undertake rapid and massive infrastructure developments in the region through the use of Sukuk instruments, thereby eliminating increasing sovereign debt over-hang from the conventional debt market. This study also recommends that policy makers in the region put in place required laws and regulations that will provide enabling environments for effective utilisation of Sukuk instruments for infrastructural development. Similarly, strong political will on the part of the region’s political leaders is essential in nurturing strong institutions that can engender policy continuity to ensure effective and efficient management of infrastructure projects funded by Sukuk instruments.
Downloads
References
Abdullah, M. R. (2010). Regulatory issues: Innovations and application of sukuk. Sukuk, Islamic Capital Series, 65-91.
African Development Bank (2010). Infrastructure deficit and opportunities in Africa. Economic Brief, 1(2), 1-15.
Alves, A. C. (2013). China’s ‘win-win’ cooperation: Unpacking the impact of infrastructure-for-resources deal in Africa. South Africa Journal of International Affairs, 20(2), 207-226.
Arezki, R. & Sy. A. (2016). Financing Africa’s infrastructure deficit: From development banking to long-term investing. Journal of African Economics, 25(suppl_2), ii59-ii73.
Butcher, A., Jabara, C., & Jones, L. (2013). Infrastructure development in Sub-Sahara Africa driving demand for imports of machinery, equipment, and transportation goods. USITC Executive Briefings on Trade
Calderon, C. & Serven, L. (2010). Infrastructure and economic development in Sub- Sahara Africa. Journal of African Economies, 19(suppl_1), i13-i87.
Dusuki, A. W. (2010). Do equity-based Sukuk structures in Islamic capital markets manifest the objective of Sharia? Journal of Financial Services Marketing, 15(3), 203-214.
Foster, V. & Briceno-Garmendia, C. (2010). Africa’s infrastructure: A time for Transformation. The World Bank, Africa Development Forum 52102.
Gelbard, E., Hussain, M., Maino, R., Mu, Y., & Yehoue, E.B. (2014). Islamic finance In Sub-Sahara Africa: Status and prospects. IMF Working Paper, WP/14/148.
Godlewski, C. J., Turk-Ariss, R., & Weill, L. (2013). Sukuk vs conventional bonds: A stock market perspective. Journal of Comparative Economics. 1-16.
Hussain, M., Shahmoradi, A. & Turk, R. (2015). An overview of Islamic finance. IMF WP/15/120
ISRA (2013). Sukuk market. Islamic Financial System: Principles and Operations. 389-450.
Mokhtar, S. & Thomasm A. (2010). Ijarah sukuk. Sukuk: Islamic Capital Market Series, 145-159.
Mokhtar, S. & Thomasm A. (2010). Debt-based sukuk: Murabahah, istina’ And istithmar (Tawarruq) sukuk. Sukuk; Islamic Capital Market series. 125-143.
Mohammed, W. (2015). Islamic banking and economic infrastructure development-Kenya’s prospect. KBA Centre for Research on Financial Markets and Policy WPS/05/15
Naim, F., & Hussain, A. (2010). Wakalah sukuk. Sukuk: Islamic Capital Market Series pp. 149-269.
Sanusi, L. S. (2012). The role of development finance institutions in infrastructure development: What Nigeria can learn from BNDES and the Indian infrastructure finance company. Governor’s Speech, Central Bank of Nigeria Publications
Sy, A. N. R. (2015). Trends and development in African frontier bond market. Global Economic and Developments at Brookings Policy Paper 2015-01
The World Bank (2017). Fact Sheet: Infrastructure in Sub-Saharan Africa. Africa’s Pulse, 15
Downloads
Published
Issue
Section
License
Site users
Copyright of all articles published in the Indian Pacific Journal of Accounting and Finance (IPJAF) belongs to their respective authors. Site users are permitted to download and print the articles for personal use. Further reproduction and/or distribution is not permitted, except for brief excerpts or quotations intended for inclusion in some other original works. In this case, proper attribution must be made to the author/copyright holder, and the place of publication must be acknowledged. Altering, editing or otherwise modifying the content of information obtained from the Indian Pacific Journal of Accounting and Finance (IPJAF) is a breach of copyright.
Authors
While you retain the copyright of your original material, by publishing in the Indian Pacific Journal of Accounting and Finance (IPJAF) , you will have agreed to the following contractual terms:
- The article is the original work of the stated author(s).
- The work has not been published previously.
- If the Article contains copyright material owned by others, written permission has been obtained from the copyright owner(s) to republish such material in any print or electronic medium and that you have included appropriate acknowledgement of such rights in the Article.
- The author agrees to grant a non-exclusive license to the Indian Pacific Journal of Accounting and Finance (IPJAF) to communicate the work to the public.
- The Indian Pacific Journal of Accounting and Finance (IPJAF) may use the article for publicity purposes.
- The Indian Pacific Journal of Accounting and Finance (IPJAF) may publish the article on third-party sites.
- Any subsequent publication of the article by the authors will carry the acknowledgement: First published in the Indian Pacific Journal of Accounting and Finance (IPJAF) [http://ipjaf.omjpalpha.com]
Disclaimer
The Indian Pacific Journal of Accounting and Finance (IPJAF) has taken all reasonable measures to ensure that material contained in this website is the original work of the author(s). However, the Journal gives no warranty and accepts no responsibility for the accuracy or the completeness of the material; no reliance should be made by any user on the material. The user should check with the authors for confirmation.
Articles published in the Indian Pacific Journal of Accounting and Finance (IPJAF) do not represent the views held by the editors and members of the editorial board. Authors are responsible for all aspects of their articles except the editorial screen design.
