ICD Report Unveils Encouraging Islamic Finance in Africa

One of Last week’s White Gold’s episodes of 101 East on Al Jazeera, information pills investigated the ongoing illegal trade in ivory, viagra 40mg exposing a complex transnational business that reaches from the grasslands of Tanzania to the port at Zanzibar to the high streets of Hong Kong and Shanghai.

According to 101 East’s Steve Chao, medicine 35 years ago, 1.2 million elephants roamed this continent. Today, no more than 500 000 remain, with that number falling by the day.”

“The statistics are sobering. Between 2011 and 2013, poachers killed 100 000 African elephants. An estimated 30 000 continue to be slaughtered each year… If nothing is done to reverse the tide, Africa’s wild elephants could be gone in just a few decades,” he added.

101 East’s investigation begins at The Selous Game Reserve, a UNESCO World Heritage Site that has lost more than 60% of its elephants in just five years.

101 East follows the ivory supply chain, from poor villagers who turn to poaching in desperation, to the local coordinators, to the middlemen, to the traders, to the smugglers and the importers in the East.

At each stage, 101 East is told the money involved rises. A kilogram of ivory earns a poacher just $20-25 dollars, the local coordinator $35, the traders $115, the smugglers $300, plus $10,000 to buy fillers to hide the ivory in.

 Hong Kong boasts one of the busiest ports in the world, handling nearly 200 000 vessels and 22m cargo containers in 2014.

According to 101 East, it’s also a key transit hub for smugglers transporting ivory from Africa to China: between 2000 and 2014, customs officials seized some 33 tonnes of ivory, taken from an estimated 11 000 elephants.

As Cheryl Lo from the World Wildlife Fund says, “If that’s how much was seized because they are checking one percent of the cargo… then how much was not seized?”

Hong Kong has pledged to tighten border controls and has started incinerating confiscated ivory. The city banned ivory trading in 1989, but with one exception.

Special licenses were granted to businesses that held 665 tonnes or more of existing stock.

The logic then was that these traders should be allowed to exhaust their inventory before the imposition of a total ban. Under the law, domestic sales by licensed traders were considered legal, but ivory exports were prohibited.

Curiously, this legal stockpile of ivory has barely gone down since 2010. Hong Kong traders explain to 101 East’s undercover investigators how certificates for legal, registered ivory can be used to disguise illegal imports. They also advise 101 East how to smuggle ivory out of Hong Kong and offer to introduce them to smugglers who could do it for them.

A simple online search takes 101 East to advertisements from Chinese companies soliciting African ivory, despite China’s promise to phase out the sale of ivory and its current one-year ban on the import of carved products.

In Shanghai, undercover journalists pose as newcomers to the business with access to 20 kilos of African ivory. They easily find willing buyers and are told by a middleman that his company is able to obtain legal documents for illegal ivory.

They then travel to Fuzhou, posing as a representative of a rich businessman interested in buying more than 10 elephant tusks. While they struggle to find an illegal dealer there, they are told that it’s possible to arrange a legal hunt for between $80-90 000, where they’d be able to take the tusks home as trophies.

“It’s a sobering realization,” says Chao.

“For all the laws regulating the ivory trade, there’s a perfectly legal way to shoot an elephant and take its tusks. As long as buyers are willing to pay, it seems someone, somewhere, will find a way to get them their white gold. And with poaching still a problem, these animals face greater danger than ever before,” he adds.

A newly-released report “Islamic Finance in Africa: A Promising Future” by the Islamic Corporation for the Development of the Private Sector (ICD) takes an in-depth look at the tremendous growth opportunities for Islamic finance to flourish in the region.

Released during the Africa Islamic Finance Forum 2015 in Abidjan, order the report is being published as the global banking community comes together to define a transformative new landscape to integrate Islamic finance into the mainstream.

Information from ICD reveals that once of interest only to a niche market of Muslim investors, Islamic finance is now venturing beyond its traditional sphere, and is slowly gaining widespread acceptance in Africa.

The birthplace of a quarter of the global Muslim population, the report highlights that Africa features a potentially strong demand for Islamic financial services and products.

While still comparatively under-developed, Islamic finance is expanding in many parts of the region, and is now present across most of North Africa and in many countries of East and West Africa, particularly those with sizeable Muslim communities.

One of the recommendations of the report is that Islamic finance can act as the catalyst in mobilising funding into Africa, thereby resulting in economic growth and sustainable development.

It is estimated that the region needed USD 93.0bln per year to finance large-scale infrastructure and manufacturing projects, while external funding is also needed to offset ballooning fiscal deficits.

Meanwhile, 2 billion adults remain unbanked globally, and currently, sub-Saharan Africa alone accounts for as much as 17.0% of the world’s unbanked adults. In addition, there is a significant funding potential opportunity for Islamic banks in view of the increasing emergence of small-to-medium enterprises (SMEs) across Africa.

In light of relatively low-income levels, a large informal sector and the prevalence of small businesses in Africa, Islamic microfinance is also a growth area worth looking into.

The report also highlights notable progress in the sukuk sector, where recent developments have seen governments focusing more on creating a more enabling environment for sukuk issuances.

Some countries which have issued sukuk include Gambia, Suan, Senegal and South Africa, while Ivory Coast is lining up to issue its debut sukuk at the end of the year.

Moving forward, several countries such as Tunisia, Egypt and Morocco have expressed keen interest in tapping the sukuk market for infrastructure financing and have finalized or are in the midst of finalizing their legal frameworks to promote sukuk issuance.

In its key recommendations, the report underlines that to capture the tremendous potential, the regional industry must overcome various challenges which are broadly similar with challenges faced in other parts of the world.

These include challenges on the regulatory front such as regulatory inconsistency, the shortage of qualified human capital, the lack of awareness and financial literacy by many end-users and consumers, and a conducive business landscape which will support the growth of Islamic finance.


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