Essentially what is happening here is that the Islamists are insisting on Shariah compliance before they will consider investing. And since they have so much oil wealth, non-Muslim countries are willing to sell out…

• South Africa is preparing to launch sub-Saharan Africa’s first Islamic bond, paving the way for issues by other countries in the region.

• The bond would be marketed to Middle Eastern countries. There are large pools of Islamic investment money in the Gulf, which have been buying sukuk eagerly this year as the global financial crisis hurts many other investments.

• Kenya, Nigeria and Tanzania have also been planning sukuk issues, and a successful sale by South Africa could encourage them to put those plans into operation.

• Muslims make up only 2 percent of the population of South Africa, which has a BBB+ foreign currency credit rating from Standard & Poor’s, so the country seemed an outside contender to be the region’s leader in Islamic finance. But it has been seeking to diversify its investor base, and its Treasury has the financial sophistication to explore new funding methods.


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