Slower-than-planned Islamic finance takes off in Algeria

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ALGERIA: Following the announcement by the government in October last year that three Algerian state-owned banks would be offering Shariah compliant solutions by the end of 2017, only one has actually introduced an Islamic financing product; however, the two others are expected to roll out their Islamic solutions by June and the country’s stock exchange is currently developing Sukuk structures to be ready once this type of instrument is accommodated.

Caisse Nationale d’Epargne et de Prevoyance, which launched in November 2017 an Ijarah Muntahiya Bil Tamleek product for the acquisition of an accommodation, is the only state-owned bank proposing a Shariah compliant financing product, although not marketed as an Islamic solution due to the lack of a regulatory framework, a source at the bank told IFN adding that Bank of Algeria, the central bank, is currently working on such a regulation.

Banque de Developpement Local, which introduced an interest-free savings account two years ago, and Banque de l'Agriculture et du Developpement Rural are due to launch Ijarah, Murabahah and Musharakah in the next three months while the country’s remaining state-owned banks are expected to roll out their own Islamic offerings during the second half of the year, Abderrahmane Raouya, the minister of finance, was quoted as saying by state news agency Algerie Presse Service.

Bourse d’Algerie is also in the midst of developing Sukuk structures, Sud Horizons reported citing Yazid Belmihoub, the managing director of the country’s stock exchange. “As banks have been authorized to open an Islamic window, Bourse d’Algerie does not want to stay out of this financial dynamism,” he said.

Bourse d’Algerie aims at offering as many Sukuk structures as possible in order to meet the need of a maximum of clients, once the Sukuk instrument is accommodated. The stock exchange has already submitted its project to the University of Setif’s Faculty of Economics and Management, which has a department focusing on Islamic finance.

“We will offer the possibility to individuals and companies to start trading on the stock exchange in accordance with their faith. If corporates want to raise money by issuing Sukuk, we believe that an important amount of funds currently hoarded will then be channeled to the bourse which as a result will experience an increase of liquidity,” Yazid indicated.

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