Islamic banking: Mauritius to cement status as offshore financial hub
Bank of Mauritius governor Rundheersing Bheenick has for long advocated issuing a sovereign sukuk, and was instrumental in bringing the Islamic Finance Service Board annual summit to the Mauritius in May. (Image: Luthfullah Azeez Blog)
With the intention of strengthening the economy beyond agriculture and tourism, Mauritius has long-term plans to consolidate its status as an offshore financial hub, encompassing a major boost to Islamic banking.
Being on the same timeline as the Gulf and having over 20 banks present in Mauritius is a key asset and at the same time adds credibility to the island economy’s plan of introducing a sovereign sukuk – the Islamic equivalent of bonds.
The reason behind this focus on Islamic Banking is that the island could be a useful conduit between Gulf money and the opportunities that are opening up on the African continent.
Besides, Bank of Mauritius governor Rundheersing Bheenick has for long advocated issuing a sovereign sukuk, and was instrumental in bringing the Islamic Finance Service Board annual summit to the Mauritius in May.
However, the move to boost Islamic Banking had lost its momentum as the country`s former Finance Minister, Xavier Luc Duval did not share his enthusiasm. But, with the resignation of the Finance Minister early June it look that the question is firmly back on the table.
Moreover, a central official confirmed this week that the central bank is in discussions with the Finance Ministry.
Thus, with African sukuks on the way, these financial instruments are clearly going to need a favorable offshore financial centre, which is where Mauritius could become a key destination is the near future.
However, Mauritius is not the only African country in the race to capitalize on the growing momentum of Islamic finance by bringing debut sukuk deals.
The past week has seen Senegal win the race to become the first African country to issue a sovereign sukuk, barring short-dated or purely domestic issuance from Gambia and Sudan, and also score a first for the Western African Economic and Monetary Union (also known as UEMOA from its name in French, Union économique et monétaire ouest-africaine).
On the other hand, South Africa is tipped to come to market with its long awaited dollar sukuk debut, while there are plenty of signs that Islamic finance is taking root in Sub-Saharan African countries like Kenya and Tanzania.
For its part, Nigeria’s Osun State brought out a domestic sukuk worth $70.6 million (approx Rs 2,178.01 million) in October.
North Africa remains a work in progress, but this year could see progress with debut deals in Morocco and Tunisia, if not in Egypt and Libya as well.
Saving the best for the last, Mauritius’ entrance into the market is one of the African market forays that makes the most sense, given that the island economy already enjoys the status of a regional financial hub.