Sub-Sahara Africa’s Infrastructure Funding Gap: Potentials from Sukuk Financing
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Date
2018
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Publisher
OMJP Alpha Publishing
Abstract
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.
Keywords: Sub-Sahara Africa, Infrastructure deficit, Sukuk
Description
Keywords
Sub-Sahara Africa, Infrastructure deficit, Sukuk