National Treasury Cabinet Secretary Henry Rotich told a media briefing in Nairobi that the government has already identified the laws that need to be amended in order to float the Islamic bond.
“We estimate in the next one year we will have completed all the legal and documentation processes needed to float the Sukuk bond in 2017,” Rotich said on the sidelines of the First International Islamic Finance Conference of Africa.
“Typically we will indicate the amount of the bond when we enter the market,” he said.
Sukuk bonds ,unlike other conventional bonds, are often backed by assets. They are Shariah-compliant bonds that do not pay interest to investors, but instead pay out profits based on income from underlying assets.
“We are currently in the process of identifying the assets that will back amount of money credit we are seeking from the capital markets,” he added.
Kenya will also launch the tendering process to award the contract for the transaction adviser.
The CS said that conventional financial markets have played an important role in mobilizing funds and facilitating economic development in the past.
“However, the evolving developmental financing requirements of Kenya call for greater diversification of the products and scope of financing markets,” he said.
Rotich noted that the perceived sustainability and attractiveness of Islamic finance as an alternative financing model in a post global financial crisis world continues to be recognized by new regions and countries.
Currently, Middle East and Asia remain the largest Islamic financial markets in the world.
The National Treasury said that the potential for growth and development of Islamic finance has triggered strong interest from beyond Islamic nations.
The CS said that Kenya has been slow to take or to attract Islamic finance at the same scale as the Gulf region.
“This is despite the significant real economy funding needs that are so well aligned to the funding structures of Islamic finance,” he said, adding that Kenya is also at an advanced stage of joining the Islamic Development Bank.
However, the East African nation will first have to become a member of the Organization of Islamic Conference (OIC). Rotich said that Kenya can easily meet all the requirements required to join the OIC so the process will soon be concluded. Enditem