Category: Business

07 Oct 2018

PLACE OF NIGERIAN YOUTHS IN THE EMERGING WORLD ORDER

It was a rare opportunity for me as a student to have attended Law Colloquium in Honour of retired Justice of the Supreme Court of Nigeria, Justice Kayode Eso, at Obafemi Awolowo University, Nigeria on July 25, 2006 where former Central Bank of Nigeria Governor, Prof. Chukwuma Soludo, was invited as the guest speaker. While delivering his lecture, Prof. Soludo quoted famous Danish Philosopher and Theologian – Søren Kierkegaard– that “Life can only be understood backwards; but it must be lived forwards”. He made reference to this Philosophy with respect to the socio-economic environment in Nigeria as one beckoning for a social revolution rather than ready for an industrial revolution as once argued by late Pius Okigbo. His thought inspired further discourse on the need of our dear nation to join the first world economy and subsequently place of youth in national integration and development. Thus, my focus in this paper is to identify place of Nigerian youths in colonial and post-colonial struggles and more importantly to elaborate on social inclusiveness of Nigerian youths in the emerging world order.

Another perspective to Søren Kierkegaard Philosophy essentially mirrors the struggle of our founding fathers during their youthful age towards Nigerian independence. From August 6, 1861 when The Treaty of Cession between the then Oba of Lagos, his chiefs and the British Crown was signed through 1914 when the Northern and Southern Protectorates were amalgamated resulting in the birth of Nigeria until October 1, 1960 when the union jack was historically lowered at the Tafawa Balewa Square (TBS) in Lagos, Nigerian youths have been at the forefront of national development.

Despite the discrepancies in colonial policy in terms of socio-economic projects, social development and establishment of administrative centres recognized by scholars and writers, Herbert Macaulay in his youth belief in the necessity for the people living in the British colony of Nigeria of multiple backgrounds to unite as one in order to be able to resist colonialism. This same philosophy led to the formation of National Council of Nigeria and the Cameroons (NCNC) together with Dr Nnamdi Azikwe in 1944. Thus, Herbert Macaulay became NCNC first president, while Azikwe was its first secretary.

Obviously, the role of Nigerian youths in agitating for independence cannot be underestimated. The likes of Sir Tafawa Balewa, Sir Ahmadu Bello, Chief Obafemi Awolowo together with aforementioned nationalists – Macaulay and Azikwe – including but not limited to Eyo Ita, Samuel Akisanya, Kofo Abayomi, Ernest Ikoli and H.O. Davies all of whom were at the forefront of Nigerian Youth Movement (NYM) founded in Lagos in 1933, fought in their youthful days to deliver the political independence we all enjoy today. We can easily recollect with nostalgia how a young and vibrant Nigeria’s foremost pro-democracy activities, Anthony Enahoro, in 1953 became the first to move the motion for Nigeria’s independence. Despite several political setbacks and defeats in parliament including an attempt by young SL Akintola in 1957, Remi Fani-Kayode revisited Enahoro’s motion and the motion was successfully passed by the parliament in 1958 which led to Nigerian independence on October 1, 1960.

On the other hand, the post-colonial struggles necessitate an inclusive social development for the youth. As noted by the United Nations Department of Economic and Social Affairs (UNDESA), the Focal Point on Youth aims to build an awareness of the global situation of young people, as well as promote their rights and aspirations.

Furthermore, the Agenda also works towards greater participation of young people in decision-making as a means of achieving peace and development.
Summarily, the Focal Point on Youth works to: enhance awareness of the global situation of youth and increase recognition of the rights and aspirations of youth; promote national youth policies, national youth coordinating mechanisms and national youth programmes of action as integral parts of social and economic development, in cooperation with both governmental and non-governmental organizations; and strengthen the participation of youth in decision-making processes at all levels in order to increase their impact on national development and international cooperation.

Coincidentally, the theme of the International Youth Day 2018 dwell exclusively on safe spaces for the youth whereby they can come together, engage in activities related to their diverse needs and interests, participate in decision making processes and freely express themselves. While there are many types of spaces, safe spaces ensure the dignity and safety of youth.

Moreover, Goal 11 of the 2030 Agenda for Sustainable Development of United Nations Development Programme (UNDP) specifically emphasizes the need for the provision of space towards inclusive and sustainable urbanization. Additionally, UNDP New Urban Agenda (NUA) reiterates the need for public spaces for youth to enable them to interact with family and have constructive inter-generational dialogue as we are now having with Association of Nigerian Students, University of KwaZulu-Natal Independence Day Colloquium.

Furthermore, the United Nation (UN) framework on World Programme of Action for Youth (WPAY) which is the UN framework for youth development, prioritizes the provision of “leisure activities” as essential to the psychological, cognitive and physical development of young people. The framework asserted that as more and more youth grow in a technologically connected world, they aspire to engage deeper in political, civic and social matters, and the availability and accessibility of safe spaces becomes even more crucial to make this a reality.

In February 2010, three key objectives were identified and adopted by the UN Framework for specific actions essential to implement the objectives, which are:
Firstly, create awareness by increasing commitment and investment in youth. This can be achieved by increasing recognition of youth development as a smart investment by the public and private sectors; advocating for the recognition of young people’s contributions to national and community development and to achieving the Millennium Development Goals; promoting understanding of inequalities amongst youth and how to effectively address the needs of the most disadvantaged; and fostering research and knowledge building on youth to better inform youth policies and programmes.
Secondly, mobilize and engage by increasing youth participation and partnerships. This can be achieved by institutionalizing mechanisms for youth participation in decision-making processes; supporting youth-led organizations and initiatives to enhance their contribution to society; and strengthening networks and partnerships among Governments, youth-led organizations, academia, civil society organizations, the private sector, the media and the UN system, to enhance commitment and support for holistic youth development.

Thirdly, connect and build bridges by increasing intercultural understanding among youth. This objective can be achieved by promoting youth interactions, networks and partnerships across cultures; and empowering and supporting youth as agents of social inclusion and peace.
This UN Framework also situate my submission in this paper in engaging Nigerian youths for national issues and programmes that are crucial in the prospect for nation building and national development. As a matter of utmost priority, Nigerian government should make concerted efforts in putting in place youth development structures as a catalyst for her national growth.

Above all, Nigerian youths are surely among the most talented and creative youths in the world. From Jessica Osita led five-member team of Save-A-Soul that won the 2018 Technovation Challenge in US through Aliyu Jelani, the famous Nigerian Chevrolet Car Designer at General Motors in US to Silas Adekunle who is credited for building the world’s first gaming robot thus becoming the highest paid in the field of Robotic Engineering in 2018 and several other Nigerian youths who are among “the thousands and one shining flowers in the jungle unseen” (apology to William Shakespeare) including but not limited to Dr Chukwuka Monyei in South Africa, Nigerian youths are fast learners; they have the ability to work under pressure and bring out desired result for any organization or institution.

Undoubtedly, I will like to conclude with the words of British statesman who twice served as Prime Minister of the United Kingdom, Benjamin Disraeli that: “We live in an age when to be young and to be indifferent can be no longer synonymous. We must prepare for the coming hour. The claims of the future are represented by suffering millions; and the Youth of a Nation are the trustees of Posterity.” God bless Nigeria!

 

[Being a keynote address delivered on September 29, 2018 at Independent Day Colloquium of Association of Nigerian Students, University of KwaZulu-Natal (ANSU), Howard College Campus, South Africa.]

07 May 2018

Dickson’s Bayelsa State Failed to Invest, Industrialize

Investment and industrialization are twin concepts that are often interchangeably used in modern world economic system.
Industrialization is the process by which an economy is transformed from primarily agricultural to be one based on manufacturing of goods, where individual’s manual labour is often replaced by mechanized mass production and craftsmen are replaced by assembly lines while, in the economic sense, an investment is the purchase of goods that are not immediately consumed but are used in the future to create wealth.

In this circumstance, Bayelsa’s economic growth can be encouraged through the use of sound industrialization and investment policies at the business level. But at no point in recent times have calls for Bayelsa State to inquire into the nature and know causes of the wealth of nations through sound industrialization and investment policies been stronger than they have been lately.

Across the length and breadth of the world, Industrialization and investment are arguably the most talked about subjects among policymakers. So why have industrialization and investment processes in Bayelsa State failed to take-off in order to move the State to an enviable economic height.

Industrialization, Investment and water projects etc, in Yenagoa and its environments have been the campaign promises of the Restoration Administration-led by Hon. Henry Seriake Dickson with its acknowledged ability to bring prosperity, create jobs, employment opportunities with better incomes for all Bayelsans in 2012.
Yet, six years of the Restoration Administration, 2012-2018, Bayelsa State with its huge Oil and Gas deposits including its 13% Derivation Fund amounting to over #10bn monthly has no single industry nor investments for the youths and women to engage in the economic sector of the State.

In fact, the 13% Derivation Fund, Bayelsa receives monthly from the Federation Account is adequate to set up small-scale/agro-allied industries and investment opportunities to promote economic growth of the State; rather the State has remained stagnant without any industry of investments over the past six years.
Also, Bayelsa with its huge Oil and Gas deposits that accounted for more than 40% of Nigeria’s total oil revenue, yet this percentage that comes to Bayelsa has been grossly misused by its political leaders that lack entrepreneurial and investment initiatives.

As a result, Bayelsa’s industrialization and investment processes are likely to remain unattainable throughout the life span of the present administration which would come to an end by 14th February 2020. Besides, many Bayelsans thought the boom in 13% derivation would restore Bayelsa’s lack of industrialization and investment opportunities, but it failed to live up to the expectation of the people all these years.

Instead of effectively utilizing the 13% derivation fund to set up small-scale agro-allied industries and investment opportunities to stimulate the economic-sector of the State, the State under the Restoration Administration wastes the money on non-productive ventures such as visits to so-called Ijaw leaders in their various States, organized political rallies called mega rallies in support of this and that and even women prayer groups etc to the detriment of the State economy.
So also, Governor Dickson, who attended and fully participated in an Oil and Gas Summit, held in Houston Texas about two years ago in USA has neither attracted Industries nor Investors to establish industries and investments opportunities in Bayelsa to date.

Even, the Industrial Estate, an area of land developed as a site for factories and other industrial businesses located at Gbarain-Toru, a brainchild of the Restoration Administration is today moribund as no efforts are made to revamp and kick-start the project all this while.
States like Akwa-Ibom, Rivers, Cross-River just to mention a few for instance effectively use their 13% derivation fund to set up small-scale agro-allied industries, investment opportunities including solving short-term domestic and economic problems such as regular payment of salaries of civil servants and pensioners in their respective States; the reverse is the case with Bayelsa State.

Has Bayelsa leader heeded to advice from experts and pump the 13% derivation fund into productive ventures of the economy of the State, prosperity and economic well-being of the people could have been different today.

For how long will the State government forsake these organized groups dancing at political and mega rally activities and women prayers groups for stipends for a meaningful economic venture that will pilot the State to the Glory of All Lands remain a mirage.

According to Modern World System Theory, two systems exist side by side and are continuously in conflict with one another namely; Economic and Political Systems. While the Economy is the Sub-structure with its economic benefits derivable from the four factors of production known worldwide; politics is the super-structure that is superimposed on the economy for its continuity and existence.

Therefore Bayelsans must not depend on the super-structure which is politics for existence rather the people of the State must depend on the sub-structure otherwise called the economy for survival. The basic problem of how social order and human progress can be possible in a society is where individuals follow their own self-interest and not to rely on politics for survival, because individualism will lead to order and progress.

It is a well known fact that in order to make money; people produce things that other people are willing to buy and not surely from political platforms, mega rally dances and women group prayer sessions for a living.

Therefore what the Restoration government should do, if it really has the interest of the people it governs at heart in this trying period is to provide a sound economic policy that is geared toward setting-up small-scale agro-allied businesses, industries and investment opportunities that will engage the youths and women groups into productive ventures based on the concepts of economic liberty.

07 May 2018

Bayelsa Business Council (BBC): Another Conduct-Pipe Like BDIC in Bayelsa?

As Governor Dickson inaugurated another 22-Member Bayelsa Business Council (BBC) to formulate polices aimed at attracting local and foreign investors to the State and as well to shore up her revenue base; the question descending minds are asking is; when will the Restoration Administration tell Bayelsans the “Gain-Income, Increase-Capital and Safety of Principal” from the #10bn Bayelsa Development and Investment Corporation (BDIC) inaugurated in South Africa and London in May 2013?

It would be recalled that Governor Dickson inaugurated Bayelsa Development and Investment Corporation (BDIC) with an initial take-off grant of #10bn, which gesture according to him was to enable the State to diversify from Oil and Gas sector of the economy.

Disclosing this at the inaugural Board Retreat of BDIC, held in Yenagoa, Governor Dickson said this would assist the Corporation in performing its statutory functions, which include attracting local and foreign investors to the State, boosting its economic profile and providing an economic blue-print for the State.

Governor Dickson who in addition stressed the importance of the Board members of BDIC to participate in the present administration’s efforts to turn the economy of the State around added that it has become imperative for the State to diversify from Oil and Gas sector of the economy in view of the non-renewable natural resources and emerging global economic market trends.

On the issue of funding, Governor Dickson disclosed that, “BDIC will enjoy from now till the end of the current budget year a capital injection of between#5bn-#10bn from the government of Bayelsa State to enable BDIC performed effectively and described Bayelsa State as Nigeria’s best-kept secret and investment destination while opening an investment office in London.

According to the State Chief Executive, his administration’s strategic vision is to attract private sector within and outside the country to open businesses in the State in order to create job opportunities as well as create alternative sources of revenue for the State noted with delight that with the opening of the London Office, the State was making a bold statement to the World at large and the investing public, that it is ready for business and eager to promote an excellent bilateral realties with Britain and the Commonwealth at large and used the occasion to disclose that BDIC Office would also open an Education Desk to assist the large number of Bayelsa Students, who are presently on scholarship in various Institutions of Higher Learning in the UK.

In their separate remarks at the official opening ceremony of BDIC’s International Office in London, Governor Dickson said BDIC’s London Office is principally intended to compliment the efforts of Nigeria High Commission in the United Kingdom by promoting trade and investment potentials of Bayelsa State and Nigeria, while the Special Guest of Honour and Nigeria’s High Commissioner to the United Kingdom, Dr. Dalhatu Tafida commended Bayelsa State Government for the bold initiative taking in opening an office in the UK., noted that Bayelsa State is one of the youngest and smallest States in Nigeria, yet one of the most enterprising in the country.

He further stated that the event marked the first time a State in Nigeria opened such an Office in the UK and pledged full support and assistance of the High Commission while the event was attended by members of the diplomatic community, business leaders including the Chairman of West-Minister Business Group, Mr. Lawrence Robertson and a high powered delegation from Bayelsa State made up of King Alfred Diete-Spiff, the First Military Governor of the Old Rivers State and Amanyanabo of Twon-Brass, Chief Timi Alaibe, former MD of the NDDC, Major Lancelot Ayanya, Chairman National Oil Spill and Response Agency, Barrister Kemela Okara Commissioner for Trade, Investment and Industry, Tam Alazigha Deputy Managing Director BDIC, Barrister Funkazi Koroye-Crooks, BDIC/London Office, Cyril Akika, Special Adviser to Bayelsa State Governor on Investment among others.

In a related development, Governor Dickson, 10th June 2017 inaugurated a-22member Bayelsa Business Council (BBC) to formulate policies aimed at attracting local and foreign investors to the State and as well to shore up her revenue base with members of the council as Chief Ephraim Faloughi–Chairman, Mr. Harcourt Adoke-Deputy-Chairman, Ambassador Godknows Igali-Vice-Chairman-Public Sector, Mr. Gesiye Asamowei-Vice Chairman Private Sector, Mr. Tam Alazigha-Secretary, Adikio Warmate-Assistant Secretary. Others are Ken Etete, Mrs. Ebi Fumudoh, Dr. Eruani, Professor Azaiki, Mr. Didi Ndiomu, Mr. Guy Murray Bruce, Mr. Elvis Donkemizuo, Mr. Samson Siasia, Mr. Joe Penewou, Chief Fumudoh, Chief Timi Alaibe, Mr. Denzel Kentebe, Mrs. Funkazi Koroye-Crooks, Ms Patience Abbah, King A.J Turner and Dr. Daru Owei.

While inaugurating the BBC at the Conference Room of the new Governor’s Office Yenagoa, Governor Dickson said the council has as part of its responsibilities the laying of a solid economic foundation and formulation of economic policy that will be private-driven.

He further said the mentality of total independence on the government has to change and the only way to achieve this is to formulate policy that will have direct impact on the people and the present administration carefully selected this set of leaders to lay foundation for a private sector driven development of the economy of the State.

In his words; “The State heavily relies on government and her resources and this mentality has to change. Our State is a land of opportunities; our State has potentials to grow its economy. “In order to change the age long mentality of our people and reposition the economy of the State and make it private sector-driven, we need our business leaders who have done well in their private businesses to come together to explore and exploit the abundance business opportunities in the State. “We need your inputs; your professional advice on how to change our story. We expect you to organize Bayelsa in such a way that her story will be told everywhere as a place that is investment-friendly; a place that is ready for investment and as a place that understand the rules of a private sector,” and assured the council of his administration’s support especially in the provision of an enabling environment to enable it function at optimal level.”

According to Governor Dickson, his administration has invested a lot in all the sectors of the economy, especially in security, education, health and capacity building to mention but a few, further stated that the administration has made a lot of investment in security such as that our State by all ratings has been adjudged as one of the most peaceful States in the region. If we create peaceful environment, the next thing is to see how businesses can be developed and grow. However, we can attract people from all sectors to come and live here and do business and called on the people in the region to embrace peace and work together for the economic development of the region.

According to him, the region is fast losing businesses while our businesses are closing down; other areas are smiling to the banks, therefore we need to work for peace and create peace in our State.

In an earlier speech, Commissioner for Trade, Investment and Industry Kemela Okara (ESQ) said the inauguration of the Council would attract investment to the State and encourage various entrepreneurs while in his remarks, Chairman of the Business Council Chief Ephraim Faloughi thanked the governor for giving them the opportunity to serve and reposition the economy of the State through private sector participation, further stated that Bayelsa has suffered over the years, however, with the present administration’s initiative of bringing together businessmen and women to rub minds on how to reposition the economy; the State will regain its glory. The initiatives according to him will assist the State’s new economic champions that will take over the economy of the State.

Accordingly, he said, we will tutor the younger ones; we pledge to share our personal experiences with younger generations to develop our economy; we need patience, dedication and perseverance as these are the keys to economic success,” end of quote:
As a matter of fact, it is easier said than done. The words of our political leaders; they said are now the words of knowledge and wisdom but to what extent these sweet talks and flowery speeches made by Governor Dickson in the past six years of the Restoration Administration concerning the economic growth and well-being of the State is yet to be felt by the people.

Besides, apart from the likes of Professor Steve Azaiki, an astute administrator and founding of Azaiki Public Library in Yenagoa, Chief Faloughi said to be a businessman operating in Lagos, Mr. Harcourt Adoke, Proprietor of Gas Factories in Port Harcourt and Yenagoa, Mr. Denzel Kentebe and Mr. Moses Siasia who are also known entrepreneurs; the rest are unknown in the business environment apart from being active participants in politics whose performance in the economic sector of the State have not positively impacted on the people, but continually engage in power-politics for self-upkeep and sustenance in the State.

Asides, in spite of this gathering of egg-heads at its inauguration in South Africa and London where powerful speeches and encomiums were showered on Stakeholders and State-actors, BDIC has neither attracted industries nor investors to establish industries in Bayelsa to create job opportunities for the teeming unemployed youths; rather BDIC turned out to be a political Jamboree, Paper Tiger and an economic retrogressive Investment Corporation to the peoples’ commonwealth since May 2013 to date.

In fact, BDIC has turned out to be one of the biggest economic wastes, political monster, conduit-pipe and a predator of the peoples’ commonwealth in Bayelsa.
Like the BDIC, let BBC never turn out to be another Barbarossiac and plutocratic cartel, aimed at conduit and siphon Bayelsa State funds to personal and family members’ pockets. Experience has shown that since the inauguration of BDIC, it has not attracted any single investor either local or foreign to the State and that in itself is an indication of a total failure either on the part of the government that established the BDIC or the leadership of BDIC, an investment Corporation that lacks clue, focus, credibility and sincerity or probably dead at inauguration.

As a matter of fact, since its inauguration in 2013, BDIC has neither brought economic welfare nor economy of abundance to the people of the State and as a result Economic Observers and Analysts see it as a total failure on its part to attract foreign investors to the State.
According to Economic Watchers, Governor Dickson, who also attended and fully participated in an Oil and Gas Summit held in Houston Texas about two years ago in USA has neither attracted Investors nor Industries to establish in Bayelsa to date.

No wonder, the State is littered with numerous abandoned projects, investment and job creation opportunities while government has not been able to give priority attention to all the investment and job creation opportunities as they are left to rot away in their various project sites cut across the length and breadth of the State thereby unable to create jobs for the teeming unemployed youths including women, rather engage them to dance at political platforms and reception grounds for crumbs in the State.

The driver of Bayelsa’s problem today is failure of leadership, poverty of leadership and leadership of poverty to holistically encourage, set-up and develop Industries, Investments and job creation opportunities to attract genuine investors both local and foreign to invest in order to turn around the economic fortunes of the State.

To state the obvious without any equivocation; it is extremely difficult for both local and foreign investors to come to invest in Bayelsa due to insecurity of their investments, criminal militancy; lack of investment by stakeholders who have been in power over the years, plutocratic activities of the ruling elites and other unwholesome practices of mandarin millionaires masquerading as political leaders in the State.
Even the few foreign construction firms that constructed few roads in the past were unable to effectively perform without either fully-armed Mobile Police Squads or Military boots on ground to guard and protect their interest otherwise their safety at job sites were unguaranteed.

For instance, in the past one-year or so the State witnessed several assassination attempts on prominent citizens, several cases of kidnaps, cultism including kidnapping of a nursing mother of nine weeks old-baby and other robbery-related cases reported in the State capital Yenagoa and its environs.
Consequent upon the above, who are those foreign investors that would come and invest in Bayelsa, inebriated with such heinous crimes and criminalities? Besides, the worst violence and criminal militancy ever experienced in other parts of the country is what Bayelsa experienced.

Therefore, Bayelsa’s failure to escape from poverty after over six years of several billions of Naira including Federal Allocations, ecological funds, NDDC Intervention Funds, Bail-out Funds, Paris/London Club Refunds and others are squarely as a result of leadership failure, poverty of leadership and leadership of poverty.

For instance, how would one imagine in a small State like Bayelsa with a population of not more than three million people at most got between #16bnand #18bn monthly from February 2012 to September 2015 before the economic recession is unable to judiciously utilize these funds for the economic growth and development of the State.

Even, during the economic recession period that lasted from October 2016 to the 3rd quarter of 2017, Bayelsa received not less than #12bn monthly allocation and also got several billions of Naira from Paris/London Club Refunds for salaries arrears, yet only one and half months paid, so also in August against September 2017, Bayelsa received #12bn; yet salaries of workers, pensioners and others were not fully paid.

To state without rhetoric or embroideries, the major trouble with Bayelsa of today is that Dillingers, Barbarossas, and Freebooters who should be inhibiting maximum security prison yards are the ones occupying seats of power, residing in government offices across the length and breadth of all the local government areas masquerading as leaders in the State, hence no end to workers’ verification exercises, so also mandarin millionaires and office plunders and their likes are the best leaders occupying lucrative offices.

Also, crooks and quacks who in civilized crimes should be banished to the internal realm of collective disdain are canonized as political demigods, godfathers, heavy weights, political bulldozers and juggernauts and Saints in Bayelsa’s political amphitheaters.

As a result, Bayelsa is marooned aground in the sandbank of underdevelopment because these Dillingers, Barbarossas and Freebooters exchanged their primeval jungle playgrounds for citadel of power.

They have been in the helms of affairs since the return of democracy in 1999, shamelessly celebrating monumental failures, grotesque incompetence and the kind of visionless kleptomania unparalleled in the history of governance in Bayelsa State.

No wonder, Bayelsa State that recorded a total of #12.56bn as Internationally Generated Revenue (IGR) in 2017 and received the sum of #105.25bn from the Federation Account in the same year, yet her domestic debt owed by the Bayelsa State government under Governor Henry Seriake Dickson stands at #219.46bn according to a data obtained from the National Bureau of Statistics (NBS) Website, Tuesday 2nd April 2018.

25 Sep 2017

Sukuk: A Global Economic Model

On 5 March 2009, the Vatican’s official newspaper L’Osservatore Romano reported that banks should look at the rules of Islamic finance to restore confidence amongst their clients at a time of global economic crisis. Author Loretta Napoleoni and income strategist, Claudia Segre, said that “The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service.” They suggested “Western banks could use tools such as the Islamic bonds, known as sukuk, as collateral”. Historically, Catholic Church forbade usury but began to relax its ban on all interest in the 16th century.

The growth in Sukuks’ popularity can be traced back to the global financial crisis in 2008. A Sukuk is a Shariah-compliant bond. Whereas Western bonds offer to pay bondholders a rate of interest over a set period of time, Sukuks offer a fixed rate of profit. Islamic finance’s emphasis on equity and investment in the real economy provides “a stable and productive banking sector” as noted in World Economic Forum report of May 2017. “Rather than providing a lucrative financial alternative to investing in the real economy, Islamic banking complements and strengthens the latter. It ensures that financial capital does not lead to artificially bloated asset prices. Instead, it is made to work in the real economy, on real projects.”

Saxony-Anhalt became the first state government in Germany and Europe to issue a sub-sovereign bond under Islamic principles. In 2004 the Sachsen-Anhalt Government issued sovereign Sukuk worth €100 million which were listed in Luxembourg and backed by Ministry of Finance buildings. The issuance by Saxony-Anhalt attracted strong demand and was fully subscribed, with 60% of the issue going to investors in Bahrain and the UAE and the remaining 40% to investors in Europe, particularly those in France and Germany.

In 2006, US Texas-based energy firm East Cameron issued a $165.67 million sukuk through a Cayman Islands vehicle. GE Capital, the finance arm of General Electric, tapped the market in 2009 with a $500 million sukuk domiciled in Bermuda to fund a lease-based aviation deal.

In December 2007, Paris Europlace established the Islamic Finance Commission. Since then, the French financial markets regulator, the Autorité des marchés financiers (AMF), has issued two positions allowing Shariah-compliant investment funds and sukuk listings. As such, the Bourse de Paris (Paris stock exchange) has created a sukuk segment and four tax regulations have been published that confirm a parity of tax treatment with conventional financial products.

In July 2010, the French government made certain amendments to its laws in order to facilitate sukuk issuances. The amendments removed double stamp duty, the payment of a capital gains tax on property and streamlined the regulations governing estate agents. In June 2011, France witnessed the introduction of the first Islamic deposit scheme operated via the Islamic window of an existing conventional bank.

The United Kingdom was the first country outside the Islamic world to issue sovereign Sukuk set up according to Al-Ijara structure as reported by Financial Times of June 25, 2014. By issuing sovereign Sukuk the United Kingdom Government has demonstrated that it is possible to create a successful base for Islamic finance outside the Islamic world.

On 9 July 2014, Luxembourg Parliament voted a law aimed at allowing the issuance of the first Luxembourg sovereign Sukuk in response to the recent surge in investor demand from Shariah-compliant instruments. The law authorized a sale and buy-back transaction of real estate assets to a Special Purpose Vehicle (“SPV”) owned by the Luxembourg state for the purpose of issuing sovereign Sukuk with a value of EUR 200 million.

Luxembourg later became the first jurisdiction in the Eurozone to securitize three government properties, that is, the two towers of the Gate of Europe in Kirchberg and the Gutenberg building in Strassen, to back Sukuk worth EUR 200 million. Luxembourg sovereign Sukuk are set up according to the Al-Ijara structure, the most common structure for sovereign Sukuk with rental payments on property providing income for the investors.

In 2015, Hong Kong Government successfully sold its second Islamic sukuk bond to raise US$1 billion in its latest effort to promote Islamic finance in the city. It issued its first issuance consisting of a 5-year $1 billion Al-Ijara sukuk in September 2014 offering a profit rate of 2.005%. The Hong Kong Monetary Authority, which handled the issue on behalf of the government, received US$2 billion in orders from 49 global institutional investors including central banks and sovereign funds among others. The orders were double its US$1 billion issue size.

South Africa as one of the deepest and most traded emerging markets first announced it would look to issue a sukuk in late 2011, as it sought to diversify its funding sources and tap into the wealth of the Arab world. But the launch was set back in part because of delays in the identification of the asset that would back the bond.

In 2014, South Africa joined Hong Kong and the UK to become the third non-Muslim country to sell government debt that adheres to Islamic law. The $500m sale was more than four times subscribed, with an order book of $2.2bn according to the SA Treasury, indicating that appetite for emerging market Islamic bonds matches that of developed world issuance.

A recent report by credit rating agency Moody’s claimed 2014 had been a landmark year for sovereign sukuk, with sales in London, Hong Kong and South Africa indicating a significant change in the potential size, depth and liquidity of the market.

In 2016, US investment bank JPMorgan include sukuk bonds in its emerging markets indices for the first time in the year, widening the appeal of Islamic instruments among global debt investors. Islamic finance assets grew by 10% to reach $2 trillion in 2015. Islamic banking represented 73% of that figure, followed by sukuk bond which represented 17%, said the initial findings of ICD Thomson Reuters Islamic Finance Development Indicator (IFDI 2016).

In 2017, Kenyan Capital Markets Authority (CMA) lauded Government efforts to deepen Islamic Finance in Kenya, following the Presidential assent of the Finance Act 2017 confirming Kenya’s commitment to positioning itself as a regional Islamic Finance hub. Finance Minister Henry Rotich outlined the steps as part of the country’s 2017/2018 budget aiming to level the playing field between Islamic and interest-based transactions. The primary objective is to prepare the groundwork for a sovereign sukuk but also equally to attract corporate sukuk from the region.

Undoubtedly, Islamic banking is one of the fastest growing financial sectors today. According to Thomson Reuters’ projections, Islamic finance assets are projected to grow to $3.2 trillion by 2020, with Islamic banking reaching $2.6 trillion. With so much damage caused by highly complex and risky financial structures untethered to assets, it is hardly surprising that more and more investors are attracted to Islamic finance’s emphasis on real assets and greater certainty.

No wonder Giovanni Maria Vian, L’Osservatore Romano newspaper’s editor, justified the theological foundation of Sukuk regarding global finance that “the great religions – Islam and Christianity – have always had a common attention to the human dimension of the economy.” Obviously, the Federal Government of Nigeria roads to 7-year N100 billion Sukuk bond offers an avenue for a competitive alternative to the conventional banking system and a path towards sustainable economic recovery.

 

 

 

 

27 Apr 2017

Resurrecting En-Slaved Voices (Video)

Far far away, behind the word mountains, far from the countries Vokalia and Consonantia, there live the blind texts. Separated they live in Bookmarksgrove right at the coast of the Semantics, a large language ocean. A small river named Duden flows by their place and supplies it with the necessary regelialia. It is a paradisematic country, in which roasted parts of sentences fly into your mouth.

The Big Oxmox advised her not to do so, because there were thousands of bad Commas, wild Question Marks and devious Semikoli, but the Little Blind Text didn’t listen. She packed her seven versalia, put her initial into the belt and made herself on the way.

A small river named Duden flows by their place and supplies it with the necessary regelialia. It is a paradise matic country, in which roasted parts of sentences fly into your mouth. Even the all-powerful Pointing has no control about the blind texts it is an almost unorthographic life One day however a small line of blind text by the name of Lorem Ipsum decided to leave for the far World of Grammar. The Big Oxmox advised her not to do so, because there were thousands of bad Commas, wild Question Marks and devious Semikoli, but the Little Blind Text didn’t listen. She packed her seven versalia, put her initial into the belt and made herself on the way. When she reached the first hills of the Italic Mountains, she had a last view back on the skyline of her hometown Bookmarksgrove, the headline of Alphabet Village and the subline of her own road.