Kenya eyes revamped legislation for sukuk this year

Thu Feb 24, 2011 12:54pm GMT

By Shaheen Pasha

DUBAI (Reuters) - Kenya may pass legislation to eliminate tax barriers to Islamic bond issuance by the end of the year with the government looking to launch Islamic treasury bills and bonds, known as sukuk, bankers said.

Kenya, the largest economy in east Africa, has yet to tap international markets but is eyeing Islamic bonds as an option to raise funds from sharia-compliant investors, central bank Governor Njuguna Ndung'u said in an email.

"We have received requests for a project to be identified so that finance can be raised through the issuance of a sukuk bond," Ndung'u said.

"Discussions are still ongoing with the Debt Management Office at the Treasury as to how this can be progressed."

The central bank had previously issued an infrastructure bond with a sukuk portion in 2009.

But the lack of accommodative tax legislation has been a hindrance to the development of the sukuk market.

A source familiar with the central bank's discussions, said there is a push within the government to get appropriate legislation in place by the end of the year.

"Once the regulatory framework is there we can promote a listing of sukuk on the local exchange," the source said.   Continued...

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