Sukuk could become the go-to debt instrument for some African countries looking to raise financing to support their post-covid economic recovery, Faizal Bhana, the director for the Middle East, Africa and India at Jersey Finance told Bloomberg. Bhana expects African countries to “struggle” to raise the funding they need as they emerge from the grips of the pandemic, and that the sharia-compliant bonds could offer a viable path to tapping international debt markets.

But Enterprise, what are sukuk? We’ve got you covered with our explainer on the debt instrument.

Why sukuk? “The convenience brought about by technology and similarities in some features of Shariah-compliant products and environmental, social and governance principles is expected to boost uptake of Islamic-finance products,” says Bhana. The expectation that governments across Africa will rely on the bonds this year comes despite Islamic finance as a whole being “relatively underdeveloped” in the continent, the business information service notes.

Countries with sovereign sukuk in the pipeline: We already know to expect sovereign sukuk issuances from South Africa before next February and Nigeria before the end of the calendar year. Abuja — whose sukuk issuance will be used to finance an important infrastructure project — has already issued three sovereign sukuk, while South Africa made its sovereign sukuk debut in 2014. Kenya, meanwhile, has the regulatory framework in place for its Islamic finance industry, but has not announced concrete plans for a sovereign sukuk sale.

Where does Egypt stand on its sovereign sukuk? The Sovereign Sukuk Act, which sets the framework by which Egypt will issue sovereign sukuk, is pending final sign-off from the House of Representatives. It will then be signed into law by President Abdel Fattah El Sisi and its executive regulations should be issued within three months of its ratification. The government plans to roll out the sharia-compliant bonds, both in EGP and foreign currency, as soon as the bill is ratified.

Corporate sukuk have already made their debut in Egypt, after Talaat Moustafa Group subsidiary the Arab Company for Projects and Urban Development, Sarwa Capital (now Contact Financial), and CIRA held a EGP 5.1 bn issuance at the tail-end of last year.