A dialogue session on ” Governmental and Non-Governmental Sukuk” was held at the Tripoli headquarters of the National Economic and Social Development Board (NESDB), in coordination with the Libyan Capital Market Authority, to discuss using Islamic financial Sukuk/Bonds to finance economic growth.
Sukuks are Islamic, Sharia-compliant financial certificates, or bonds, that are an alternative to conventional, interest-bearing bonds.
The session was attended by several business leaders and representatives of relevant stakeholders and regulatory bodies.
The NESDB said the session was part of the groundwork laid for a larger, specialized workshop on the same topic, which will focus on enhancing the prospects of non-governmental Islamic finance and exploring opportunities for utilizing sukuk as an innovative and sustainable financing tool that supports economic growth.
The event highlighted the importance of developing Islamic financial instruments based on the legislative and regulatory framework adopted in Libya, particularly Law No. (11) of 2010 and the executive regulations issued by the Stock Market Authority.
The NESDB said this will enhance transparency, deepen the financial market, and contribute to diversifying funding sources for both the public and private sectors.
Background
It will be recalled that Libyan law does not permit banks operating in Libya to charge interest (usuary) on loans. Moreover, Islamic banking is still very much under-developed. Equally, banks do not feel the current law is strong enough to allow them to give out loans and be able to recover their capital or property / assets used as a guarantee. Consequently, Libyan banks are sitting on mountains of cash that they are unable to lend to drive the country’s economic growth or earn profit for the banks’ owners.
