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Islamic financing for SMEs: a line of more than 26 billion FCFA opened to Afriland First Bank

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(Business in Cameroon) – On June 2, 2022 in Sharm El-Sheikh, Egypt, Youssoufa Bouba, Deputy Managing Director of Afriland First Bank, signed with the Islamic Society for the Development of the Private Sector (SID), an agreement opening of a line of credit in the amount of 40 million euros, or just over 26 billion FCFA. This line of credit is co-financed by the Arab Bank for Economic Development in Africa (Badea), we officially learned.

The funds thus made available to Afriland First Bank, leader of the banking market in Cameroon, will “on the one hand, to further increase its commitment to the SME and SMI segment and, on the other hand, to promote Islamic financing in the business communityin Cameroon, we learn from the official press release which sanctioned the signing of this convention.

This agreement confirms our commitment to strengthen the impact of Islamic financing in the development of Cameroonian SMEs alongside Afriland First Bank, pioneer of Islamic finance in Central Africa and leading institution in the Cameroonian banking sector.explained Ayman Sejiny, CEO of SID.

The new agreement brings to three the number of credit lines made available to Afriland First Bank by this partner since 2016, for a cumulative amount of more than 100 million euros. This represents an overall envelope of more than 65.5 billion FCFA, over a period of 6 years.

A lever for financial inclusion

As a reminder, Islamic finance makes it possible to offer financial products that comply with the principles of Sharia, Islamic law. Its principles are the prohibition of charging interest on loans, the prohibition of uncertainty and speculation, the prohibition of investing in certain sectors (alcohol, tobacco, betting on games, etc.), as well as respect for the principle of profit and loss sharing.

This mode of financing the economy, based on the equitable distribution of wealth and the prohibition of profit, is very rare in Cameroon. Until 2019, according to official data, only one bank and three microfinance establishments, out of nearly 500 approved establishments, had an Islamic financing window.

With a view to popularizing Islamic finance, the Ministry of Finance and the UNDP organized at the end of 2019 in Yaoundé, the Cameroonian capital, a forum on the theme “Islamic finance: contribution to Cameroon’s economic growth and the achievement of sustainable development goals”.

According to the Minister of Finance, Louis Paul Motazé, who opened the work in Yaoundé, this finance “can promote the development of financial inclusion, targeting all those still excluded from the traditional financial system for cultural reasons; constitute an additional lever for economic growth by attracting foreign investment, in particular from certain Middle Eastern countries wishing to recycle their excess liquidity”.

Brice R. Mbodiam

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