**Figure 6: Regional financial integration instruments that could promote green** **_sukuk_ in Africa**<sup>**18**</sup>

<!-- Start of picture text --> RFI Initiatives in Africa<br><!-- End of picture text --> <!-- Start of picture text --> Currency unions<br><!-- End of picture text --> <!-- Start of picture text -->  West African CFA<br>franc<br> Central African CFA<br>franc<br><!-- End of picture text --> <!-- Start of picture text -->  CFA green sukuk<br> Rand green sukuk<br><!-- End of picture text --> <!-- Start of picture text --> Regional exchanges<br><!-- End of picture text --> <!-- Start of picture text -->  BRVM (UEMOA)<br> BVMAC (Central<br>Africa)<br><!-- End of picture text --> <!-- Start of picture text -->  Listing: green<br>segment<br> Clearing and custody<br> Sustainability index<br><!-- End of picture text --> <!-- Start of picture text --> Regional/sub-regional<br>MDBs<br><!-- End of picture text --> <!-- Start of picture text -->  AfDB/Africa 50<br> BOAD<br> EADB<br> BDEAC<br><!-- End of picture text --> <!-- Start of picture text -->  Green sukuk<br>programs<br> Technical assistance<br> Credit enhancement<br><!-- End of picture text --> <!-- Start of picture text --> Sub-regional Central<br>Banks<br><!-- End of picture text --> <!-- Start of picture text -->  BCEAO<br> BEAC<br><!-- End of picture text --> <!-- Start of picture text -->  Regulatory treatment<br> Tax incentives<br><!-- End of picture text -->

# **_Components of the Roadmap for Sub-Saharan Africa_**

Green _sukuk_ can be used to tackle the three dimensions of sustainable development: energy security, energy poverty, and environmental responsibility. _Sukuk_ and thematic bonds share a key principle: the link to the real economy (although they differ in other ways, see box 2). This principle—one of the pillars of Islamic finance—requires the allocation of the issuance proceeds to predefined activities or projects. This traceability obligation promotes accountability and requires transparency.

# **Box 2: Differences between sukuk and thematic bonds**

Although they share similar financial characteristics, _sukuk_ and thematic bonds differ in several ways:

- Thematic bonds are concerned with the allocation of receipts from the issue to predefined projects with social or environmental impacts, whereas _sukuk_ applies to any type of activity in accordance with the principles of _shari’ah_ . Assessment of social and environmental impacts is still not developed in the Islamic finance industry in general and the _sukuk_ market in particular.

- Thematic bonds represent debt securities of the issuer to their holders, whereas _sukuk_ represent ownership (legal or usufruct) of the underlying assets.

- _Sukuk_ must be backed by a minimum of tangible assets in order to be tradable, and the value of the underlying assets must be greater than or equal to the value of the issue.

> 18 _BOAD:  West African Development Bank; BRVM: Regional Securities Exchange-West Africa; BCEAO: Central Bank for the West African States; MDBs: Multilateral Development Banks; BVMAC: Regional Securities Exchange-Central Africa; AfDB: African Development Bank; EADB: East African Development Bank; BDEAC: Development Bank of the Central African States; BEAC: The Banks of Central African States_

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