An increasing number of African countries are considering issuing sukuk, or Islamic bonds, in a push to fund their huge infrastructure needs and to diversify their investor base, Standard and Poor’s has said in a report. South Africa, Nigeria, Senegal, and Mauritania have all announced in recent years their intention to issue sukuk bonds.

Standard and Poor’s said in a report that following the Arab spring and the rising influence of Islamist parties in some countries has put the development of Islamic finance on their governments’ agendas. Egypt for example, has recently presented a law allowing sovereign sukuk issuance, which would help finance the country’s high fiscal deficits and also provide funding for the current account deficit, while Tunisia’s 2013 budget law expects to finance its fiscal deficit partly by sukuk issuance, said the ratings company.

“We believe that sukuk issued by African sovereigns could address an investor base in the Gulf Cooperation Council, or GCC, countries or at the Islamic Development Bank, which may be looking for sharia-compliant investment opportunities,” said Standard & Poor’s credit analyst Christian Esters. Countries in the GCC generally benefit from strong current account surpluses, which S&P says could make them potential investors in sukuk issued in other regions.

The African Development Bank estimates that the cost of addressing Africa’s growing infrastructure needs is around $90 billion (Dh330.66 billion) annually. Growth on the continent is expected to remain supported by infrastructure spending, the development of mineral resources, and growing consumer spending. Islamic bonds will give African governments access to a new investor base and to diversify sources of funding, but S&P says that in some cases governments will aim to establish a benchmark for the development of an Islamic finance market, while others may be responding to the desires of a significantly Muslim population or aiming to become a hub for the global Islamic finance market.