The challenges for Islamic finance in Africa

Author: Gemma Varriale | Published: 17 Oct 2013
  • Nigeria’s issuance of a sukuk earlier this month has been taken as a signal that large-scale Islamic finance has arrived in Africa;
  • It is widely believed that Islamic finance is a good fit for African countries given their huge infrastructure funding requirements and predominantly Muslim population;
  • But, despite its clear potential, the continent's nascent Islamic finance industry faces significant challenges;
  • Not least is the fact that countries looking to issue domestic sukuk must have sophisticated capital markets;
  • Sovereign sukuk also require government assets, which are in short supply.

The development of Islamic finance in Africa promises to bring shariah-compliant banking to its population of roughly 400 million Muslims. But, despite its clear potential, the continent's nascent Islamic finance industry faces significant...