Innovations in Islamic Finance 2015: New finance for a growing continent

With expanding economies and hundreds of million Muslims, Africa deserves to be a bigger part of Islamic finance. After a slow start, there are signs the sector is beginning to gain the crucial mass and legislative backing it needs.

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Amid a surge in sovereign debuts in the sukuk market last year, one region – perhaps unexpectedly – featured prominently: Africa.

First to the market was Senegal, the biggest economy in sub-Saharan Africa with a majority Muslim population after Sudan. Its CFAFr100 billion ($200 million) debut last June was Africa’s biggest-ever sovereign sukuk, attracting both local and international buyers. South Africa followed in September with a $500 million 5.75-year deal that was only the third-ever sukuk issued by a non-Muslim majority country, according to Standard Bank, one of the lead managers.

Those in the industry argue Africa’s new-found visibility as a market for Islamic finance is long overdue. Indeed, around a quarter of the world’s Muslims live in Africa – a population of almost 400 million. Moreover, as developed countries and more established emerging economies slow, this is a continent that is increasingly important to...