Africa: New Islamic 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.
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 global growth, with sub-Saharan Africa set to continue to grow at around 5% in the coming three years, according to the World Bank.
Given that growth, South Africa’s relatively early entry as a non-Muslim issuer is perhaps not entirely inappropriate.