Islamic banking asset of the total African banking is expected to rise to above 10 per cent in the next five years from the current below 5 per cent. Moody’s Investor Service report indicates that Islamic finance is set to grow across Africa as financing need continues to grow.
The report which cites Kenya among 18 other African Countries with the greatest growth potential for Islamic banking as well as Sukuk issuance, shows that Africa’s larger Muslim population, which is predominantly un-banked, will also provide a solid foundation for the growth of Islamic banking assets.
“The desire within Africa for stronger investment links with the fast-growing economies in the Gulf and Asia that have large Muslim populations with large pools of capital will help drive the issuance of Sukuk on the continent,” said Akin Majekodunmi, a Vice President and Senior Credit Officer, at Moody’s.
African Sukuk currently makes only 0.5 per cent of global Sukuk issuance and is also expected to grow as well.
Moody’s forecasts at least $1 billion of Sukuk issuance in Africa over the next 18 months in Egypt, Algeria, Morocco and Sudan have expressed interest in issuing sukuk this year or next.
Islamic banking has been on the rise in the continent with banks from the Middle East as well as other Islamic majority countries setting up shop in Kenya.
According to the Moody’s, other countries that are expected to see an influx in the number of Islamic banking products include Egypt, Morocco, Senegal, Nigeria and Sudan.
