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Sunday, December 4, 2016


     Having the largest Muslim population in Africa, one would have expected Nigeria to be the leader in Islamic finance in Africa but that position goes to Sudan. Nigeria is late comer to Islamic banking and finance having gotten her first Islamic bank in 2012. Sudan is the first African country to accept the Islamic banking system and convert it whole financial system to level compatible with the Islamic system, it also issued Africa's first Sukuk bond through a Sudanese cement company{1}. It remains among the  few countries in the world to attempt total conversion of their monetary and banking system to Islamic. While the first modern Islamic bank in the world is believed to have being established in Egyptian town of Mit Ghamr in 1963, though it operation was short lived as it was closed. Sudan still remains the biggest market for Islamic finance followed by Egypt. South Africa a country where Muslims are in the minority is doing better in term of adaptation of the Islamic banking model than either of Nigeria, Algeria and Morocco. The first Islamic bank to open in South Africa was Albarka Bank in 1989.

      According to some estimates{2} Africa has only about 2% of the global Islamic banking assets and only 0.5% of outstanding Sukuk despite having over a quarter of the total global Muslim population. Muslims make up about half of the population of Africa. Another study{3} put the share of Islamic finance in Sub Saharan Africa, as part of the total global market, as 16.6 in 2012. There are currently Islamic banks in Algeria, Botswana, Chad, Djibouti, Kenya, Egypt, Tunisia, Gambia, Guinea, Liberia, Libya, Niger, Nigeria, South Africa, Mauritania, Mauritius, Morocco, Sudan, Senegal, and Tanzania. Kenya, despite having its Muslims not in position of being the majority, its first Islamic bank was established back in 2005 by Barclays bank. Since that period more Islamic banks have opened their doors in Kenya. In Nigeria, the first Islamic banking window was open by Habib bank Nigeria plc (a subsidiary of Habib bank Pakistan) in 1992, but Nigeria's first fully fledged Islamic Bank Jaiz Bank Nigeria plc only open its door in 2012 despite raising capital for that purpose way back in 2003. Other banks operating Islamic banking window in Nigeria include Stanbic IBTC plc and few micro finance banks. Senegal first Islamic bank Banque Islamique du Senegal (BIS) its biggest Islamic bank was established in 1983{4}

    Just last week, the governor of Bank of Uganda Prof Emmanuel Tumusiime-Mutebile was quoted saying: "We should not think that Islamic banking and finance is only for Muslims. It is for all of us. Therefore, you need to come out and stress the unique tenets that distinguish Islamic banking from the conventional banking and compare the similarities too," Ugandan central bank is putting things in place for the introduction of supervisory manuals and regulatory framework on Islamic banking in the East African nation. Among the major factors slowing the growth of Islamic banking in Africa are: Ignorance about the system, absence of initiative on the part of African leaders, lack of Shari’ah compliant investment vehicles, poor legal and regulatory frameworks, unnecessary oppositions (base on ignorance of the system) from non Muslims, absence of commitment from Africa based research institutes, and lack of trained manpower. In view of these, multinational financial institutions like African Development Bank shall lead the initiative just like the IMF and World Bank are doing at the global level. Considering the position of Nigeria in Africa, base on its economic and population strength, Nigeria shall also join in leading the initiative to make Africa a world leader in Islamic finance.


1- Global Islamic Finance Report (GIFR 2010)
3-Gelbard, E., Hussain, M., Maino, R., Mu, Y., and Yehoue, E.B. (2014), "Islamic Finance in Sub-Saharan Africa: Status and Prospects", IMF Working Paper WP/14/149
4- Abdullahi, S.I., "Islamic banking in West African Sub region: a survey", Arabian Journal of Business and Management Review (OMAN Chapter) Vol. 2, No.7, Feb. 2013