African economies tap Islamic finance to diversify borrowing
Four of Africa’s five largest economies have recently turned to sukuk, Islamic finance certificates structured to comply with Sharia law
Egypt, Nigeria, Algeria and Morocco turn to sukuk — Sharia-compliant alternatives to bonds — for budgets and infrastructure
CAIRO/ABUJA/ALGIERS/RABAT (MNTV) — Four of Africa’s five largest economies have recently turned to sukuk, Islamic finance certificates structured to comply with Sharia law, as part of efforts to attract a broader pool of investors and diversify debt funding. Unlike conventional bonds, sukuk represent partial ownership in an asset or project and pay returns generated by those assets rather than interest.
In late June, Egypt raised $1 billion through a three-year ijara (leasing) sukuk offering a 7.875 percent annual return, paid twice yearly. Privately placed with Kuwait Finance House, the sale avoided costs linked to global investor roadshows and credit ratings. It is part of a $5 billion sukuk programme Cairo plans to issue in multiple rounds.
Nigeria’s Debt Management Office issued its seventh sovereign sukuk in May, raising 300 billion naira (about $190 million) via a seven-year leasing sukuk with a 19.75 percent fixed rental rate. The offering was oversubscribed more than sevenfold, attracting over $1.4 billion in bids. Proceeds will fund construction and repair of 44 major roads and bridges nationwide. Since its debut sukuk in 2017, Nigeria has raised nearly $900 million through the instrument.
Algeria, under its 2025 finance law, has set up a sukuk framework and plans its first sovereign issue in the third quarter of 2025, likely in local currency. Morocco’s central bank has confirmed plans for a second sovereign sukuk later in 2025; its first, in 2018, raised about $110 million.
Analysts say the surge reflects both rising demand from Islamic and ethical investors and a push by finance ministries to broaden funding options. While local-currency sukuk can reduce foreign-exchange risk, they remain government liabilities and add to repayment obligations. Experts stress that strong regulation, active secondary markets and investor confidence will be key to making sukuk a regular financing tool in Africa.
Have Your Say!
Have you been affected by the issues raised in this story? Please share your experiences by emailing haveyoursay@soundvision.com.
Please include a contact number if you are willing to speak to a Muslim Network TV’s representative. You can also get in touch in the following ways:
Tweet: @MuslimNetworkTV
We must take charge of our narrative. Research indicates that 92% of their Muslim coverage is negative. Help us change that.
