Islamic finance increasingly popular in sub-Saharan Africa
Islamic finance is expected by many experts to grow rapidly in the coming years in Africa.Although Islamic banks’ financial assets have reached $ 1.3 billion in late 2012, the industry remains underdeveloped in Africa. But it seems this could be changing, as evidenced by the interest generated by a recent conference on the subject in Nairobi.
Global Head of Islamic Banking at Standard Chartered Wasim Saifi told Ghana Business News he believes this sector could reach 10 percent of bank assets in the near future, in five or six countries in sub-Saharan Africa, particularly Kenya and Nigeria.
This would represent a relatively rapid development, since the first licences were granted in Kenya only six years ago. Islamic banks currently hold a two percent market share in the country.
Many experts believe a real demand exists for Islamic financial services, and governments as well as regulatory agencies now seek to facilitate the development of the sector.
Cash from the Middle East is also ready to be invested in products such as Islamic bonds, or sukuk. Nigeria has recently authorised a first issue. The government considers this could be a significant new mean of financing future infrastructure.
As for the banking sector, the first institution not charging interest began operating last year in this country. Conventional banks have also been allowed to offer products that do not bear interest. Uganda and Tanzania are seen as following a similar process.