CIBAFI on the potential of Islamic banking in Africa

Islamic finance is experiencing steady growth globally, with the industry doubling in size every five years. The pandemic in 2021 did not hinder this growth, with regions like Central Asia and Africa gradually contributing to the industry's expansion. While countries like Saudi Arabia, Malaysia, and UAE dominate the market share, African nations like South Africa, Nigeria, and Senegal are emerging as key players. Despite having around $50 billion in Islamic finance assets, Africa's share remains small, less than 2% of the global total. However, the continent's young and growing population presents immense opportunities for growth. The transition to sustainable development also offers a promising avenue for Islamic finance in Africa. The key lies in creating the right regulatory environment. Recommendations include aligning tax laws and regulations to support Islamic banks, amending legal frameworks to facilitate the issuance of Islamic bonds, and developing Islamic financial infrastructure beyond the banking sector. Digital transformation and innovation have become crucial in sustaining growth. The pandemic expedited digitalization in the industry, leading to advancements in mobile banking, insurance, and payments. African Islamic banks must leverage partnerships with fintech companies to further deepen market penetration and promote financial inclusion. Addressing gaps in policy frameworks and embracing technological advancements will be crucial in unlocking the full potential of Islamic banking in Africa.