Over the last decade, trade between African countries and the rest of the world has grown significantly and, in particular, charting a 170% increase in trade with the GCC.
The ongoing shift by African countries from being aid-dependant to increasing trade and investment ties with the Middle East has positioned Islamic finance to play a key role in facilitating further increases in trade and investment flows between Africa and the Middle East.
It has been reported that supportive socio-political factors and economic incentives shouldaccelerate the growth of Islamic banking activities in North Africa from currentlow levels, according to a new report
published by Standard & Poor's Ratings.
Services titled "Prospects For Islamic Banking In North Africa Improve Following The Arab Spring." Islamic banking started to emerge in North Africa in the 1970s when Egypt was among the first countries in the Arab world to authorize the establishment of pioneer Islamic banks.
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There is buzz about the prospects for Islamic finance in parts of the Middle East and North Africa region (MENA) impacted by the Arab Spring. News reports suggest that, as a consequence of change in public policy, the market share of Islamic banking in Egypt will grow to “35 per cent in five years from 5 per cent now.” Much attention in Islamic finance circles is also falling on the relatively smaller markets, including Oman and Morocco. Observers, including researchers from Credit Suisse, are also pointing to Islamic finance as a potential spur to economic growth in the Arab Spring countries.
With 80% of Algeria’s banking sector still under state control, reform has been ponderous to say the least, and Islamic finance is still a long way away.
Patrick Abi Habib an analyst for ABC Islamic Bank gave his personal opinion to The Islamic Globe: “The banks are popular because they are seen as the safest [in the region] but they are generally slow in introducing change.” This lethargy has repeatedly prompted the industry to call for intervention to help speed up regulation and stimulate the adoption of Islamic finance. Currently less than 1.5% of assets in Algeria are Shari’ah compliant.
“The Islamic fund industry needs to evaluate new strategies to restimulate growth. Islamic fund assets remained flat in 2009 at $52 billion, whereas the potential wealth pool grew by 20 percent, now estimated at $480 billion,” concludes the Islamic Funds & Investments Report (IFIR) 2010 which was published by international auditing and advisory firm Ernst & Young in September 2010.
The Middle East insurance industry is expected to grow at a compound annual growth rate of around 25 percent during 2010- 2013 and cross insurance premium of $80 billion in next three years, according to a report.
The region, which has a total insurance penetration below 10 percent, is expected to witness rapid growth in near future, according to "Middle East Insurance Market Forecast to 2012" report.