Africa is for the first time embracing large-scale Islamic finance as countries seek to tap cash-rich Middle Eastern investors to finance their large infrastructure programmes.
The market for sukuk, or Islamic bonds, received a boost this month after Nigeria became the first major economy in sub-Saharan Africa to use the $100bn a year Islamic market, followed days later by Senegal.
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.
Swaziland is reportedly considering the establishment of the country’s first Islamic bank, with Qatar National Bank (QNB) said to be a frontrunner for its set up.
The move is significant in two ways — Firstly, in that it would mark the African nation’s entry into Islamic finance; and secondly, it could help Qatari conventional banks such as QNB to circumvent orders to shut down their Islamic operations last year.