An empty banking hall

An empty banking hall
An empty banking hall

A newly-released report by the Islamic Cooperation for the Development of the Private Sector (ICD) has indicated that two billion people in the world do not have bank accounts, with 340 million of these in sub-Saharan Africa.

Africa’s population currently is estimated at 1.166 billion and this figure represents 29.1 % of the unbanked population in Sub Saharan Africa.

The report “Islamic Finance in Africa: A Promising Future” was released during the Africa Islamic Finance Forum 2015 in Abidjan held on September 17-18, and focuses majorly at the growth opportunities for Islamic finance to flourish in the region.

Stories Continues after ad

‘The birthplace of a quarter of the global Muslim population, the report highlights that Africa features a potentially strong demand for Islamic financial services and products. While still comparatively under-developed, Islamic finance is expanding in many parts of the region, and is now present across most of North Africa and in many countries of East and West Africa, particularly those with sizeable Muslim communities,’ the report indicates.

According to the report, Africa needs US93 billion to finance large scale infrastructure and manufacturing projects.

‘One of the recommendations of the report is that Islamic finance can act as the catalyst in mobilising funding into Africa, thereby resulting in economic growth and sustainable development.’ The report indicates and adds ‘there is a significant funding potential opportunity for Islamic banks in view of the increasing emergence of small-to-medium enterprises (SMEs) across Africa’.

The report also highlights notable progress in the sukuk sector, where recent developments have seen governments focusing more on creating a more enabling environment for sukuk issuances. Some countries which have issued sukuk include Gambia, Sudan, Senegal and South Africa, while Ivory Coast is lining up to issue its debut sukuk at the end of the year.

Other countries such as Tunisia, Egypt and Morocco have expressed keen interest in tapping the sukuk market for infrastructure financing and have finalized or are in the midst of finalizing their legal frameworks to promote sukuk issuances.

‘Although the Islamic financial services industry in Africa is currently dominated by the banking and sukuk segments, growth potential remains in the asset management and takaful spheres’ the reports states.