Africa’s Islamic finance market has reached an important milestone after the value of outstanding sukuk across the continent surpassed $7 billion in August 2026.
The development shows growing interest in Islamic financial instruments as African governments search for new ways to raise money, fund infrastructure projects and reduce their dependence on traditional borrowing.
According to Fitch Ratings, Africa’s outstanding sukuk rose by about 16 per cent compared with the previous year. However, despite the growth, Africa still accounts for less than one per cent of the global sukuk market.
Sukuk are often described as Islamic bonds, although they work differently from conventional bonds. They are structured to comply with Islamic financial principles and are linked to underlying assets or economic activities rather than traditional interest payments.
For African governments, sukuk are becoming an alternative way to attract investors and diversify sources of funding.
The growing market could also help African countries attract investment from the Gulf region, particularly from Islamic banks, Sharia-compliant investment funds and other international investors looking for suitable projects.
However, the market remains concentrated in only a few countries.
Egypt currently holds about 48 per cent of Africa’s outstanding sukuk, making it the continent’s largest market. Nigeria follows with approximately 26 per cent, while South Africa accounts for around 15 per cent and Benin about 7 per cent.
Egypt’s strong position has been linked to regulatory reforms and closer financial ties with countries in the Gulf Cooperation Council. The country issued its first US dollar sovereign sukuk in 2023 and later introduced local-currency sukuk as part of efforts to expand Islamic finance options.
Nigeria has also played an important role in the African sukuk market. The country has issued naira-denominated sukuk for several years, using the funds to support major infrastructure projects.
Despite the positive growth, Fitch Ratings warned that major challenges remain.
One of the biggest problems is the lack of clear regulations for sukuk in many African countries. Without proper legal and financial frameworks, governments and companies may find it difficult to issue Islamic securities.
Another challenge is the limited number of large Islamic financial institutions within Africa. In many countries, Islamic banks and investment firms remain small or are still developing.
Fitch also noted that Africa’s wider debt capital markets are still underdeveloped compared with other regions of the world.
The amount of new sukuk issued in Africa has also slowed this year. Around $1 billion has been issued so far in 2026, mainly by Egypt and Benin, compared with approximately $3.3 billion issued during the whole of 2025.
However, there are still signs of opportunity.
Benin recently entered the international sukuk market with a major sovereign issuance, while other African countries are exploring similar options. Nigeria is also looking at ways to expand its presence in international Islamic finance markets.
Financial experts believe sukuk could become an increasingly important funding option for African governments, especially as countries search for alternative sources of investment for infrastructure, energy, transportation and other development projects.
The $7 billion milestone shows that Africa’s Islamic finance market is growing. However, experts say the continent will need stronger regulations, better financial institutions and more investor participation before sukuk can become a major part of Africa’s overall financial system.
For now, the growth of the market represents both an achievement and a reminder that much more work is needed.
