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Despite having around 28% of the world's Muslim population, Africa's Shariah compliant banking assets make up only around 2% of global Islamic banking assets, Moody's Investors Service said.
African Islamic banks face obstacles to growth, including high level of competition from conventional banks in some countries and a lack of product awareness in some other jurisdictions.
While the industry's nascent legal and regulatory landscape has been among the constraints, there is noticeable progress now being made in jurisdictions such as Morocco, Nigeria and across the West African Economic and Monetary Union (WAEMU), the report, issued on Thursday, said.
“The Islamic banking industry remains underdeveloped in Africa as product awareness and sector competitiveness lag domestic conventional peers in some countries. However, legal, regulatory and tax frameworks are progressing well in some jurisdictions,’’ said Mik Kabeya, Vice President, Analyst at Moody’s.
African Islamic banks enjoy regulatory support in some jurisdictions, they face obstacles to growth, including limited competitiveness in some countries and a lack of product awareness in some other countries.
Some highlights from the report:
Sudan stands out as a clear leader; all its banks are fully Shariah compliant. In nearby Djibouti a quarter of banking assets are Islamic
In Egypt, Morocco, Tunisia, Algeria, Libya and Senegal, where Muslim populations account for over 90% of the population, Islamic assets represent less than 6% of the banking system
In Nigeria where Muslims make up half the total population, Islamic finance makes up just 3.5%
(Writing by Brinda Darasha; editing by Daniel Luiz)
