Islamic Finance in Sub-Saharan Africa: Status and Prospects

Abstract

Islamic finance is a fast growing activity in world markets. This paper provides a survey on Islamic Finance in SSA. Ongoing activities include Islamic banking, sukuk issuances (to finance infrastructure projects), Takaful (insurance), and microfinance. While not yet significant in most Sub-Saharan countries, several features make Islamic finance instruments relevant to the region, in particular the ability to foster SMEs and micro-credit activtities. As a first step, policy makers could introduce Islamic financing windows within the conventional system and facilitate sukuk issuance to tap foreign investors. The entrance of full-fleged Islamic banks require addressing systemic issues, and adapting the crisis management and resolution frameworks. The IMF can play a role by sharing international experiences and providing advice on supervisory and regulatory frameworks as needed.

Keywords: Islamic banking, Sub-Saharan Africa, Financial sector, Financial institutions, Insurance, Microfinance, Bonds, Islamic Finance, sukuk, islamic banks, banking, islamic bank, takaful, murabaha, islamic financing, islamic products, islamic economics, islamic banking activities, islamic development, islamic bonds, islamic principles, islamic investment, islamic fund, islamic bond, ijara, islamic finance instruments, islamic mode, musharaka, islamic research, banking activities, islamic market, islamic mortgages, islamic insurance, islamic instruments, islamic banking institutions, islamic banking products, islamic law, diminishing musharaka, ethical principles, bank deposits, resource allocation

JEL Classification: F30, G15