Islamic Finance: An Exploratory Survey of an Emergent New Opportunity in Resource Mobilization and Inclusion for Africa

The total value of global Islamic finance assets in 2021 was US$4.5 trillion, projected to reach $6.7 trillion in 2027. In this chapter we look at the state of Islamic finance in Africa, in particular, and its potential in addressing the continent’s massive financing gap and to serve as a means of financial and religious inclusion. The subject of Islamic finance is of great and growing interest to researchers and multiple stakeholders, with regard to Africa as a very significant destination for and source of such finance. Africa has a population of about 1.2 billion people, 40% of whom are Muslims, whose share in the total value of Islamic finance assets is growing although still less than 10%. Yet, there is very little information on what is actually happening in the sector in the continent as a whole. Therefore, this exploratory chapter is intended to highlight the state of Islamic finance in Africa in one succinct study, by outlining the latest developments in the sector, before turning to the challenges, prospects and the way forward. The study examines developments in the different areas of Islamic finance in Sub-Saharan, as well as North, Africa, and introduces new dimensions in the Islamic finance literature—i.e., as a means of both financial and religious inclusion/tolerance, both of which are crucial in Africa’s development.