Africa will be next big growth area for Islamic finance

Dubai: The Islamic finance market in Africa is potentially worth close to $235 billion, conservatively assuming that banking entrenchment represents an average 50 per cent of total GDP produced by African Muslims, according to Moody's Investors Service.

Sharia-compliant banking is a recent phenomenon in Africa, discovered by most Muslim Africans only over the past decade.

In a recent special comment entitled Islamic Finance Explores New Horizons in Africa, Moody's said that the expansion of Islamic banking and finance has accelerated in recent years, with the industry diversifying out of pure lending into new business lines and new territories beyond the natural borders of the Muslim world.

Although a country such as Egypt has been familiar with Islamic finance since the 1960s, overall Sharia-compliant banking is in its infancy across the continent. Today, 37 Islamic fin-ancial institutions operate in Africa, serving a Muslim population of 412 million inhabitants.

'Not insignificant'

"Average per capita GDP on the continent was a low $1,137 in 2007, but given the fact that Africa is host to the second-largest Muslim population in the world, the absolute size of its economic production reached $469 billion last year," said Anouar Hassoune, a Moody's analyst and author of the report. "This is not insignificant, as it is on par with the combined GDP of Saudi Arabia and the United Arab Emirates, two of the dominant economies of the Muslim world," he said.