Unlocking Africa's islamic finance instruments

Africa's Islamic Finance assets are projected to grow to $3.7 trillion by 2024, according to the Islamic Development Finance Corporation. This promising forecast has sparked discussions about the opportunities and challenges in Africa's Islamic Finance market. In a recent interview on CNBC Africa, Kazim Alimi, the Head of Secondary Market at the Nigerian Exchange Limited, shared insights into the current state of Islamic Finance in Nigeria and across the continent. Alimi noted that Islamic Finance in Nigeria is still in its early stages of development compared to conventional finance, leading to low penetration rates. He highlighted Sukuk as one of the most familiar products in Islamic Finance, but noted that it accounts for less than 1% of global Sukuk, indicating room for growth. Alimi attributed the slow growth to capacity-building and engagement efforts in the industry. To address these challenges, Alimi emphasized the importance of regulatory capacity building and market infrastructure development to support the growth of Islamic Finance in Nigeria. While regulatory frameworks are gradually improving, there is still work to be done to align regulations with Islamic Finance principles and practices. Across Africa, Alimi observed that Nigeria sets the pace for Islamic Finance development on the continent, with sovereign instruments like Sukuk playing a significant role in the market. Despite the progress made in Nigeria, Alimi acknowledged that there is still a need for greater awareness and education about Islamic Finance to foster interest and participation in the market. In a bid to enhance understanding and promote engagement, the Nigerian Exchange Limited, in collaboration with IFN, organized a webinar focused on the intersection of Islamic Finance and sustainable finance. This initiative aims to shed light on the benefits of Islamic Finance in supporting sustainable development goals and corporate social responsibility. Alimi emphasized the value of such initiatives in building a stronger foundation for Islamic Finance in Nigeria and beyond. As Africa's Islamic Finance market continues to evolve, stakeholders are optimistic about the potential for growth and innovation in the sector. With a concerted effort to address barriers, improve regulatory frameworks, and raise awareness, Islamic Finance in Africa is poised for significant expansion and impact.