According to the UN, Africa’s growth has consistently outperformed the global growth rate for the past seven years. In just eight years’ time, it is projected that the continent will boast eight of the fastest growing economies in the world.
In order to sustain this aggressive trajectory, and close the gap with the rest of the world, the World Bank estimates that the continent will require $93 billion of commercial and social infrastructural development. In the past, natural resources projects have played a key role in generating the income to fund the capital projects necessary to spur economic growth, however the ongoing commodities slump has resulted in less resource-based income than in previous years.
With a finite amount of funding available from traditional financiers, the need to actively seek alternative sources of finance, for example shariah-compliant instruments such as sukuk, has never been more pronounced.
In a recent article, Clement Fondufe, Kem Ihenacho and David Ziyambi explain why Islamic Finance is becoming a more significant source of additional funding for Africa’s needs. The continent currently accounts for less than one percent of global sukuk issuance but, as the article examines, this may be about to change.
Read more about Africa’s Funding Alternative.