Benin’s Islamic bond sale is encouraging other African states to consider sharia-compliant financing, after robust demand highlighted the potential to diversify funding and attract a broader investor base, advisers and analysts said.
Rothschild’s Gatien Bon, who advised the West African country on its international bond sale, described the sukuk issuance as a “turning point” for African sovereign borrowers.
“This creates more diversification in terms of format and therefore in terms of the investor base in Africa,” Bon said.
Benin, which offered a seven-year sukuk alongside a reopening of its 2038 dollar bond, saw combined orders of more than $7 billion, far exceeding the proposed issuance size.
“We’ve seen a lot of countries coming to us asking for strategies…trying to understand better how these work and who the players are in the market,” said Nicole Kearse, head of sovereign finance at the African Legal Support Facility.
Sukuk had become a “big area of interest”, Kearse — whose organisation is hosted by the African Development Bank which advises governments on topics such as capital markets — , said during a webcast panel discussion earlier this week.
Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings, said African sukuk issuance rose to $3 billion in 2025, from $112 million the previous year, driven largely by Egypt’s $2.8 billion return after a year-long hiatus
By comparison, international bond sales in Africa exceeded $13 billion with deals from Nigeria, South Africa and Kenya.
Sukuk issuance so far in 2026 has exceeded $580 million, largely through Benin’s $500 million debut, Al-Natoor said.
Nigeria, which has issued a local-currency sukuk, is among the countries exploring dollar-denominated Islamic finance solutions, with President Bola Tinubu seeking legislative approval for an inaugural international sukuk last year.
Senegal has also said it is exploring both local and international sukuk markets.
Admassu Tadesse, president of Trade and Development Bank, said there will be plenty of advantages for governments getting access to liquidity from Gulf investors.
“There is a lot more (Gulf) appetite to provide funding to emerging markets, in particular Africa,” Tadesse said during a panel discussion.
But structural barriers remain.
Many low-income countries lack legal and regulatory frameworks to facilitate sukuk issuance, Kearse said, adding that ALSF assists governments in addressing these gaps.
Algeria is preparing for its first sukuk, having established the necessary legal framework in 2025.
SUKUK FORECASTS FOR 2026
Mohamed Damak, Global Head of Islamic Finance at S&P Global Ratings, said sukuk issuance is more complex than traditional bonds, limiting activity largely to core markets like Malaysia, Indonesia, and GCC countries, where it reached $265 billion in 2025.
Despite challenges, Damak expects issuance to grow to $270 billion-$280 billion in 2026, supported by rising demand from Islamic investors. He highlighted a 40% increase in sustainable sukuk to $21.5 billion in 2025, suggesting growth potential in regions pursuing climate-related goals, including those in Africa.
