In its latest report on the African sukuk market, the credit rating agency said outstanding African sukuk crossed USD 7 billion in August, up 16% year-on-year.
Fitch said that sukuk is becoming a new way for some African governments to get funding, helping them to move away from traditional loans and attract interest from banks and investment funds in the GCC and Africa.
Egypt accounts for 48% of Africa’s outstanding sukuk, making it by far the continent’s largest market, supported by regulatory reforms and closer economic ties with the GCC. Around USD 1 billion of African sukuk has been issued so far in 2026, mainly by Benin and Egypt, a sharp slowdown compared with the USD 3.3 billion issued across the full year in 2025.
The decline in fresh issuance this year underscores how heavily the market still depends on a narrow group of sovereigns that are both willing and able to access the instrument. Fitch noted that enabling regulation for sukuk remains absent in most African countries, leaving a legal and structural vacuum that discourages new entrants.
Domestic Islamic financial institutions, which typically serve as both key investors and potential issuers in more established sukuk markets, are either small or non-existent across much of the continent.
The broader African debt capital market reached USD 1.6 trillion outstanding as of August, with South Africa accounting for 39% of that total, Egypt 18% and Nigeria 9%. Conventional bonds continue to dominate the overwhelming majority of issuance across the continent, leaving sukuk as a niche but growing instrument confined largely to a handful of jurisdictions with the regulatory infrastructure to support it.
Against that backdrop, Fitch’s suggestion that African issuers look more actively to the GCC reflects the scale of liquidity now sitting in Gulf Islamic finance markets. Global sukuk issuance rose 25% in 2025 to around USD 300 billion, a record, with Fitch-rated sukuk outstanding climbing 23% year-on-year to USD 240 billion by the end of the year.
That growth has been helped by steady activity in GCC countries and increased participation from banks, companies, and those funding infrastructure projects, with over 80% of Fitch-rated sukuk receiving investment-grade ratings and no defaults reported in the past four years.
Bashar Al Natoor, Fitch’s global head of Islamic finance, has previously highlighted that sukuk is expanding into new geographies and sectors, with first-time Fitch-rated sukuk emerging in markets as varied as Australia, the UK, and Sri Lanka despite the instrument’s additional structural complexities.
Fitch has also pointed to Egypt’s emergence as a regular issuer, noting that most of its 2025 dollar issuance came in sukuk format, while countries including Algeria, Tunisia, Malta, and the Philippines issued new sukuk rules in 2025, paving the way for additional entrants globally. Whether similar regulatory momentum builds elsewhere in Africa will likely determine how quickly the continent’s market can move beyond its current reliance on a small number of sovereign issuers.
For African governments and companies that can overcome structural challenges, seeking funding from Gulf Cooperation Council (GCC) investors makes sense: Gulf investors, including Islamic funds and banks that focus on sukuk, are increasingly interested in investing in emerging markets, especially where governments can show solid financial plans and sharia-compliant systems.
Green and ESG-labelled sukuk have proven especially effective at drawing in this pool of capital elsewhere, with Fitch noting that ESG sukuk issuance globally is on track to surpass USD 50 billion outstanding, driven largely by Saudi Arabia, Malaysia, the UAE, and Indonesia.
For now, though, African sukuk remains a small fraction of the continent’s overall debt capital markets and an even smaller slice of the global Islamic finance industry.
Until those structural gaps narrow, Fitch’s message is likely to remain the same: the opportunity in Gulf liquidity is real, but African issuers will need deeper institutional foundations at home before the market can scale at the pace seen elsewhere in the Islamic finance world.