Benin’s Sukuk Success Spurs African Interest in Sharia-Compliant Financing

Benin’s successful Islamic bond (sukuk) sale is encouraging other African countries to explore sharia-compliant financing, attracting strong investor demand and diversifying funding sources. With combined orders exceeding $7 billion, the issuance has sparked interest from nations like Nigeria and Senegal. Experts note structural and regulatory challenges, but rising global and Gulf investor appetite, along with sustainable finance opportunities, suggest sukuk could become an important tool for Africa’s capital markets.

Benin's recent Islamic bond sale is encouraging other African countries to explore sharia-compliant financing options, as strong investor demand has highlighted the potential for nations to diversify their funding sources and attract a wider range of investors. Advisers and analysts say this development could mark a significant shift in how African sovereign borrowers approach international capital markets.
Gatien Bon of Rothschild, who advised Benin on its international bond sale, described the sukuk issuance as a “turning point” for African sovereign borrowers. He explained that the successful issuance demonstrates the ability to create more diversification both in terms of the format of financing instruments and in expanding the investor base within Africa. Benin offered a seven-year sukuk alongside a reopening of its 2038 U.S. dollar-denominated bond, and the response was overwhelmingly positive, with combined orders totaling more than $7 billion—far exceeding the proposed issuance size.
The strong performance of Benin's sukuk has drawn attention from other countries in the region, prompting them to explore similar financing structures. Nicole Kearse, head of sovereign finance at the African Legal Support Facility, noted that a growing number of governments are reaching out for advice on strategy and market players in the sukuk space. She highlighted that sukuk has become an area of significant interest among African countries seeking new ways to raise funds. The African Legal Support Facility, hosted by the African Development Bank, provides guidance to governments on matters such as capital market development, legal frameworks, and market access, helping them understand the opportunities and complexities associated with sukuk issuance.
Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings, pointed out that African sukuk issuance rose sharply to $3 billion in 2025, up from just $112 million the previous year. This surge was largely driven by Egypt’s $2.8 billion return to the international market after a year-long hiatus. In comparison, total international bond sales in Africa during the same period exceeded $13 billion, with deals from major markets such as Nigeria, South Africa, and Kenya. Al-Natoor noted that sukuk issuance in 2026 has already surpassed $580 million, largely fueled by Benin’s $500 million debut, reflecting continued investor appetite for sharia-compliant debt instruments.
Several African countries are actively exploring both local and international sukuk markets. Nigeria, which has previously issued local-currency sukuk, is considering dollar-denominated options, with President Bola Tinubu seeking legislative approval for the country’s inaugural international sukuk last year. Senegal has also indicated plans to explore opportunities in both local and international sukuk markets, signaling a broader regional interest in this type of financing.
Admassu Tadesse, president of the Trade and Development Bank, emphasized that access to liquidity from Gulf investors offers significant advantages for African governments. He noted that there is growing appetite among Gulf-based investors to provide funding to emerging markets, particularly in Africa, creating opportunities for countries to tap into a larger and more diverse pool of investors.
Despite the growing interest, many low-income countries face structural challenges, including the absence of the necessary legal and regulatory frameworks to facilitate sukuk issuance. Kearse highlighted that the African Legal Support Facility works with governments to address these gaps and provide technical assistance in establishing the frameworks needed to support sharia-compliant financing. Algeria, for example, is preparing for its first sukuk after establishing the required legal framework in 2025, demonstrating how countries are gradually building the capacity to enter this market.
Mohamed Damak, global head of Islamic finance at S&P Global Ratings, pointed out that sukuk issuance is generally more complex than traditional bond offerings. As a result, activity has largely remained concentrated in core markets such as Malaysia, Indonesia, and GCC countries, where total issuance reached $265 billion in 2025. Nonetheless, Damak expects global sukuk issuance to grow further, reaching between $270 billion and $280 billion in 2026, driven by rising demand from Islamic investors. He also highlighted the significant growth in sustainable sukuk, which increased by 40% to $21.5 billion in 2025, indicating strong potential for regions pursuing climate-related objectives, including countries in Africa.
The success of Benin’s sukuk demonstrates that African countries can tap into sharia-compliant finance to access new pools of capital, diversify funding sources, and attract a wider base of investors, while also providing a pathway for other nations to follow in the coming years. As governments build the necessary legal and regulatory frameworks, and as investors increasingly seek ethical and sustainable investment options, sukuk could become an important tool for financing development across the continent.