Amid growing financing needs and dwindling soft resources, Islamic finance is gaining more ground across Africa. However, it is partly supported by Gulf actors, but reflects very different realities, ranging from commercial banks embedded in local economies to development institutions focused on sovereign borrowers and public policy.
Islamic commercial banks: what exactly are we talking about?
Commercial Islamic banks are neither public instruments nor development agencies. They operate as market-based banks, with branches, clients and profit objectives, but within a contractual framework compatible with Islamic Sharia principles. These laws prohibit the payment of interest, known as usury, and purely speculative transactions, without questioning the basic activity of banking itself.
In practice, these institutions finance the same needs as traditional banks: SMEs, trade, housing, equipment, and imports. The difference lies in the mechanisms used. Financing revolves around contracts based on the real economy, such as Murabaha, cost-plus sales agreements, Ijara, leasing arrangements, or Musharaka, which is a partnership to share risks and profits.
Subject to the same local regulatory frameworks as their traditional competitors, these banks operate in direct competition across African markets. It is this market position that distinguishes them from Islamic development institutions, which primarily target states, infrastructure and public policy.
Gulf Islamic commercial banks in Africa
The modern Islamic banking industry first took shape in the Gulf region, which today hosts the majority of groups active internationally. In Africa, its impacts remain uneven, but some patterns are beginning to emerge.
UAE-linked institutions are among the most visible in the commercial banking landscape, often following a strategy centered around economic centres. In East Africa, Kenya demonstrates this approach. Dubai Islamic Bank, through its subsidiary Dubai Islamic Bank Kenya, announced in 2022 the opening of a branch in the commercial district of Nairobi, while promoting the “corridor” strategy aimed at enhancing financing for SMEs and facilitating trade flows between Kenya and the UAE. In this context, the banking presence becomes part of a broader framework of economic integration.
In North Africa, the logic is different. In Egypt, ADIB benefits from a longer-term and more established presence, supported by an extensive national network. This anchor makes Egypt a major entry point for Islamic commercial finance in the Gulf region, combining retail banking, corporate finance and capital market operations.
Alongside the expansion of Gulf banks is a more discreet but also evident trend: the rise of African players seeking to capture demand for sharia-compliant services, while leveraging Gulf financial centers to enhance visibility and credibility. Nyla Bank, a Ghanaian fintech bank positioning itself as a pan-African digital Islamic banking venture, has been selected in 2024 as a semi-finalist for the Milken Motsepe Prize in FinTech, with a presentation scheduled at the Milken Institute’s Middle East and Africa Summit in Abu Dhabi. This trajectory suggests that the ecosystem is also being shaped by African-led initiatives linked to Gulf hubs, and not just by the expansion of existing foreign groups.
Beyond physical networks, some transactions illustrate the increasing integration of Islamic commercial banks into African finance circuits, especially through syndicated murabaha structures and capital market interventions. These developments point to gradual, albeit targeted, integration within African economies.
Three Gulf approaches to Islamic finance in Africa
This commercial dynamism coexists with another key pillar of Islamic finance on the continent: development institutions.
The Kingdom of Saudi Arabia plays a central role in this regard. The Islamic Development Bank, headquartered in Jeddah and where Saudi Arabia has significant influence, serves as a major center of gravity for multilateral Islamic finance. Its operations focus on public projects, trade finance and risk mitigation, within a long-term development logic that extends beyond traditional banking activity.
Kuwait, for its part, occupies a more targeted position. Its African footprint is largely concentrated in North Africa, with Egypt considered its main base. In 2025, KFH strengthened its presence by rebranding Ahli United Bank Egypt as KFH Egypt, which is now presented as a fully Sharia-compliant bank and operates a large branch network. This banking presence is coupled with capital market capabilities, which is evident through the sovereign sukuk issuances in which Kuwait Finance House participates.
Therefore, the Kuwaiti model prioritizes the depth of the balance sheet and targeted operations at the expense of broad geographical expansion.
In sum, Gulf Islamic finance in Africa does not reflect a unified movement or one dominant strategy.
The UAE advances primarily through commercial banking and economic centres, Saudi Arabia is building an Islamic development structure, while Kuwait asserts its presence through a concentrated banking presence in North Africa and significant financial capacity.
These parallel logics point to a process reshaping of African finance circuits, where Gulf capital, domestic demand, and Islamic instruments intersect without converging into a single model.