Amid mounting financing needs and dwindling concessional resources, Islamic finance is gaining ground across Africa. Backed in part by Gulf-based actors, it nonetheless reflects very different realities, ranging from commercial banks embedded in local economies to development institutions focused on sovereign borrowers and public policy.
Commercial Islamic 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 profitability targets, but within a contractual framework compliant with sharia principles. These prohibit the payment of interest, known as riba, and purely speculative transactions, without calling into question the core activity of banking itself.
In practice, these institutions finance the same needs as conventional banks: SMEs, trade, housing, equipment and imports. The distinction lies in the mechanisms employed. Financing is structured around contracts anchored in the real economy, such as murabaha, a cost-plus sale agreement, ijara, a leasing arrangement, or musharaka, a risk- and profit-sharing partnership.
Subject to the same domestic regulatory frameworks as their conventional competitors, these banks operate in direct competition across African markets. It is precisely this market positioning that differentiates them from Islamic development institutions, which are primarily geared towards states, infrastructure and public policy.
Gulf commercial Islamic banks in Africa
The modern Islamic banking industry first took shape in the Gulf, which today hosts the majority of internationally active groups. In Africa, their footprint remains uneven, yet certain models are emerging.
Institutions linked to the United Arab Emirates are among the most visible in the commercial banking landscape, often pursuing a strategy centred on economic hubs. In East Africa, Kenya illustrates this approach. Dubai Islamic Bank, through its subsidiary DIB Bank Kenya, announced in 2022 the opening of a branch in Nairobi’s business district, while promoting a “corridor” strategy aimed at strengthening SME financing 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 differs. In Egypt, Abu Dhabi Islamic Bank benefits from a longer-established and more deeply rooted presence, supported by an extensive national network. Such anchoring makes Egypt a key entry point for Gulf commercial Islamic finance, combining retail banking, corporate financing and capital market operations.
Alongside the expansion of Gulf banks, a more discreet yet telling trend is also visible: the rise of African actors seeking to capture demand for sharia-compliant services, while leveraging Gulf financial centres to enhance visibility and credibility. Nyla Bank, a Ghanaian fintech positioning itself as a pan-African digital Islamic bank project, was selected in 2024 as a semi-finalist for the Milken Motsepe Prize in FinTech, with a presentation scheduled at the Middle East and Africa summit organised by the Milken Institute in Abu Dhabi. This trajectory suggests that the ecosystem is also being shaped by African-led initiatives connected to Gulf hubs, rather than solely through the expansion of established foreign groups.
Beyond physical networks, certain transactions illustrate the growing integration of commercial Islamic banks into African financing circuits, particularly through syndicated murabaha structures and interventions in capital markets. These developments point to gradual, albeit targeted, integration within African economies.
Three Gulf approaches to Islamic finance in Africa
This commercial dynamic coexists with another core pillar of Islamic finance on the continent: development institutions.
Saudi Arabia plays a central role in this regard. Headquartered in Jeddah, the Islamic Development Bank, in which Saudi Arabia holds significant influence, acts as a key centre of gravity for multilateral Islamic financing. Its operations focus on public projects, trade finance and risk mitigation, under a long-term development logic that extends well beyond traditional banking activity.
Kuwait, for its part, occupies a more targeted position. Its African footprint is largely concentrated in North Africa, with Egypt as its primary anchor. In 2025, Kuwait Finance House strengthened its presence by rebranding Ahli United Bank Egypt as KFH Egypt, now presented as a fully sharia-compliant bank operating a significant branch network. This banking presence is coupled with capital market capabilities, illustrated by sovereign sukuk placements involving KFH.
The Kuwaiti model thus prioritises balance sheet depth and targeted operations over broad geographic expansion.
Taken together, Gulf Islamic finance in Africa does not reflect a uniform movement or a single dominant strategy.
The United Arab Emirates primarily advances through commercial banking and economic hubs, Saudi Arabia structures the Islamic development architecture, while Kuwait asserts itself through a concentrated banking presence in North Africa and substantial financial capacity.
These parallel logics point to a pragmatic reshaping of African financing circuits, where Gulf capital, local demand and Islamic instruments intersect without converging into a single model.
Gulf Strategies and the Emerging Landscape of Islamic Banking in Africa first appeared on Egyptian Streets.
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