Four of the five largest African economies have resorted to raising funds from international financial markets through the issuance of Sukuk over the past few weeks. The question is whether such issuances are now a regular function of mainstream public debt, procuring a combination of several African Ministry of Finance's debt management offices (DMOs).
A Sukuk is an Islamic Financial Trust Certificate, equivalent to a traditional financial bond, which is in compliance with Islamic religious law, commonly known as Sharia. Because traditional Western interest-paying bond structures are not permitted, Sukuk issuers essentially sell certificates to investors groups, use the revenue to purchase assets, and pay them back to investors with the funds generated from the acquisition.
Sovereign debt is a worrisome country in many countries regardless of their economic status, and the exaggerated risk perceptions by rating agencies, particularly for developing countries, which poses exaggerated debt services and financial costs. Africa is no exception in this regard.
However, the playbook for the publication of Sukuk in Africa has been changing, assuming elements “made in Africa.” At the end of June 2025, Egypt, for example, raised $1 billion by leasing Sukuks with a three-year tenor.
What's unique is that the entire issuance was taken over by one bank, Kuwait Finance House (KFH) through private placement. KFH is not a regular bank. It was founded in 1977 and one of the largest in terms of managed assets and the second oldest Islamic bank in the world. Prior to this, Egypt raised $1.5 billion in February 2023 through a similar lease cuck.
According to the Egyptian Ministry of Finance's Public Debt Management Corps, the plan is to issue several more scuktlanches over the next three years under a $5 billion trust certificate issuance program.
Egypt's finance minister Ahmed Kuchok stressed that despite the current economic challenges related to the current conflict in the Middle East region, the issuance of the Sukuk will also come at a time of significant improvement in the Egyptian economy. Proceeds from the issuance will be used to fund the national budget gap for 2024/25. The Treasury confirmed its commitment to reduce budget agencies' foreign debt by approximately $1 billion to $20 billion this year.
South Africa and Egypt have tapped the US dollar market in the past with their Sukuks debut, but the Federal Government of Nigeria (FGN) has been ringing the issuance of Sukuks in Naira-denominated markets despite regular issuances in the traditional Eurobond market, relying on 44 are country countryside and bridge countryside to request rehabilitation. The territory of the federal capital.
In May 2025, the Nigerian Debt Management Office (DMO) issued its seventh Sukuk so far, raising 300 million ($1.9 million) through a seven-year lease skkuk. This transaction firmly entrenches the debt instruments of the Ministry of Finance's public funding playbook.
The costs associated with issuance of Sukuk and bonds are directly linked to issuance regularity, the existence of yield curves, the success of DMOs in funding strategies and investor-based diversification, and the driving causes of access and financial inclusion in the country's capital markets. A recent report by Fitch Ratings showed a strong correlation between traditional bonds and Sukuk pricing and yields.
What's surprising about this seventh FGN Sukuk issue is that it was oversubscribed at 735%, with an unprecedented subscription level exceeding ₦2.205trn ($1.4 billion).
“This is clear evidence of the enormous investor applicants for the ethical instrument introduced by DMO in 2017, as an innovative strategy that expands the country's investor base and provides opportunities for all Nigerians to participate in capital market activities.
“Subscription analysis showed that subscribers block various segments such as retail, non-profit banks and financial institutions, traditional banks, pension funds, and asset managers,” the DMO said.
So far, DMO has raised $13,924,600 (892.46m) through seven Sukuk publications. “Funding through the issuance of Sukuk to fund infrastructure projects,” the DMO states:
Social and Financial Inclusion
The success of FGN's Sukuk strategy is also based on the priorities of DMO Director Patience Oniha, its social and financial inclusion and sustainability goals.
This latest issue includes a wide range of Nigerian financial institutions, which has expanded the Sukuk Financial Engineering value chain and jointly arranged by Greenwich Merchant Bank Ltd. Stanbic IBTC Capital Ltd, a member of the Standard Banking Group in South Africa. and Vetiva Capital Management Ltd.
It also has a strong retail subscription from ordinary Nigerians, democratizing access to capital markets backed by FGN's sovereignty guarantees, giving regular investors a special comfort.
DMO's strategy to incite a broader public awareness campaign to encourage investment in Sukuk is rewarded, judging from a 735% oversubscription. Even for institutional investors, DMO holds regular investors meetings in Abuja for the issuance of sovereign sukuks, as well as the offering of Eurobond.
The economic impact of the issuance of Sukuks is evident in improved road infrastructure and timely completion of designated projects. The DMO says road safety, travel time and faster travel of goods between major commercial cities have been improved.
Sukuk certificates are listed and traded on Nigeria Exchange Limited and FMDQ Securities Exchange Limited, and may free up further liquidity of the project.
Despite the evolutionary outlook of the origins of Nigerian Sukuk, the possibilities are much greater. Credit risk qualifications for the Nigerian Sukuk offer are only tested when the issuance of DMOs is rated in the international US dollar or euro market in order to confirm the desires of international investors and diversify the sovereign foreign investors base.
There is also the challenge of how to increase the issuance of sukuks to attract crowds for private sector involvement and acquire more Nigerian states, agencies and businesses instead of using more expensive traditional banking finance.
Algerian Maiden Sook
Algeria is another market at the pinnacle of issuing maiden sukuks. Despite being the founder of the Supranational Islamic Development Bank (ISDB), which has 27 African member states, it is a relative newcomer in Islamic finance and capital markets.
President Abdelmadjid Tebbone's government held the 2025 ISDB Group Annual Meeting at Algiers in May 2025.
The proposed debut sovereign suk was approved under the 2025 Finance Act and the Ministry of Finance's Sukuk Issuance Framework. Banks are mandatory to manage transactions, which could be sected in local currency, Algerian dinars, DZDs. Proceeds from the issuance are used to fund projects and infrastructure.
The plan is to go to the market for its debut sukuk in the third quarter of 2025 to complement the funding needs of the 2025 national budget, and aims to attract a wider base of foreign investors through diversifying funding sources and investor bases and increase confidence in local capital markets.
According to Zohir Laïche, CEO of Cagex (a state-run Algerian export insurance and guarantee company), “Islamic finance is growing steadily in Algeria.
“However, structured growth and regulatory development remains necessary. As the country explores the syndicated Murabaha structure and Sukuk to raise capital, there is an opportunity for insurance mechanisms (such as credit risk insurance) to complement these initiatives to strengthen investors' trust and economic stability.”
Nearby Morocco will also be taking part in the trends in issuing Sukuks. In July, Reuters confirmed that the kingdom is currently issuing a second sovereign scoop in the second half of 2025, citing central bank Abdelatif Joari.
