Arab Finance: Egypt accounted for 48% of Africa’s outstanding sukuk as of August 2026, leading a continental market valued at more than $7 billion, according to a report by Fitch Ratings.

Nigeria held the second-largest share at 26%, followed by South Africa at 15% and Benin at 7%.

The value of outstanding African sukuk increased by approximately 16% year on year in August. Despite this growth, Fitch said the continent’s sukuk market remains relatively new, with issuance expected to be sporadic over the medium term.

Egypt’s growing share follows its emergence as a recurring issuer of dollar-denominated sovereign sukuk. The country entered the international market with its first sovereign sukuk in 2023 and has since developed into a significant and more regular issuer, supported by regulatory reforms and deeper ties with Gulf Cooperation Council (GCC) countries.

The government expanded its activity into the domestic market by issuing its first local currency-denominated sukuk in 2025, followed by further issuances during the first half (H1) of 2026.

These offerings attracted demand from Egyptian Islamic banks, which account for around 5% of the country’s banking system assets and had previously faced a shortage of Sharia-compliant investment instruments.

Fitch said the expansion of Egypt’s sukuk market is supported by a growing pool of potential investors, particularly Islamic financial institutions in Egypt and the Gulf region. This demand could help the government diversify its financing sources.

The rating agency covered approximately $3.7 billion of outstanding African sukuk at the end of H1 2026, all of which carried sub-investment-grade ratings.

Around 67% of Fitch-rated African sukuk were rated at ‘B’, with the entire share issued by Egypt. The remaining 33% were rated at ‘BB’ and originated entirely from South Africa. All rated sukuk issuers carried stable outlooks.

Across the continent, governments could use sukuk to broaden their funding options and reach investors in GCC countries, African Islamic banks, Sharia-compliant funds, and multilateral institutions, the report said.

However, Africa still represents less than 1% of outstanding sukuk globally. Fitch attributed the limited market share to structural constraints, including the absence of supportive regulatory frameworks in many countries and the small size or lack of domestic Islamic financial institutions in some markets.

As for the African debt capital market, it reached $1.6 trillion outstanding as of August 2026, led by South Africa with a 39% share, Egypt at 18%, and Nigeria at 9%. Most of this was bonds, with the sukuk share below 1%.