Already a rapidly expanding sector in Kenya, Tanzania, South Africa, Egypt, Sudan and Nigeria, Islamic banking now looks set to develop elsewhere, too, as the governments of Ghana, Uganda, Ivory Coast, and Somalia begin making strident efforts to introduce the system.
The practice has been identified as having huge growth potential in Africa, where Muslims constitute 51 percent of the population. More than 250 Islamic financial institutions, including Islamic banks, Takaful companies, Islamic Funds, Modarabas, and Islamic Microfinance, are already operating in Africa, according to research by MicroFinance Africa.
A recent article by the Nigerian Daily Trust newspaper suggests that the growth of Islamic banking may owe partly to the failure of the Western banking system that precipitated a worldwide financial crisis that is yet to end.
“Non-Interest (Islamic) banking may be seen as a recent financial system improvised as alternative to tackle the turmoil inherent in conventional banking system. However, there were earliest references which suggest that Islamic banking came into the picture first in Egypt in 1963. This pioneering effort was achieved by Ahmad El Najjar who brought the idea into existence, whose key principle was profit sharing (non-interest based philosophy of Shariah). By the end of 1976 there were 9 such banks in Egypt alone. These banks neither charged nor paid interest but their activities were mostly limited to trade and industries where these banks invested directly or as partners of depositors.”
Indeed, the reasons appear both numerous and complex, but the rise of Islamic banking is a trend to keep an eye on.