African Sukuk Crosses $7bn Outstanding in August, 2026 – Fitch
Sukuk is emerging as an alternative funding tool for some African sovereigns, Fitch Ratings says. Sukuk can help to diversify funding sources and attract demand from GCC and African Islamic banks, sharia-compliant investment funds, and multilateral institutions.
African sukuk crossed USD 7 billion in outstanding amount in August 2026, up about 16% year-on-year. However, sukuk issuance remains infrequent and nascent, and is likely to be sporadic in the medium term.
According to a Fitch report, Africa still accounts for less than 1% of the global outstanding sukuk, due to structural constraints.
The constraint was a result of a lack of enabling regulations for sukuk in most African countries, while domestic Islamic financial institutions – which are typically key sukuk investors and issuers – are either small or absent.
“Most African countries’ debt capital markets also remain underdeveloped. The outstanding amount of African sukuk is concentrated in Egypt (48%), Nigeria (26%), South Africa (15%), and Benin (7%).
“Around USD 1 billion of African sukuk were issued so far in 2026, mainly by Benin and Egypt, compared with USD 3.3 billion in full-year 2025”, Fitch said in the report.
The African debt capital market reached USD1.6 trillion outstanding as of August 2026, led by South Africa (39%), Egypt (18%), and Nigeria (9%). Most of this was bonds, with the sukuk share below 1%.
The report disclosed that Fitch rates about USD 3.7 billion of African sukuk outstanding as of end-1H26, all of which are speculative grade. About 67% of African sukuk are rated ‘B’, all in Egypt, and 33% are rated ‘BB’, all in South Africa.
Fitch said all rated issuers are on a stable outlook. South African sukuk were upgraded following Fitch’s June 2026 sovereign upgrade. No rated African sukuk has defaulted to date.
Egypt issued its debut US dollar sovereign sukuk in 2023, and is subsequently emerging as a regular and substantial issuer of US dollar sukuk following regulatory reforms and deepening ties with the GCC.
It also issued its first local-currency sukuk in 2025 and continued issuance into 1H26. This helped attract demand from Egyptian Islamic banks, which hold about a 5% share of banking system assets and had faced a lack of sharia-compliant investment options.
“We project Egypt’s general government debt will fall to 77% of GDP by FYE27 (FYE25: 81%), which could affect sukuk supply”.
Nigeria has a relatively developed and liquid domestic debt market. The government has issued naira sukuk since 2017, including the May 2025 issuance, which was 7x oversubscribed.
Nigerian banks have ample liquidity and strong demand for government securities, including sukuk. Nigeria’s parliament approved a plan in October 2025 that allows the government to borrow up to USD 2.85 billion on international markets, including its inaugural US-dollar sovereign sukuk.
South Africa issued its first US dollar sukuk in 2014, attracting large interest, including interest from Middle Eastern investors. It also issued rand sukuk in 2023, aimed at broadening the investor base to include domestic Islamic funds and Islamic banks.
South Africa’s sharia-compliant investment funds industry is the largest in Africa, with assets under management exceeding USD 6 billion in the first 7 months of the financial year 2026.
Fitch said, however, sukuk investment options remain scarce. More broadly, South Africa benefits from deep local capital markets and a large domestic asset management industry.
Al Baraka Bank South Africa and Agrarius have also issued sukuk over the last decade (unrated). Benin debuted with a USD 500 million sovereign sukuk in 2026 (unrated).
The issuance attracted significant investor demand, including from the GCC, and was more than 8x oversubscribed. Fitch affirmed Benin’s Long-Term Issuer Default Ratings at ‘B+’/Positive in June.
The Algerian sovereign announced in January the launch of its debut sovereign sukuk (unrated). Most African sukuk outstanding have been issued in local currencies, with 41% denominated in US dollars. Nigeria’s Eurobonds Bearish on U.S. Elevated Yield Sensitivity
