Islamic Banking and Finance in North Africa
This report examines the state of Islamic banking in North Africa, reasons why it has failed to take off, its future potential, and how it can contribute to economic development. It provides a detailed survey of the historical development and current state of Islamic banking in Egypt, Libya, Tunisia, Algeria, Morocco, and Mauritania. The report states that Islamic banks currently operate in most of these states, but account for only a minute proportion of total bank deposits and assets. Findings include:
- North Africa has poor infrastructure and has a substantial need for project finance;
- There has been some capital market development in North Africa, with stock markets in Egypt, Morocco, and Tunisia;
- Sovereign and corporate sukuk could attract investment funds from the Gulf Co-operation Council and could provide a useful instrument for liquid holdings of Islamic banks;
- Sharia-compliant financing facilities have the potential to harness funds for both commercial and development projects;
- Islamic finance can diversify funding sources and ensure better monitoring of funds deployment;
- Islamic mutual funds and foreign direct investment can contribute to private sector development in North Africa.