Islamic Finance In Africa

Study reveals large investment opportunities in the untapped sectors of Islamic economy in the African continent...

In spite of its small Muslim population, South Africa has emerged as one of the five largest producers of halal products worldwide largely due to its access to the rest of the African continent and the presence of highly advanced halal certification programmes (60 per cent of all products in South Africa’s retailers are certified halal) worth approximately $71.7million, according to MATRADE (Malaysia External Trade Development Corporation).

South Africa hopes to increase the value of halal exports by $33 billion by 2025 and reinforce its position as gateway to Africa’s halal food and beverage market.

Halal Travel

Halal travel in Africa offers significant growth potential for the tourism industry. Muslim tourists globally represent a major niché market that has a young demographic, is growing in affluence, and is increasingly asserting its unique needs on the travel, tourism and hospitality market.

Tanzania, Zanzibar and South Africa are currently the most popular destinations, and are best equipped for the halal market, but destinations in Africa are still considered for the more intrepid traveller. Poor marketing strategies are symptomatic of the undeveloped market.

The study lists the priorities for Muslim tourists which are centred on the availability of halal food, a family-friendly environment and religious practices and gender related nuances such as private pools.

Global Muslim spending on travel is expected to reach $300 billion by 2025. Africa has a small share of the halal market, representing only 5 per cent (Europe 51 per cent), according to DinarStandard research signalling room for growth. There has been a 40 per cent increase in tours to Africa year on year.

The study stated that the success of the halal tourism in Africa depends on the high population density, high rates of growth, and geographical proximity of GCC states, as well as the need for Islamic finance to fund infrastructure projects.

The study came up with several recommendations, most notably the need to develop a mechanism and standard for Islamic services covering all relevant financial and hospitality services, according to the approved international standards, while establishing ties with institutions and centers of Islamic finance in Malaysia, Dubai and London, and the establishment of an independent monitoring board to oversee the application of Islamic standards. Finally, to strengthen cooperation with financiers to Islamic finance products such as the Arab Fund for Economic and Social Development.