book chapter
Islamic banking across Africa faces significant legal and regulatory obstacles stemming from the complex interaction between Sharia governance and conventional financial systems. Primary hurdles include fragmented national legal systems, inconsistent interpretations of Sharia principles, and inadequate regulatory oversight. A comparative assessment of practices in Nigeria, Sudan, and Kenya demonstrates differing national approaches to supervising and integrating Sharia compliance. Insights drawn from established global Islamic finance jurisdictions, including Malaysia, Indonesia, and the Gulf Cooperation Council, suggest the value of adopting a harmonised regulatory model across the continent. Proposed interventions encompass targeted legal reforms, the establishment of centralised Sharia advisory structures, enhanced regional cooperation, and capacity building. Together, these measures aim to improve regulatory compliance, widen financial inclusion, and foster sustainable economic development throughout African markets.
Establishing clear and cohesive regulatory frameworks is essential for expanding alternative banking options. Aligning conventional financial regulation with Sharia governance can lower compliance barriers, attract investment, and expand access to banking for underserved populations across Africa. This institutional alignment directly supports broader efforts toward financial inclusion and sustainable development.
The insights and models are aimed at financial regulators, central banks, and policymakers seeking to establish structured Islamic finance markets. Because the research delivers comparative policy analysis and regulatory proposals rather than commercial products, it operates at an early policy-formation stage. Realisation depends on statutory reforms, institutional capacity building, and regional intergovernmental adoption before commercial institutions can deploy standardised offerings.
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This chapter examines the legal and regulatory challenges facing Islamic banking in Africa, focusing on the complex relationship between Sharia governance and conventional financial regulation. It highlights the fragmented legal systems across African countries, the lack of standardized Sharia interpretation, and weak regulatory frameworks as main challenges to the growth of the sector. The chapter used comparative case studies from Nigeria, Sudan, and Kenya, which analyzes the varying approaches to Sharia integration and supervision. It draws lessons from global Islamic finance leaders such as Malaysia, Indonesia, and the GCC to recommend a harmonized African regulatory model. The chapter proposes legal reforms, centralized Sharia advisory structures, regional cooperation, and capacity building as pathways to strengthening Islamic banking. These strategies aim to enhance compliance, financial inclusion, and sustainable development across the continent.
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DOI: 10.4018/979-8-3373-1887-5.ch002
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