More states in Africa seem keen on joining the global Islamic finance sector, which is projected to be worth $2 trillion by the end of 2014. According to Moody’s Investors Service, global issuance of sovereign Islamic bonds – also known as “sukuk” – is expected to increase 30 percent in 2014 to reach $30 billion.

In September 2014, South Africa sold its first-ever sukuk at a record low borrowing cost. The $500 million 5.75-year sukuk has been launched at a yield of 3.9 percent. Almost 60 percent of investors participating in the deal are from the Middle East. BNP Paribas SA, KFH Investment, and Standard Bank Group Ltd. reportedly arranged the sale.

Other sub-Saharan states have made or contemplated similar moves recently. In June 2014, Senegal raised $208 million through its first sukuk. Also, it has been reported that sukuk is part of Nigeria’s strategic framework through 2017. And Kenya may offer sukuk to broaden its investor base.

Islamic finance also has gained traction in North Africa, where states have introduced new regulations as they seek alternative funding. In July 2014, Tunisia passed a new law allowing the issuance of sukuk. In June 2014, Morocco’s lower house of parliament approved an Islamic banking bill. Now before the country’s upper house of parliament, the bill is being evaluated by Morocco’s Economic, Social and Environmental Council (CESE), which offered revisions in August 2014. Egypt has been keen on tapping into the sukuk market, but its sukuk law has stalled since 2013. The government reportedly plans to submit a revised draft law to the new parliament which may be elected later this year. According to Standard & Poor’s, the use of sukuk could help diversify investors’ base for some of the projects currently underway or in development for North Africa, including renewable energy, transport infrastructure, and communications. Still, the process is expected to be gradual.

As Africa creates its own footprint in the Islamic finance sector, it may see several new investors and opportunities in the years ahead.