Cooperation fosters the growth of East Africa’s Shariah capital marketplace

Given its nascent status, East Africa’s Islamic asset management marketplace is evolving into a regional investment ecosystem of cooperation – rather than a collection of standalone national markets impeded by rivalries.

As regional integration deepens under the East African Community, multi-country platforms are increasingly viable as they can aggregate projects across jurisdictions, diversify risk and achieve the scale required to attract institutional investors, shared Gerase Kamugusha, CEO at Alpha Capital.

“They are especially relevant for sectors like energy, logistics and housing, where investment themes naturally cut across borders. Shariah compliant structures are gaining the most traction in asset-backed and cashflow-visible sectors, particularly housing, transport infrastructure and energy.”

Renewable energy projects, logistics assets and industrial real estate, he added, are especially suitable because they fit the asset-backing requirements for Islamic investments – where Ijarah or Musharakah structures can be efficiently deployed.

As institutional investors are seeking stable, income-generating assets, traction is strongest where projects can demonstrate clear asset ownership, ring-fenced cashflows and minimal speculative risk.

“Investors should adopt a hub-and-spoke approach, anchoring their exposure in more advanced markets such as Kenya, where regulatory clarity, pipeline visibility and institutional depth are stronger. These markets can serve as entry points for capital deployment.”

For Salum Awadh, CEO at SSC Group, the growing significance of Islamic asset offerings should lie less in individual transactions and more in what they signal about regional market maturity – as these offer compelling and competitive opportunities.

“If you look at Tanzania, for instance, with the population of 60 million plus, rapid urbanization, youthful population, single digit inflation and, of course, GDP growing at an average of between 5% to 6%, I believe asset allocators have good reasons to diversify their portfolio and look at all the markets in the region.”

The SSC Group acts as a portfolio manager for its high-net-worth clients – investing in Kenya, Uganda, and South Africa in assets that include equities, Sukuk, gold and ETFs.

Salum conceded that a lot of reform is needed for public governance structures – to cut red tape, to push for an effective and efficient execution culture. The same applies to the private sector, where most are still family-owned and execution decisions can be much longer. But changes are happening with the hiring of professionals to make these entities more competitive.

Abdullahi Adan, executive director at SIB Najah, said East Africa should be viewed through a layered framework of markets playing different roles. Kenya currently offers deeper regulatory infrastructure and capital-market development, while Tanzania and Uganda are emerging as active infrastructure and issuance markets with longer-term growth potential.

“Currency mix matters more than country mix.” Abdullahi said Shariah investment structures aligned such are better suited because they reduce the foreign exchange mismatches that have historically burdened African infrastructure financing.

SIB Najah’s MansaX Shariah Special Fund invests in both local and global markets, with about 62% invested within the African continent as of Q1 2026.

Noting how the East African Community is also strengthening the case for cross-border Islamic investment vehicles, Abdullahi said infrastructure corridors involving transport, logistics and energy increasingly span multiple jurisdictions, creating demand for pooled investment structures capable of deploying capital regionally.