Journal of Economic and Social Dynamics

Abstract

The growth of Islamic finance in Africa depends not only on market demand but also on the strength of legal, regulatory, institutional, and infrastructure frameworks. This study assesses the readiness of ten selected beneficiary countries of the Arab Bank for Economic Development in Africa (BADEA) to support Islamic finance. The study selected five countries from each of the four regions: Eastern and Southern Africa and Western and Central Africa.

The author developed a structured nine-dimensional readiness framework. It covers: legal and statutory arrangements, prudential and supervisory frameworks, tax and accounting treatment, Shariah governance and certification, liquidity and market infrastructure, capital markets and Sukuk, Takaful and pension systems, consumer protection and financial inclusion, and human capital and institutional capacity. Each dimension is scored on a 0-4 scale and weighted based on its institutional importance.

The weighted scores are combined into a Composite Readiness Score and converted to a 0–100 scale. This readiness index provides a comparative indication of the extent to which each country has the conditions required for broader Islamic-finance development. The results show wide variation in readiness, from 43.1 in Rwanda to 93.8 in Nigeria. Nigeria and Senegal are classified as High; Kenya, Tanzania and Niger as Moderate–High; Uganda, Ethiopia, Ghana and Mali as Moderate; and Rwanda as Low. The study contributes an integrated, transparent framework for Islamic-finance readiness across multiple institutional dimensions, and evidence for sequencing of Islamic-finance initiatives in BADEA beneficiary countries.