Africa Finance Corporation (AFC) secured a $400 million Murabaha financing for Africa's energy sector, highlighting the growing role of Islamic finance in Africa's infrastructure development and the potential for deeper financial cooperation between Arab and African nations in the energy sector.

The facility, upsized from $300 million, attracted 11 Islamic financial institutions, including Abu Dhabi Islamic Bank, Al Rajhi Bank, and Emirates Islamic Bank.

The Murabaha financing structure aligns with Sharia principles, offering an attractive and ethical investment vehicle for Middle Eastern and North African financial institutions seeking exposure to African markets.

The increasing participation of Islamic banks and financial institutions presents a strategic opportunity for Middle Eastern nations to play a larger role in Africa's energy transition.

Countries like the UAE, Saudi Arabia, and Qatar have well-capitalised financial institutions and sovereign wealth funds that can accelerate Africa's energy infrastructure expansion, particularly in natural gas, renewables, and power generation.

However, there remains significant untapped potential for Arab-African cooperation, particularly in financing LNG terminals, gas-to-power projects, and oil and gas exploration.

As global Islamic finance experiences sustained growth, the surge in Islamic finance presents a timely opportunity for African energy projects, which require significant capital investment to meet the continent's growing energy demand.

Islamic finance's alignment with sustainable investment principles makes it particularly attractive for funding Africa's energy transition.