On mainland Africa, the African sheath-tailed bat is found in well illuminated caves, rocky crevices and cellars of houses (Rosevear 1965). It preferentially roosts in caves along the sea and lake shores (Kingdon, 1974). In Nigeria, the African sheath-tailed bat is found in localised rocky habitats in southern Guinea savanna. Rosevear (1965) stated that they occur in woodland but only where there are acceptable roosting places. It is likely that other colonies occur in suitable rocky habitats in the southern Guinea savanna of western Nigeria. On Madagascar this bat taxon appears to be more varied in its habits, with some roost sites typically very dark and others quite close to the cave entrance. The two known sites on Madagascar are within dry deciduous tropical forest on a karst substrate (Goodman et al. 2005). Some authours suggests that the African sheath-tailed bat migrates (Happold 1987, Skinner and Smithers 1990).

The African sheath-tailed bat is found in much of east and eastern-central Africa, with an isolated record from central Mozambique. It is also found in west Africa, with records from Guinea and Guinea Bissau, northern Ivory Coast, Ghana, Togo, Benin, and western Nigeria. There is also a small distribution in western Angola. This species was recently discovered in Madagascar (Goodman et al. 2005) and is known only from the Ankarana Special Reserve in the north of the island and the Namoroka National Park in the west.

On the African continent, there are no species-specific conservation measures in place, but there are some protected areas within its range. Both of the known sites for this species in Madagascar are within protected areas (the Ankarana Special Reserve and Namoroka National Park).