AAOIFI's achievements in 2023: Advancing Islamic finance standards and global adoption In 2023, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) made significant progress in advancing Islamic finance standards and promoting its global adoption. AAOIFI, based in the Kingdom of Bahrain, is a leading standard-setting body that plays a pivotal role in shaping...

IIFM activities in 2023–24 During 2023, the International Islamic Financial Market (IIFM) completed its market assessment exercise on various new industry initiatives to be undertaken in line with market developments and requirements.

INTERVIEW: Sanjay Singh, CEO of Azentio Software You were appointed CEO of Azentio in August — congratulations! Can you tell us what your top priorities are as CEO and the strategy you will be implementing for the firm?
Since I took over, my primary focus revolves around customer satisfaction. Developing a proactive customer success strategy has forced me to undergo some key changes internally. This has driven a major....

ACCOUNTING: Market outlook of Islamic accounting During the year 2023, AAOIFI continued its comprehensive project for the revision and review of the Financial Accounting Standards (FASs); the project was initiated in 2016. This included a set of previously issued standards, namely: FAS 3 ‘Mudaraba Financing’ and FAS 4 ‘Musharaka Financing’, as well as FAS 14...

AGRICULTURE FINANCE: Islamic agricultural financing: The next global frontier for Islamic finance The global Islamic finance industry is at a crossroads, with the potential to have a big effect on the constantly evolving landscape of agricultural financing. It is critical to recognize two fundamental factors shaping...

AVIATION FINANCING: Islamic financing for aviation: Ready for take-off There are reasons to be cheerful about the global aviation industry: demand for travel remains strong and approaching pre-pandemic levels; oil prices are down from 2022 highs; there continues to be liquidity in the aviation finance sector...

ARBITRATION & LITIGATION: Islamic finance disputes: Arbitration and litigation Industry specialists predicted that 2022 and 2023 would carry a sharp increase in Islamic finance court litigation, in comparison to a quiet 2021. Those projections were incorrect. However, the limited number of cases reported by the state courts does not necessarily indicate that the volume...

COMMODITIES: Commodities and the Islamic finance industry: Navigating current economic waters The global Islamic finance industry continues to grow at pace — today, it is estimated to be worth US$3 trillion and expected to grow around 10% in 2023–24, according to S&P. Within this, commodities are becoming increasingly significant, serving as important foundational assets...

CROWDFUNDING: Islamic crowdfunding: A gateway to financial inclusion, SME growth and start-up empowerment Islamic crowdfunding is often referred to as Sadaqah-based crowdfunding or crowdfunding for charity and prosperity. Shariah guidelines ensure that crowdfunding campaigns adhere to the values and rules...

CYBERSECURITY: Cybersecurity in Islamic banking: Navigating challenges and opportunities Cybersecurity is a fundamental pillar of trust and stability in the finance sector, where the protection of sensitive financial and personal information is paramount. Cybersecurity is a critical concern for Islamic banks, in particular because in addition to their holding of large customer deposits....

DERIVATIVES & HEDGING: Risk management through Islamic derivatives — current landscape and outlook The Islamic finance industry, deeply rooted in the principles of Shariah law, has experienced a transformative journey over the past few decades. This unique system, which strictly prohibits the collection and payment of interest, has consistently demonstrated its adaptability...

ENERGY: Energy and Islamic finance: Continued growth Focus on the energy sector within the Islamic finance industry continued to develop throughout 2023, with projects focusing more particularly on the utilities and infrastructure sectors. The growing global issue of the climate emergency and the resulting need for renewable energy sources...

EQUITY CAPITAL MARKETS: Global equity capital markets – adopting new market dynamics This has been a good year for global equity markets amidst higher interest rates, tight liquidity conditions, geopolitical uncertainties, and widespread pessimism about the global economy. The equity markets have performed well this year, with Russia, the US, and Japan leading...

ESG: 2024 a promising year for ESG and sustainability in the Islamic financial industry ESG has gained traction in the Islamic financial industry in the last three years with innovations across the various segments of the industry. 2024 is expected to be another year of increased activity in this space. However, greenwashing issues, product innovation in line with Islamic...

EXCHANGE-TRADED FUNDS: AI themed ETFs to overtake mutual funds Buying the Market – the masterpiece of Harry Markowitz and William Sharpe headed Burton Malkiel in 1973 to popularize the market-oriented investments and thereafter the first ETF was created in Canada in 1990 (TSE 35 participation units), and the first US ETF...

GOLD: Integration of gold within the Islamic finance sector offers promising prospects Gold continues to be a pillar of stability in the global economic and financial landscape. In 2023, amidst fluctuating economic and geopolitical conditions, the demand for gold has been sustained, underscoring its traditional role as a hedge against inflation and economic instability. This is particularly significant...

HALAL INDUSTRY: The Halal industry encounters challenges in human resource quality and global competitiveness The global Muslim population of 1.9 billion makes it fertile ground for the Halal industry. Expansion could boost exports, foreign exchange reserves and overall...

INSTITUTIONAL ASSET MANAGEMENT: Trends in the Islamic institutional asset management sector The global landscape of Shariah and Islamic funds is evolving at an unprecedented rate with new developments coming thick and fast. This sector continues to exhibit robust growth. According to data from the General Council for Islamic Banks and Financial Institutions based in Bahrain...

ISLAMIC FINTECH: Between significant strides and ethical questioning Islamic fintech, a generic term to summarize the applications of digital technologies in Islamic finance, has experienced rapid growth in recent years, particularly since COVID-19 which has significantly disrupted the way in which people, businesses, nonprofit organizations, local authorities...

ISLAMIC INDICES: The growth of passive investments in Islamic finance: Trends and implications Islamic indices provide market participants with a comprehensive set of Shariah compliant benchmarks for equities and Sukuk, offering a diverse range of strategies tailored to various investment goals. These have been developed to cater to the unique needs of the Islamic financial ecosystem...

MERGERS & ACQUISITIONS: The evolution of Islamic finance mergers and acquisitions in 2024 and beyond Islamic finance is witnessing significant activity in the realm of mergers and acquisitions (M&A), reflecting the industry’s growing importance and strategic maneuvers by key players. The global Islamic finance industry is growing rapidly and M&A deals are playing a key role in its development. M&A deals...

MICROFINANCE: Financial inclusion to be critical for climate change adaptation In the rapidly evolving landscape of global finance, Islamic microfinance has emerged as a powerful tool for promoting financial inclusion and poverty alleviation. With its adherence to Shariah principles and focus on serving marginalized communities, this sector has gained significant traction...

PRIVATE EQUITY: Islamic private equity shows compelling promise in the face of market adversity — but which undercurrents should investors bear in mind? New and varied challenges in the wider economy have exerted pressures on Islamic private equity (PE) in 2023. Most prominently, higher interest rates caused retail consumers to approach Islamic financing more...

REAL ESTATE: The beginning of the end Shariah compliant real estate investment has long been an established product offering for Islamic investment managers. As global market uncertainty continues, the allure of bricks and mortar remains, with investors seeking safety, an income and the prospect of capital appreciation...

REGULATORY ISSUES: Regulatory challenges and future prospects in the global Islamic finance industry The global Islamic finance industry, grounded in ethical and Shariah compliant financial practices, has gained substantial traction as an alternative to conventional banking systems. With approximately two billion Muslims worldwide, this sector significantly impacts the global economy. In recent years...

RETAIL ASSET MANAGEMENT: Islamic retail asset management: Navigating the world of ethical finance The landscape of Islamic finance has experienced a remarkable evolution, transcended its traditional boundaries and permeated various segments of the financial industry. One of the pivotal facets of this transformation is Islamic retail asset management. This report seeks to provide...

RETAIL BANKING: The journey of Islamic retail banking Shariah compliant retail banking, catering to retail and individual clients along with small businesses, has been a core contributor to volumes and profits for commercial banking. Driven by the nature and mass of the Islamic banking clientele, it has been a catalyst for lots of localization, customization...

RISK MANAGEMENT: Rapid change in risk landscape toward 2024 2023 has been mainly instrumental in terms of tight macroeconomic policies that were in force to contain inflation. The policy rates were consistently increased as inflation impacted the banking sector to a greater extent on credit creation and banks’ profitability....

SMES & ENTREPRENEURSHIP: SMEs and Islamic financing models are in need of each other There is a paradigm shift in the world order as far as the inclination of employable youth is concerned. Islamic finance has been contributing to this so-called new order in-principle from times immemorial or at least actively ever since its advent as part of modern...

The social finance journey of 2023 and beyond The current state of humanity reflects a dichotomy wherein some individuals are grappling with enduring challenges of the contemporary world, while others are embracing novel opportunities for advancement and innovation. This dichotomy constitutes a noteworthy criticism of capitalism...

STRUCTURED FINANCE: The pivot point: Conviction and trust The year 2023 has been a year full of a number of challenges that have consistently kept the rate of inflation and monetary policies on a higher note. Economies across the globe felt the economic pressure on the domestic and cross-border trade level...

SUSTAINABLE FINANCE: Sustainable finance and green Sukuk issuance in a rapidly evolving landscape The increasing share of responsible investors underscores the need for financial instruments that can enhance access to finance and channel capital toward well-structured climate projects, especially in regions that need it the most. Sukuk instruments share common...

SYNDICATED FINANCE: Islamic syndications: Long-term opportunities for brighter horizons Three years ago, I wrote my first article about Islamic syndication pre and post the COVID-19 era. After the end of the pandemic, many economic variables in the global markets have changed. Some economic challenges are still prevailing as a result of the ongoing war in Ukraine and the current...

TAKAFUL & RE-TAKAFUL (AFRICA): Digitalization and Takaful technology in Africa The year 2023 is considered the year of digitalization of Takaful, leveraging the technology with Takaful operations and the strategic framework of digital Takaful transformation. Digital Takaful transformation is the process of changing how Takaful business leverages technology, people and processes...

TAKAFUL & RE-TAKAFUL (ASIA): Ways to unlock the full potential of Takaful The Takaful industry in the region continued its growth path in 2023. At the same time, the results of challenges have remained, and the industry has still to unlock its full potential...

TAKAFUL & RE-TAKAFUL (MIDDLE EAST): GCC Takaful sector’s endurance journey into a much brighter future The introduction of new regulatory and global best practices in accounting, digitalization and customization of products to suit a more sophisticated customer base is reshaping the insurance industry and driving further growth opportunities in the Takaful...

TRADE FINANCE: Charting the future: Navigating growth horizons of Islamic trade finance Trade finance plays a pivotal role in Islamic banking, offering a financial framework that aligns with the divine injunctions of the Quran. As Surah Al-Baqarah (2:275) underscores the permissibility of trade and condemns usury, Islamic banking actively seeks financial instruments and mechanisms that promote...

VENTURE CAPITAL: Changing trends Driven by favorable market dynamics in the GCC, Malaysia and Indonesia, the global Islamic finance industry is poised to finally reach the US$3 trillion mark in 2023, growing by around 10% after expanding at a similar pace in 2022 (S&P Global Ratings). Ninety-two percent of Islamic banking assets were driven by GCC...

AFGHANISTAN: Humanitarian conditions eclipse aspiration for stability Two years after the regime change in Afghanistan, the economy has slowly showed signs of recovery, exemplified by ongoing deflation, increased exports and stable exchange rates (The World Bank (2023): Afghanistan Economic Monitor August 2023; The World Bank (2023): Macro Poverty...

The generalization of the Islamic finance industry finding its place in the new Algeria Islamic finance in Algeria is entering a new era. Both Islamic banking and Takaful fueled the growth of so-called alternative modes of financing and insurance in a country with a Muslim-majority population. The presence of the first fully-fledged Islamic bank, Al Baraka Bank Algeria since...

AUSTRALIA: Growth trajectory of Islamic finance to continue into 2024 As of 2023, the Islamic finance industry in Australia has been growing at a steady pace. 2023 saw several significant developments in the Islamic finance industry in Australia with the industry gaining traction in the country...

State of Islamic finance in Bahrain Bahrain’s financial system is one of the most sophisticated in the MENA region. There are 362 licensees as of 2023 comprising 54 wholesale banks, 30 retail banks, 40 insurance firms and other specialized licensees.The banking system which comprises both conventional and Islamic banks is the most important...

Four decades of Islamic banking in Bangladesh: From inception to innovation Islamic finance has emerged as an effective instrument for funding economic endeavors on a global scale. In Bangladesh, Islamic banks have played a substantial role in sustaining the nation’s economic landscape. These Islamic financial institutions are pivotal in facilitating agricultural...

Islamic finance principles and products imperative for Brazil Brazil is the largest economy in Latin America, and a G20 member. It is part of the global economy and has trade and investment relations with countries around the world. Muslim-majority countries are not an exception to those relations. On the contrary, Brazil and Muslim-majority countries...

Fostering growth in Brunei Darussalam through Islamic finance development Brunei Darussalam’s Islamic finance sector continues to maintain a strong commitment to its Islamic values and principles. Guided by the Financial Sector Blueprint 2016–2025 produced by Brunei Darussalam Central Bank (BDCB), Pillar II aims at fostering competitive and innovative...

Canada’s Islamic finance landscape In 2023, Canada’s Islamic finance sector witnessed significant developments, making it a landmark year for the industry. The government of Alberta’s pioneering initiative on Islamic finance, the emergence of new Islamic financial products and partnerships among major...

Promising outlook for Islamic banking in Central Asia The concept of Islamic banking and finance has gained significant traction in recent years, especially in Central Asia. The region, comprising countries such as Kazakhstan, Uzbekistan, Tajikistan, Turkmenistan and Kyrgyzstan, has been increasingly embracing Islamic financial...

CHINA: Islamic finance along the Belt and Road is on the ascendancy at the right time 2023 marks the 10th anniversary of China’s ‘Belt and Road’ initiative. The Belt and Road initiative encompasses the world’s major Islamic financial centers in the Middle East and Southeast Asia, where assets in line with Islamic principles make up as much as one-quarter of the total banking...

Could sovereign Sukuk help save Egypt from its debt crisis? The Egyptian Islamic finance industry is still managing to grow amid the backdrop of the country’s economic struggles and the burgeoning currency crisis. In fact, the success of Egypt’s first sovereign Sukuk issuance indicates the potential of the Shariah compliant financing method to boost foreign currency...

Positive strides promise a more inclusive and diverse financial landscape in Ethiopia In Ethiopia, where a community of around 40 million Muslims resides, equivalent to the entire population of nations such as Canada, Iraq, Afghanistan, and Uganda, Islamic finance plays a pivotal role in fostering financial inclusion. By adhering to Shariah compliant financial principles, financial institutions...

French Muslim retail market more resilient than the institutional market 2023 was a challenge due to market conditions, from mortgages to property deals through investment funds in a downward economic cycle impacting all financial segments. But interesting enough, the fall is impacting far less the Islamic finance retail segments in France as the main push...

The potential impact of Islamic finance as an alternative in The Gambia In The Gambia, the Islamic financial services industry is on an upward trajectory with a significant increase in the number of institutions and total Islamic finance assets. Compared with six in 2022, this year, there were 10 Islamic financial institutions, comprising one Islamic bank, one Islamic...

Islamic finance thrives in Germany: A look into the growing market and innovations Germany is home to approximately 5.7 million Muslims, and this number continues to grow. Due to the ethical values inherent in Islam, Muslims adhere to specific rules when it comes to financial transactions. This adherence is fueling the continuing growth of the Islamic finance...

GHANA: Advancements and future prospects in Islamic finance Ghana, a country known for its rich cultural diversity and economic dynamism, is experiencing a gradual but noteworthy increase in the number of people embracing the principles of Islamic finance. This has led to efforts to ensure progress toward establishing a formal Islamic finance...

INDIA: Taking Islamic finance to the grassroots The year 2023 has been a remarkable year for the Indian economy in many respects. When the world economy remained under duress due to war, inflation and climate impacts, the Indian economy displayed resilience and promise. There have been impressive gains on tax...

A new equilibrium of Indonesian Islamic finance After three consecutive years of economic growth hit by a recession due to the COVID-19 pandemic, 2023 was a year full of hope. However, many analysts predict that business activities will not return to normal as before the pandemic but will form a new normal. Indonesia is one of the countries...

Iran’s Islamic capital market — the next step forward Iran’s capital market witnessed many fluctuations in 2023 with different events which were quite important for market players. Basically, the market is a key place for fundraising and securities trading. Another important aspect of the market is in relation with its compliance with Shariah principles...

IRAQ: A slow but steady comeback for the banking sector The Islamic financial sector has a vast potential to perform efficiently in Iraq due to the extraordinary wealth the country retains; however, all the resources are unexploited and/or mismanaged. Iraq, being rich in oil, gas, natural resources including phosphate, sulphur, water and many...

Japan desires forging partnerships with countries on the Islamic finance bandwagon The upcoming Liberal Democratic Party (LDP) presidential race, slated for September 2024, has set the stage for a high-stakes political maneuver. Prime Minister Fumio Kishida’s calculus is clear: winning a general election before the LDP’s internal contest could bolster his standing as a presidential...

Jordan’s Islamic economics contributes to encourage investment in agriculture Jordan, similar to other countries in the Islamic world, suffered negatively from the impact of foreign debt, which led to more poverty and unemployment. Successive governments have sought to propose several solutions to resolve the foreign debt crisis; however, they have...

The ousting of double compliance regime in Islamic finance in Kenya The Islamic population in Kenya makes up approximately 10.9% of the overall population. Given the marginal numbers, the county’s historical legislative efforts have not had a sharp focus on Shariah-related laws. In fact, to date, the only substantive law that is Islam-centerd is the...

Unveiling the dynamics: Islamic finance flourishing in Kyrgyzstan Today, we can already talk about the first successful results of promoting Islamic finance in Kyrgyzstan through the example of the issuance of Islamic securities Sukuk Mudarabah. But the Islamic finance business in Kyrgyzstan faces certain challenges. The biggest challenge is a lack of qualified...

The stagflation of the Lebanese financial market In order to put this report on Lebanon in its context, the term stagflation, which combines the words ‘stagnant’ and ‘inflation’, refers to an economy characterized by high inflation and low economic growth. More precisely, a stagnant economy is an economy that neither grows...

Ekonomi MADANI framework a paradigm shift for the Malaysian Islamic finance industry In 2023, Malaysia witnessed several key developments that showcased its commitment and innovation in advancing the Islamic finance agenda, especially in line with the Ekonomi MADANI (or civilizational economy) framework launched in July by Prime Minister Anwar...

Hope ignites progress: Unveiling opportunities in the Maldives’s Islamic finance journey In the recent 2022 Islamic finance growth indicator report by Refinitiv, the Maldives was ranked 11th in the Islamic Finance Development Indicator (IFDI). This indicates the country’s strong position in the Islamic finance industry. Notably, in the category of other Islamic financial institutions...

Toward the implementation of an Islamic financial regulatory framework by the Central Bank of Mauritania Islamic finance in Mauritania is developing, thanks to financial technologies, especially the mobile banking apps launched by several Islamic banks. These mobile banking apps such as Bankily, BAMIS Digital, BIM app and Masrevi are the most widely-used financial apps offered...

MOROCCO: An immense potential in participatory banking The year 2023 proved to be tumultuous for financial markets, characterized by bank failures, tight monetary policies, persistent inflation and ongoing debates about global debt sustainability. Under these challenging circumstances, liquidity became scarce, and the cost...

NIGERIA: Consolidating gains… The non-interest finance industry in Nigeria continued to extend its stride, gaining status as a potential market leader in the Nigerian financial sector. However, in 2023, the industry had to contend with numerous macroeconomic challenges, from a cash scarcity that bedeviled the economy...

OMAN: 2023 in review and what to expect in 2024 Keeping in line with previous years, the Islamic finance industry of the Sultanate of Oman showed another solid year of growth in 2023 where total assets of Islamic banks and windows in the Sultanate reached OMR7.2 billion (US$18.65 billion) by the end of August 2023. This figure translates into...

Islamic finance of Pakistan: A rewarding journey The Islamic banking and finance industry in Pakistan has achieved tremendous growth during the last two decades with the support of a comprehensive legal, regulatory and Shariah governance framework. So far, Islamic finance has emerged as an effective alternative to conventional financing...

THE PHILIPPINES: Regaining lost momentum toward Islamic banking and finance The Philippines is gradually regaining the momentum it lost during the COVID-19 pandemic in promoting the development of Islamic banking and finance...

QATAR: The calm before the storm The prestigious FIFA World Cup 2022 served as a pivotal moment for Qatar, highlighting its economic and financial potential to the global community and leaving an impact that continues to this day. While the event attracted a great global attention and investments, the domestic market...

Russia focuses on cooperation with eastern countries in promoting Islamic finance The current political situation, significantly aggravated recently in connection with the intensification of the confrontation between western countries on Russia’s actions to protect its interests, testifies to the expansion of the split between the global west and other countries in the desire...

Shaping the Islamic finance framework in Saudi Arabia: Regulatory milestones and market expansion in 2023 There have been significant developments in Saudi Arabia in 2023 that positively impacted the Islamic finance market. These developments include the promulgation of the Civil Transactions Law, and other regulatory reforms, that provide solutions and further certainty and clarity...

Singapore 2023: A year of transformation and innovative resilience Singapore’s 2023 stands as a testament to its mature political landscape, marked by significant transitions in leadership that would be pivotal in shaping its future trajectory. The nation welcomed Tharman Shanmugaratnam as its new appointed...

SOUTH AFRICA: Diversified prospects underpin rewarding returns 2023 saw global economic activity decelerating from higher post-lockdown rebound growth levels but it is proving reasonably resilient in the face of very rapid monetary tightening. US economic growth moderated from higher levels due to headwinds...

Exploring the potential of Islamic finance in Spain Islamic finance is yet to make significant inroads in Spain, despite a moderate level of interest and comprehension regarding the concept. However, the practical application of Islamic finance remains relatively undeveloped, even in a country with a Muslim population...

Islamic finance in Tanzania: The future is here 2023 was a remarkable year for Islamic finance industry in Tanzania, with a lot of new developments seen in the market, as a pay-off of decade-long efforts to build and promote the industry. Despite that, challenges are still huge that need intervention from all...

There is much to do to rebuild the Islamic finance ecosystem in Tunisia The Tunisian economy is struggling between: • the weak prospects for a final agreement with the IMF since subsidy reforms were rejected by the president, who dismissed the minister of economy and planning, considering that its impact on social strains will lead to protests...

TURKIYE: Solid steps moving toward 2025 sector targets Although Islamic banking has a very modest size compared with conventional banking, it is developing both nationally and internationally with continuous momentum by revealing its potential. In the field of participation banking in Turkiye, it is important...

Trends and recent developments in Islamic financing in Uganda Islamic financial business connotes financial institution business which conforms to Shariah and includes receiving property into profit-sharing investment accounts or managing such accounts, the entry into one or more contracts under Shariah or otherwise carried out...

COP28: Sustainable Islamic finance and economy in the UAE The year 2023 is a historic year for the UAE and the year of sustainability. The country is hosting the 28th session of the Conference of the Parties of the United Nations Climate Change Conference (COP28). The conference is primarily focused on sustainability and the economic case...

2024 will continue to show that the UK is a polarized market We end 2023 with the reassurance that the UK remains the world leader for the knowledge economy motivated by the continued push for the global discussion around the connection between Islamic finance and the UN SDGs. An election looms and it is no surprise that the view that Islamic finance...

The state of the US Islamic financing industry In 2023, the US Islamic financing industry can best be described as a clean house in an ugly neighborhood. The US Muslim consumer who is typically better educated and considered financially ‘more responsible’ was able to withstand a sharp increase in mortgage rates...

Uzbekistan’s fintech frontier: A year of breakthroughs and eyeing a future of digital prosperity As 2023 draws to a close, I find myself both reflecting on the key achievements of Uzbekistan’s fintech and Islamic financial services sectors, and perhaps more excitingly, thinking about the new opportunities we are likely to see emerge in 2024...