Islamic finance can address global economic woes

RITIKA SHARMA / Emirates Business

Islamic Economy is considered not just the fastest growing segment of global economy, but it is also being seen as a novel sector for developed economies to invest in. Experts believe that the Islamic Economy can find solutions for modern world’s problems ranging from income disparities to other plights that have led to several economic and political disruptions in the past.
In this regard, UAE is considered one of the few countries that have stand-alone regulations for Islamic finance and it leads around four banks of the top 25 Islamic banks around the world, with total Islamic finance assets amounting to $118 billion.
In an exclusive interview with Emirates Business, Dr. Suzanna El Massah, Assistant Professor of Finance and Economics, Zayed University, said, “UAE occupies the second Global Islamic Economy Indicator (GIEI) and the third Islamic Finance Indicator among 73 countries.”
Reports suggest that Islamic finances industry is projected to reach a market size of $3.25 trillion by 2020 as more and more international financial institutions look to apply Shariah-complaint financial practices.
“Islamic banking share has increased from 18 percent to 21 percent and consumer deposits in Islamic banks have increased from 17 percent to 23 percent between 2008 and 2013 consequently according to World Islamic Banking Competitiveness Report 2014–15. There are 24 banks worldwide, dominating the sukuk market through amount of $13,475 million, UAE controls around 25 percent of them by 19 sukuk issues,” she added.
Experts are encouraging demand and supply aspects of Islamic economy to stimulate development and growth. It is believed that use of marketing campaigns and working on digital platforms can increase the access to customers in the segment.
“We can support the supply side, through improving the strategy and performance of the Islamic economy sectors in order to be able to compete, enhance the governance structures to maintain reliability in Islamic economy products, and improve regulations and standards effectiveness,” she pointed out.
At least ten out of 25 fastest growing economies are Muslim-majority countries. The Organisation of Islamic Cooperation (OIC) nations represent more than $6.7 trillion of the global GDP and to propel the growth-graph of global Islamic economies, there are more than 1.7 billion Muslims.
Ibrahim Sarfaraz, who works with a bank in Dubai, told Emirates Business, “Robust figures speak volumes about the intensity with which Islamic economies are flourishing throughout the globe. It is already proved that world economies can be hugely benefited from the growth and prosperity of Islamic economies. Henceforth, there is no doubt that Islamic Finance can be an answer to majority of the economic troubles our world is facing at this moment.”