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Islamic Finance
Gulf Bank partners with Institute of Banking Studies to support transition to Sharia-compliant operations

Gulf Bank has signed a strategic partnership with the Institute of Banking Studies (IBS) to provide specialized Islamic finance training for its employees, following the Central Bank of Kuwait’s preliminary approval for the bank’s transition to a fully Sharia-compliant institution.

The agreement was signed by Bader Al-Ali, general manager of consumer banking at Gulf Bank, and Rana Al-Nibari, director general of IBS, during a ceremony attended by senior representatives from both organizations. The collaboration marks a key milestone in Gulf Bank’s transformation strategy aimed at aligning its operations with Islamic banking principles.

The training programs, developed in partnership with IBS, will focus on the fundamentals of Islamic banking, emphasizing the distinctions between conventional and Sharia-compliant financial services. The initiative is part of Gulf Bank’s broader plan to build internal expertise and ensure a smooth operational transition.

Gulf Bank received preliminary approval from the Central Bank of Kuwait on August 18, 2025, to proceed with its conversion under Law No. (32) of 1968, which governs currency, the central bank, and banking regulation. The approval followed a feasibility study by an international consultancy and the submission of legal and technical documents to the central bank.

The partnership with IBS reinforces Gulf Bank’s broader strategy of aligning with Kuwait’s vision to expand Islamic finance, while ensuring that its employees are prepared to lead the transition through targeted education and skills development.

OIC Economies
Pakistan, Malaysia deepen ties with six agreements

Pakistan and Malaysia signed six agreements to strengthen bilateral cooperation during Pakistan premier Shahbaz Sharif’s first state visit to the Southeast Asian country. 

The agreements included memorandum of understandings on higher education, tourism, halal certification, small and medium enterprises as well as combating and preventing corruption.

Both sides memorialized cooperation to train diplomats, too.

Malaysia announced a $200 million quota for meat exports from Pakistan which, the Pakistan premier assured, will be regulated by market price mechanisms and comply with halal certification requirements set forth by Malaysian authorities. 

The two countries agreed to continue to explore new avenues for collaboration across sectors covering IT and telecom, halal industry, connectivity, green energy, electrical and electronic manufacturing, climate change and agriculture. 

The Pakistani premier’s visit comes a year after Malaysian prime minister Anwar Ibrahim’s state visit to Pakistan. Both leaders reaffirmed their commitment to expand bilateral cooperation, with particular focus on strengthening economic and trade ties.

The Malaysian premier said both nations saw potential in deepening ties in defense, agriculture, energy and digital technologies, against the current backdrop of geopolitical uncertainties. 

Speaking to state-run Associated Press of Pakistan, Sardar Tahir, Islamabad Chamber of Commerce and Industry head, said both countries can enhance bilateral trade to $5 billion in the next three years. 

Trade between the two countries reached $1.76 billion in 2024, soaring 25.5% year-on-year. Key Malaysian export products include palm oil, petroleum and chemical items, while imports cover textile, apparel, footwear and petroleum items.

The Southeast Asian country aims to increase palm oil exports to Pakistan to fulfil increasing demand within domestic food processing and manufacturing sectors. 

Malaysia and Pakistan established diplomatic relations in 1957, which elevated to a strategic partnership in 2019.
 

Islamic Finance
Abu Dhabi dominates MENA sovereign wealth fund spending

Abu Dhabi’s Mubadala Investment Company was the most active sovereign investor across the Middle East and North Africa (MENA) during the first nine months of 2025, as the region gains prominence as a hotbed of economic activity and financial strength. 

MENA sovereign investors ploughed $56.3 billion in 97 transactions from the beginning of January through September, Global SWF said in its 2025 MENA Playbook launched on Wednesday.

MENA SWF activity made up about 40 per cent of all global activity, with over a third of the capital deployed in the US, 28% across Europe, including the UK, and 16% domestically. 

Mubadala invested $17.4 billion, followed by Abu Dhabi Investment Office, which spend $9.6 billion. They were trailed by Qatar Investment Authority ($7.6 billion), Saudi Arabia’s Public Investment Fund ($6.2 billion) and Abu Dhabi's ADQ ($4.8 billion).

The funds, dubbed as the Oil Five, in the report, comprised 81% of all sovereign dealmaking across the MENA region, with Abu Dhabi’s three wealth funds funds comprising more than half of it. 

On balance, state-owned investors − which includes SWFs, public pension funds and central banks – spend $8.2 trillion in the nine months through September. While it was a modest increase over 2024’s $8 trillion, MENA state-owned investment is projected to reach $12 trillion by 2030. 

Inbound capital from global state-owned investors into MENA remains limited, despite recent partnerships with Canada’s La Caisse and investments by Singapore’s GIC and China’s CIC.

“The war has made it worse, as Norway’s NBIM, the world’s largest SWF, recently sold $2.8 billion of Israel-related stocks. However, governments across the region - especially in the GCC - are making significant efforts to attract offices of asset managers," the report added. 
 

Salaam Gateway
Are charitable organizations in the West leveraging Zakat?

Walk through any high-street fundraiser in London or scroll a U.S. appeal page during Ramadan, and you won’t be wrong in concluding that Zakat is a fairly well-known and leveraged option in the West.

The real answer to whether this is surface-level branding or whether mainstream charities in the West have retooled their fundraising, governance, and programs to unlock Zakat at scale is a bit more nuanced.

Even as a growing cohort of major humanitarian organizations has established credible Zakat channels and governance, the broader Western charity sector still under-utilizes this market. Taking the example of Muslims in the UK and the U.S., the result shows that the gap isn’t demand; in fact, Muslim donors are generous and consistent with Jahangir Mohammed, founder and director, Ayaan Institute, pointing out that Muslim donations in the UK for international humanitarian charities stand at £1.5 billion with upto 40% of that amount comprising Zakat donations. 

The problem thus lies on the supply side. 

“When Muslim charities were first established in the United Kingdom, their efforts were largely directed overseas, focusing on humanitarian crises in Asia and Africa. This approach echoed the model of long-standing international NGOs such as Oxfam, and zakat distribution was typically confined to two of the eight categories set out in the Qur’an: the poor (fuqara) and the needy (masakin),” said Conor Murphy, chairman of Convert Muslim Foundation, a UK registered charity.



“In the past 15 years, however, the landscape has begun to change. A growing share of Zakat has been distributed locally to address hardship within British Muslim communities, from housing insecurity to food poverty. At the same time, some charities have broadened their interpretation of Zakat beyond immediate relief, using it to support converts to Islam (muallaf) and, more recently, to fund sustainable development initiatives. While these shifts remain the subject of debate among scholars, they mark an important evolution in how Muslim giving is practiced in Britain today,” he added.

Blue State’s 2024 report shows most secular UK charities aren’t Zakat-ready, lacking ring-fenced funds, eligible programs, and clear communication. Yet the potential is huge: British Muslims give about £708 a year compared to £165 for others, but only 14% direct Zakat to secular groups. Half say they would if the process were clearer. In the U.S., the Muslim Philanthropy Initiative reveals a similar picture: around 70% of Muslims regularly pay Zakat, with annual giving worth billions.

A drop in the ocean
Some global organizations have gone well beyond Ramadan appeals, creating full systems to manage Zakat in line with Islamic guidelines. UNHCR’s Refugee Zakat Fund raised $14 million in 2024, reaching 474,000 people across 22 countries.

With Sadaqah included, the total reached $22 million, aiding nearly 872,000 people. UNICEF, in collaboration with the Islamic Development Bank, established the Global Muslim Philanthropy Fund for Children to channel Zakat into child-focused programs.

Meanwhile, UNRWA raised $41 million in 2024 through its Islamic Philanthropy program. Even secular bodies are joining in: the IFRC is now accredited to receive Zakat, and the IOM launched an Islamic Philanthropy Fund in 2025 to bring Zakat into mainstream humanitarian aid.

All of which begs the question: If donors and early movers exist, why isn’t Zakat ubiquitous across Western charities? 
The barriers to Zakat in Western charities are mostly practical. Governance is the first: Zakat has strict rules, requiring ring-fenced accounts, Shariah oversight, and transparent reporting—systems that many charities lack, although the UNHCR has shown that they can be built.

Communication is another hurdle; research shows Muslims are open to giving Zakat to secular charities if they trust how funds will be used. Fundraising design also matters: Zakat is a year-round obligation, so donors expect calculators, tax-ready receipts, and clear Zakat-eligible programs—something faith-based NGOs already provide.

In the UK, Gift Aid adds complexity. While charities can claim the 25% top-up, scholars argue that it shouldn’t be considered Zakat, so most treat it separately. For donors, clarity on this point is essential to maintaining trust.


Bigger Picture
So, are Western charities truly maximizing the potential of Zakat? A handful certainly are, and they show it can work.

The first step is Shariah-aligned governance. Successful charities establish respected advisory boards and publish clear guidelines on which programs qualify for Zakat and how administrative costs are managed. 

Agencies such as UNHCR, UNICEF’s Global Muslim Philanthropy Fund for Children, and the IFRC have all developed frameworks to demonstrate this alignment.

Zakat works best when it’s tightly   managed and clearly explained. Leading organizations treat it as a separate, ring-fenced fund with transparent reporting and design programs that fit traditional categories,   such as aid for the poor, debt relief, or family support.

The UK’s National Zakat Foundation shows how this can even tackle local hardship. Just as crucial is plain communication - when charities are upfront about rules, costs, and impact, Muslim donors are far more willing to give, even to secular organizations.

Many mainstream charities haven’t yet established the necessary structures—separate accounting, tailored programs, Shariah oversight, and culturally sensitive messaging—that enable Zakat to be implemented at scale. The irony is that the opportunity exists; it’s up to charities to step into it.

OIC Economies
Saudi expects fiscal deficit of 3.3% of GDP in 2026

Saudi Arabia is expected to record a fiscal deficit of $44.2 billion (166 billion Saudi riyals) next year, the kingdom’s finance ministry has estimated.

The deficit for 2026, estimated at 3.3% of the kingdom’s gross domestic product, is a sharp drop from 5.3% projected for this year. 

Despite the projected deficit for 2026, the government will continue to adopt “expansionary spending policies that are contrary to the economic cycle”, the finance ministry said in a statement on Tuesday. The funds will be directed towards national priorities with social and economic impact. 

Government revenues for 2026 are expected to total $305 billion (1.147 trillion Saudi riyals), with expenditures totalling $350 billion (1.313 trillion Saudi riyals). Inflation is set to rise 2.3% this year, before dipping to 2% in 2026. 

Total revenues are expected to reach about $345 billion (1.294 trillion riyals) in 2028, with total expenditures estimated to touch $378 billion (1.419 trillion riyals) the same year. 

Mohammed Aljadaan, Saudi minister of finance, said that the kingdom’s ratio of public debt to GDP is still at relatively low levels compared to other economies, and that it is within safe limits compared to the size of the economy, and supported by financial reserves.

The government continues to support economic growth by continuing development projects and implementing national strategies and motivating the private sector to be an effective partner in development, he added. 

Saudi economy is expected to grow 4.4% this year, according to ministry data, higher than the International Monetary Fund’s July projection of 3.6%. The fund expects the kingdom’s GDP to grow by 3.9% in 2026, lower than the ministry’s projections of 4.6%. 

The kingdom has been running budget deficits since 2022, as reduced oil revenues squeeze state coffers. Brent crude, which serves as a benchmark for roughly two-thirds of the world's crude oil supplies, dipped nearly 14% since the beginning of the year. 

Saudi Arabia needs oil to be north of $92 per barrel this year and at $86.6 per barrel in 2026 to balance its books, according to the IMF. It is currently hovering around $65 per barrel mark, well below levels needed for fiscal equilibrium. 
 

Islamic Finance
Saudi fintech erad secures $33m to tackle GCC’s credit gap

Saudi Arabian fintech erad has raised $33 million in debt financing to accelerate its expansion in the Kingdom and across the Gulf, aiming to narrow the region’s estimated $250 billion credit gap for small and medium-sized enterprises (SMEs).

The funding round, announced during the Money 20/20 Middle East conference in Riyadh, was led by India’s Stride Ventures with participation from other regional and international investors. The fresh capital will be used to scale erad’s Shariah-compliant, data-driven lending platform and meet rising SME demand in sectors such as retail, food and beverage, healthcare, and e-commerce.

“Access to capital remains one of the primary challenges for SMEs across the region,” said Salem Abu-Hammour, co-founder of erad. “This investment follows a strong period of 5x growth year-on-year as we double down on our expansion in Saudi Arabia.”

Fariha Ansari Javed, partner at Stride Ventures, described the deal as a milestone for Gulf markets. “Debt remains an untapped and powerful asset class in the GCC, offering immense potential to fuel growth for ambitious businesses without the need to dilute equity,” she said.

Launched in 2022, erad provides Shariah-compliant financing to SMEs in Saudi Arabia and the UAE, offering funding within 48 hours through a proprietary platform that analyzes real-time business data to assess risk. The company has already disbursed over $50 million in financing and received funding requests exceeding $532 million, underscoring the scale of unmet demand in the region’s SME sector.

The new debt facility strengthens erad’s ability to offer fast, flexible financing while supporting Saudi Arabia’s broader Vision 2030 agenda of diversifying the economy and empowering entrepreneurs.

Islamic Finance
Pakistan to raise $4.6bn in Islamic financing to cut energy debt, meet IMF conditions

Pakistan is set to sign agreements on Wednesday to raise about ($4.6 billion) in Shariah-compliant financing from a consortium of local banks to retire energy-sector debt and meet key conditions of its $7 billion International Monetary Fund (IMF) loan program, officials and market analysts said.

The funds will be mobilized through sukuk (Islamic bonds) and a financing facility agreement to reduce the circular debt plaguing the country’s power sector. A signing ceremony is scheduled at the Prime Minister’s House, according to an invitation from the state-run Central Power Purchasing Agency (CPPA), which buys electricity from producers and manages payments for the national grid.

Analysts tracking the deal said roughly $2.4 billion will refinance existing debt held by the government’s Power Holding Company, while about $2.1 billion will come as fresh loans from 18 participating banks. Analysts further say the government aims to retire its old expensive debt as well as reduce late payment charges. Power producers currently charge late-payment surcharges of KIBOR plus 2.5% to 4.5%, while the new financing will be secured at KIBOR minus 0.9%.

Circular debt has ballooned into one of the country’s most serious fiscal problems, draining public revenue and threatening energy supply. The IMF has made reducing this debt a key benchmark for its ongoing $7 billion program. The government has to show the IMF that it has reduced the outstanding balance of the circular debt, which is a major objective here. 

Analysts said the consumers will ultimately repay the financing through a Power Holding Limited surcharge of Rs3.23 per unit, already included in monthly electricity bills. The deal will unlock liquidity for energy-sector firms, enabling them to invest in infrastructure upgrades and pay dividends. Listed companies expected to benefit include Oil & Gas Development Company, Pakistan State Oil, Pakistan Petroleum, Hub Power Company, Lucky Cement, Fauji Fertilizer Company and Thal Limited.

The financing agreements come as an IMF mission prepares to visit Pakistan for a second review of the country’s economic performance and flood-recovery efforts. By settling circular debt and lowering borrowing costs, the government hopes to strengthen its case for continued IMF support while easing pressure on its fragile power sector.


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