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Islamic Finance
Islamic finance wrap: Sohar Islamic introduces new Shariah-compliant credit cards

Here's a roundup of key developments across the Islamic finance ecosystem during the first week of May

Editor's note: Oman's Sohar Islamic has unveiled three new Shariah-compliant credit cards, while AlHuda CIBE partners with an Islamic fintech to propel the sector. 

Company News


Oman

Sohar Islamic introduces new Shariah-compliant credit cards

Sohar Islamic, the Islamic window of Sohar International, has introduced three new Sharia-compliant credit cards. 

 

These cards offer a range of benefits in travel, wellness, and lifestyle, meeting the increasing demand for premium services and unique experiences.  (Zawya)

 

UAE

MYTM and AlHuda CIBE partner to drive global expansion of Islamic fintech
MYTM, an Islamic fintech firm, and AlHuda Centre of Islamic Banking and Economics (CIBE) have inked a memorandum of understanding (MoU).

 

The collaboration underscores their shared commitment to driving innovation and accessibility in Islamic finance. (Zawya)

 

 

Trade Developments


Azerbaijan / Türkiye

Azerbaijan participates in training on "Islamic banking, finance" in Turkiye

The Small and Medium Business Development Agency (SMBDA) and the Participation Banks Association of Turkey collaborated on a training initiative titled "Islamic Banking and Finance" in Istanbul, aimed at enhancing expertise within financial sectors, according to Azernews.

 

Representatives from various Azerbaijani institutions attended, including the ministry of economy, Central Bank, and Entrepreneurship Development Fund, and banks. (Azernews)

 

Malaysia

GFIEF to help Malaysia become top innovator in Islamic finance

The upcoming Global Forum of Islamic Economics and Finance (GFIEF) in Kuala Lumpur, slated for the end of May, presents an opportunity for Malaysia to reclaim its status as a leading innovator in Islamic finance, according to Treasury secretary-general Datuk Johan Mahmood Merican.

 

Prime Minister Anwar Ibrahim believes Malaysia's Islamic finance industry has matured enough to develop its own products and collaborate with other Islamic countries. (Pakistan Observer)

Islamic Finance
Islamic finance wrap: Canada to introduce halal mortgages for Muslims

Here's a roundup of key developments across the Islamic finance ecosystem during the month of April

Editor's note: Canada leads the news race, with the government announcing its intent to introduce halal mortgages for Muslims. Meanwhile, Ahli Islamic has introduced Oman's first Shariah-compliant money market fund. 

In neighbouring UAE, Emirates Islamic has introduced fractional sukuk for investors. 

 

Company News


Pakistan

JazzCash launches Islamic Savings product 

JazzCash has introduced its Islamic Savings product, featuring the highest daily halal profit rates, aiming to enhance financial inclusion in Pakistan.

 

The offering includes free accidental insurance upon enrollment, providing added security for customers.

 

The initiative addresses key obstacles to digital financial service adoption in the country and offers a user-friendly platform through the JazzCash app for managing savings conveniently. (Business Recorder)

 

Oman

Ahli Islamic introduces first Shariah-compliant money market fund
Ahli Islamic, a subsidiary of ahlibank in Oman, has introduced the country's first Islamic money market fund, offering customers Shariah-compliant investment opportunities with attractive local and regional profit rates.

 

The fund aligns with Islamic principles of ethical finance and responsible growth, providing investors with accessible entry points starting from just 500 Omani riyals. (Zawya)

 

Australia

Hejaz, LMG partner to offer Shariah-compliant finance

Hejaz, an Islamic financial services provider, has teamed up with aggregator LMG to offer Shariah-compliant financing to brokers.

 

The partnership addresses demand from LMG brokers to better serve Muslim clients by leveraging Hejaz's unique position as the sole provider of broker-friendly Islamic finance products in Australia. (MPA)

 

UAE

Emirates Islamic introduces fractional sukuk for investors

Emirates Islamic has introduced fractional sukuk, an innovative product aimed at investors seeking access to international sukuk markets.

 

With a minimum investment of $25,000, this offering addresses the challenge faced by retail investors who typically require a minimum of $200,000 to enter the Sukuk market. (Zawya)

 

Saudi Arabia / Malaysia

Securities Commission Malaysia partners with Islamic Development Bank to advance Islamic capital market

The Securities Commission Malaysia inked a memorandum of understanding with the Islamic Development Bank (IsDB) Group, marking a significant step towards enhanced collaboration in the Islamic capital market.

 

The agreement focuses on expanding Islamic fintech and social finance, particularly in waqf. (The Edge Malaysia)

 

Investment


Singapore

Olam Agri secures inaugural $625m Shariah-compliant financing facility

Olam Agri, a subsidiary of Olam Group, has obtained a Shariah-compliant financing facility worth $625 million on April 4.

 

The Murabaha facility, the first of its kind for Olam, attracted investments from various global entities, including the UAE, Malaysia, Singapore, and Hong Kong. (The Edge)

 

Trade Developments


Canada

Canadian government unveils ‘halal mortgages’ for Muslims

The Canadian government plans to introduce halal mortgages for Muslims, providing alternative financing options and promoting homeownership within the community.

 

The initiative aims to enhance diversity in the housing market while meeting the specific needs of Canadian Muslims.

 

Additionally, the government intends to implement a two-year ban on foreigners purchasing land in the country, as outlined in the federal budget for 2024. (English Aaj)

 

Saudi Arabia

ICIEC, Federation of Contractors from Islamic Countries promote Islamic insurance solutions

The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a member of the Islamic Development Bank (IsDB) Group, signed a MoU with the Federation of Contractors from Islamic Countries during the IsDB Group Annual Meeting 2024 in Riyadh.  (Zawya)

Islamic Finance
Türkiye secures $6.3bn financing from Islamic Development Bank 

Türkiye has secured $6.3 billion in financing from the Islamic Development Bank (IsDB) Group for development projects.

The financing is part of a three-year country engagement framework launched on the sidelines of the bank’s annual meeting and 50th anniversary event in Riyadh. 

International institutions trust Türkiye's economic program, the country’s treasury and foreign minister Mehmet Simsek said in a post on social media platform X (formerly Twitter). 

Türkiye received about $12.9 billion of financing from the bank so far, Turkiye’s state run Anadolu Agency quoted him as saying. 

"The Islamic Development Bank has been a great partner, it has helped the Turkish economy become more resilient," he added. 

The new framework aims to support the government in “achieving its development targets by addressing some of the critical bottlenecks under current and emerging economic financial challenges”, the lender said in a statement. 

The $6.3 billion funding consists of IsDB’s public-sector and public-private partnership funding of $2 billion, $900 million from the International Islamic Trade Finance Corporation, $300 million from the Islamic Corporation for the Development of the Private Sector and $3.1 billion from the Islamic Corporation for the Insurance of Investment and Export Credit.

On Saturday, the bank approved $128.6 million for a highway project in Türkiye.

Türkiye is a founding member of the IsDB, which hosts a regional hub with two offices in Ankara and Istanbul. 

In the past five decades, the bank has provided the country with nearly $13 billion in financing for more than 545 development projects across several sectors.
 

Halal Industry
UAE commits $50m to development initiative 

The UAE has committed $50 million to the second phase of the Lives and Livelihoods Fund 2.0 (LLF 2.0), a multi-donor development initiative supporting sustainable socio-economic development in Islamic Development Bank’s (IsDB) 57 member countries.

The funding will be used by LLF 2.0 to support critical projects in health and infectious diseases, agriculture, and social infrastructure in low and lower-middle income IsDB member countries. 

The funding also aims to support 32 member countries in achieving 10 of the 17 sustainable development goals.

The new financing will be administered by the Abu Dhabi Fund for Development, in addition to $50 million the UAE has contributed to the LLF since its launch in 2016.

“Through LLF 2.0, we will focus on climate-smart agriculture, primary care, underfunded social services, and infrastructure investment,” Mohamed Saif Al Suwaidi, director general for Abu Dhabi Fund for Development said. 

“LLF 2.0 will also optimize its anti-poverty focus, setting grant portions to enhance stability and transparency.”

The Fund in its first phase invested over $1.4 billion across 22 IsDB member countries, enabling more than three million smallholder farmers to improve their livelihoods, and providing 12.5 million women and children access to quality healthcare.

It is also expected to provide over 7.5 million people with better water and sanitation facilities.

LLF is a joint initiative of the Islamic Development Bank, the Abu Dhabi Fund for Development, the Bill & Melinda Gates Foundation, the Islamic Solidarity Fund for Development, the King Salman Relief Humanitarian Aid and Relief Centre, and the Qatar Fund for Development.
 

Islamic Finance
Challenges impede Islamic finance growth in Central Asia

Central Asian countries harbour several opportunities for a burgeoning Islamic finance landscape, that could increase investment as well as diversify sources of financing. 

These opportunities include evolving favourable legislation and a tech savvy, predominately Muslim population base across the region. 
"Islamic finance will also enable financing on a Sharia compliant basis," says Najib Al Aswad, director at advisory firm Islamic Finance Advisory & Assurance Services (IFAAS).

“Islamic finance will also benefit CIS (Commonwealth of Independent States) economies in terms of facilitating international trade. A lot of CIS countries trade with Muslim-majority nations, in addition to Russia and China.”

Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan make up the Central Asia (CA) region, home to roughly 80 million people, 85% of whom identify themselves as Muslims.

The four Central Asian states, barring Turkmenistan, also make up the broader CIS association. 

Islamic finance can also help attract more foreign direct investment [into Central Asian nations] from Islamic countries like Malaysia, Turkey and the GCC states, particularly in the financial sector, adds Aswad. 

FDI can be in the form of paid-up capital and/or lines of finance for Islamic financial institutions.

Several supranational organisations have played an active role in boosting the region’s Islamic finance sector. The Islamic Corporation for the Development of the Private Sector (ICD), for example, has provided technical assistance and support to local stakeholders.

The Islamic Development Bank (IsDB) has also been a key player in the progression of the region’s Islamic finance sector ecosystem.

Adding to this, the Eurasian Development Bank, a development institution, pledged to become a platform for Islamic finance in Central Asia.

Last October, it revealed plans to sell $500 million worth of sukuk in international markets. 

However, despite key factors coalescing to promote the region's Islamic finance industry, it continues to face long-standing challenges, according to a recent S&P Global Ratings report.

These include low levels of financial intermediation, low financial literacy and long-standing secular legacy shared in all CIS countries. Specific in-country challenges exist, too.

“Even in countries where banking regulation is developed, accounting rules for corporate customers are not necessarily well-established which complicates access to customers,” says Roman Rybalkin, associate director at S&P Global Ratings.

Kazakhstan
Kazakhstan introduced its Islamic finance framework in 2009, which seeks to cover banking products, Takaful and capital market instruments. 

Al Hilal, a UAE-based Islamic bank and a subsidiary of Abu Dhabi Commercial Bank, is one of the two Islamic banks that currently operate in the country. The other is Zaman Bank, whose key shareholders is the ICD.

In February, Qatar-based Lesha Bank entered into a preliminary agreement with state-owned management holding Baiterek, on the potential acquisition of one of its subsidiaries Bereke Bank.

To jumpstart the domestic sukuk market, ICD issued its first-ever Tenge-denominated sukuk in June 2023. The 2 billion Kazakhstani tenge five-year amortized sukuk, is rated A+ by Fitch.

However, there is limited demand for Islamic products, due to less awareness and confidence in Shariah-compliance of products, despite housing a sizeable Muslim population, according to Fitch Ratings. 

“The government has, in the past, supported the industry through regulatory changes to diversify its financial sector, and aimed for Kazakhstan to become the Islamic finance hub of Central Asia. However, the industry hasn’t kept up pace, with more push and regulatory changes still needed,” the rating agency noted. 

However, government initiatives aim to continually push Islamic finance into the mainstream. For example, the establishment of the Astana International Financial Centre (AIFC) in 2018 has accelerated the sector. AIFC seeks to be a regional financial zone offering a different legal framework to mainland Kazakhstan. 

“The AIFC has had mixed success, as it takes time to develop an international financial centre, particularly in a unique region and context like the CIS - it is difficult to mirror the Dubai Financial International Centre as the dynamics are different,” explains Aswad.

A broader challenge faces Kazakhstan’s Islamic finance industry, though, he adds. "Although Islamic windows are permitted within the AIFC, they not allowed in mainland Kazakhstan." 

Despite the challenges, the country, by virtue of its Islamic finance master plan (2020-2025) and through the AIFC, intends to increase the sector’s market share in total banking assets to 3%-5% by 2025.

Tajikistan
Tajikistan passed its Islamic banking framework in 2014, followed by an Islamic banking supervision department established by the country's central bank three years later.

Under the country’s National Financial Inclusion Strategy for 2022-2026, Islamic finance has been highlighted as a priority area, ranging from product development, financial education and research.

Tawhid Bank, a fully-fledged Islamic bank, is one of the two Islamic finance players operating in the country. In February 2022, the lender signed an agreement with UAE-based Al Huda CIBE to launch a Takaful operator. 

The other Islamic player is Alif Bank, a Tajikistan-based fintech company, that serves 1.3 million customers locally and an additional one million in Uzbekistan. It presently operates under a conventional banking licence and is in the process of converting into a Sharia-compliant firm.

Outside of the country, Alif maintains a presence in Uzbekistan and recently launched in the UAE. 

Kyrgyzstan
Islamic finance remains modest in Kyrgyzstan, accounting for around 1.5% of the country’s banking sector. 

Despite an established framework available since 2006, its domestic industry is beset by challenges, including lack of Islamic finance specialists, low public awareness and a tightly regulated market.

At present there is one full-fledged Islamic bank and four Islamic windows. There are five Islamic microfinance institutions offering Sharia-compliant services, too.

Although the banking sector remains nascent, Kyrgyzstan’s Islamic capital sector offers more promise. 

In April 2023, Intercascade Group, a Hong-Kong based trading firm with a special focus on Central Asia, issued the first ever Som-denominated sukuk. Intercascade privately sold a $8.39 million-equivalent mudaraba sukuk to investors. 

Uzbekistan
Despite housing the region’s largest population of around 36 million, Uzbekistan has no dedicated Islamic finance framework, no fully-fledged Islamic banks nor windows. 

Financial inclusion remains a challenge, too. Around 56% of the adult population did not have a bank account in 2021, according to a World Bank report. Only 39% of women held a bank account then.

Account ownership, by economy, 2021
Economy Adults with an account (%)
Tajikistan 39
Uzbekistan 44
Kazakhstan 81
Source: World Bank Group

“Uzbekistan’s high-level regulation allows Islamic finance for non-bank financial institutions in principle,” says S&P’s Rybalkin. “But there are no low-level documents on permissible/standard operations, creating a gray zone of sorts.”

To address this, Uzbekistan’s central bank has been working to reform the banking legislation, notes IFAAS’ Aswad.

“However, this [reform] requires the involvement of other government bodies and institutions including the Ministry of Justice,” adds Aswad. 

“The country is working on enabling the introduction of Islamic windows at existing conventional banks and microfinance institutions, as well as full-fledged Islamic banks.”

The timing is rather promising as the adoption of Islamic finance comes as Uzbekistan is seeking to attract FDI as part of its reform agenda which began in 2017.

Odilbek Isakov, CEO and co-founder at Infrasia Capital, a London-based finance advisory, says that since 2017, Uzbekistan has developed its advanced funding programs in international capital markets.

This includes a record of local currency Eurobonds, sustainable development goals (SDG)-linked and Green bonds, in addition to conventional benchmark issuances.

“Sukuk and other Islamic instruments seem like the natural next step that can open a new source of funding,” says Isakov. 

“Sukuk allows international Islamic investors and funds to invest in the Uzbek economic success. The government is working on introducing a new capital market legislation and we are hopeful that sukuk will be issued.”

Isakov, who served as Uzbekistan's deputy finance minister from 2019 to 2023, adds that despite the lack of Islamic finance regulations, market education has begun.

“[The] private sector has already started educating customers, practitioners and other stakeholders about Islamic products,” he says.

“Some companies such as Iman Invest are already using fintech which is a new tool that can provide services for retail and some corporate customers.”

Turkmenistan
Turkmenistan is fairly underdeveloped in Islamic finance. There is no legislation and no Islamic banks offering Sharia-compliant financial services. 

In 2022, International Islamic Trade Finance Corporation - an IsDB subsidiary - and the State Bank for Foreign Economic Affairs of Turkmenistan held a Islamic finance trade workshop for local financial institutions and public enterprises in the country. 

However, government backing is imperative to bolster Islamic finance initiatives and projects in the country. 

 

Note: Story updated on April 24, 2024. 

Islamic Finance
Cyberthreats heighten in Middle East during Ramadan 

Businesses and companies across the Middle East are urged to step up cybersecurity measures to safeguard consumers and brands during Ramadan. 

Ramadan, the ninth month of the Muslim calendar, is a period of fasting, reflection, and discipline. But it is also a time for increased spending on gift tokens and food, resulting in a surge in retail and online transactions. 

The spike in e-commerce activity offers a perfect backdrop for cybercriminals to defraud individuals and conduct online scams. 

Los Angeles-headquartered cybersecurity firm Resecurity has estimated that the total financial impact of fraudulent activities and scams ranges between $70 million to $100 million across the Middle East. This accounts for frauds committed against expatriates, residents and foreign visitors. 

Resecurity identified gifts/charity/donations fraud as the most emerging type of fraudulent activity across the Middle East during Ramadan, followed by job scams.  Other malicious types include financial fraud, phishing/smishing, investment fraud and cryptocurrency scams. 

The cybersecurity firm also highlighted a rising trend where cybercriminals impersonate shipping companies such as Aramex, SMSA Express and Zajil Express, targeting people through SMS, iMessage or WhatsApp.

The deceptive messages claims that a parcel delivery is pending, urging individuals to pay for a ‘delivery’. 

“Cybercriminals are aggressively exploiting platforms and well-known logistics services to deceive internet users and draw them into different scams. It is strongly advised to refrain from sharing personal and payment information on questionable sites or with individuals posing as bank or government employees,” Resecurity said in its report. 

Countries across the Middle East have upped their cybersecurity game in recent years. The UAE launched its National Campaign for Cybersecurity in the run-up to the holy month to enhance public awareness of cyberthreats and various ways of protection against them.

Last December, Saudi Arabia’s National Cybersecurity Authority updated its cybersecurity toolkit to bolster cyber preparedness in the kingdom. 

Islamic Finance
Islamic finance wrap: CIMB Islamic, Petronas partner for Islamic commodity derivatives

Here's a roundup of key developments across the Islamic finance ecosystem during the first three weeks of March

Editor's note: Islamic finance is stepping up the pace in Malaysia as two giants signed an agreement for Shariah-compliant commodity derivatives. A new Islamic banking solution tailored for particularly SMEs across the halal space was also launched. 

Meanwhile, UAE entities Bee'ah Group and Emirates Islamic partnered, too, to foster sustainable initiatives. 

 

Company News


Malaysia

An ECF site has launched a halal venture capital firm & accelerator

Ethis advances its mission of supporting halal enterprises by introducing HASAN, a venture capital accelerator initiative.

 

Umar Munshi, Ethis Group co-founder and HASAN managing partner, along with Mohamad Akhtaar bin Abdul Ghani, HASAN's head of accelerator and Investor Relations, elucidated on this development.  (Vulcan Post)

 

Oman

Alizz Islamic bank partners with Al Jabr MENA to nurture SMEs
Oman's Alizz Islamic Bank embarks on a year-long strategic partnership with Al Jabr MENA to foster SME growth through knowledge enrichment.

 

The formal signing of a memorandum of agreement  took place at Alizz Islamic Bank's Head Office in Wilayat Bawshar. (Zawya)

 

Malaysia

CIMB Islamic and Petronas sign agreement for Islamic commodity derivatives

CIMB Islamic Bank Bhd and Petronas have signed the tahawwut master agreement (TMA) for Shariah-compliant commodity derivatives.

 

This agreement marks Petronas' entry into Shariah-compliant derivatives, positioning it as the first Malaysian corporation to utilize CIMB Islamic's instruments for Islamic energy commodity derivative trades. (The Star)

 

United Kingdom

Halal car finance platform, Ayan Capital, launches in the UK

Ayan Capital, an Islamic car finance platform, has launched in the UK. 

 

It offers Shariah-compliant financing for vehicle purchases, catering to businesses and drivers. 

 

Approved drivers can obtain financing of up to £50,000 within days from any UK dealership, addressing the growing demand in the market. (Zawya)

 

Malaysia

Hong Leong Islamic launches BizHalal to support SMEs

Hong Leong Islamic Bank Bhd (HLISB) responds to Malaysia's halal ecosystem push with BizHalal, an Islamic banking solution tailored for businesses, particularly SMEs in the halal industry.

 

This initiative aligns with national goals to bolster the halal sector and foster economic growth.

 

Through BizHalal, the lender offers Shariah-compliant financing and halal advisory support, supported by an in-house team of halal industry experts. (The Malaysian Reserve)

 

Malaysia

Google Cloud, Mambu, Backbase to power Bank Muamalat’s Islamic banking overhaul

Bank Muamalat Malaysia partners with Google Cloud to transform its digital Islamic banking services.

 

Leveraging Google Cloud's technology, including infrastructure, data analytics and artificial intelligence, the bank aims to offer more personalized and accessible services.

 

This collaboration involves transitioning digital applications and databases to Google Cloud, integrating with Mambu's digital banking platform and Backbase's engagement banking platform. (Fintech News)

 

 

Event


Republic of Somaliland

African Islamic Finance Summit successfully concluded in Somaliland

The 11th African Islamic Finance Summit, organized by AlHuda Centre of Islamic Banking and Economics (CIBE) in collaboration with the Central Bank of Somaliland and the National Insurance Authority (NIA), took place on March 5, in Hargeisa, Somaliland.

 

The event garnered participation from industry leaders, scholars, and practitioners from Africa and beyond. (Zawya)

 

 

ESG Developments


UAE

BEEAH and Emirates Islamic sign landmark ESG Agreement

BEEAH Group and Emirates Islamic have forged a pioneering partnership in the UAE, focusing on sustainable initiatives.

 

This collaboration introduces an environmental, social, and governance (ESG) linked financing facility, emphasizing both entities' dedication to advancing environmental objectives.

 

The partnership aims to drive sustainable solutions across various sectors, including clean energy and waste management. (Emirates Islamic)

 

 

Operational Developments


Ethiopia

Islamic Development Bank Institute delivers Islamic banking capacity building program for Ethiopia

The Islamic Development Bank Institute (IsDBI) conducted a capacity-building program for Ethiopia's banking sector. 

 

Attended by over 35 senior officials from Ethiopian commercial banks, the program focused on competitive product development and strategic business growth. (Zawya)


Events & Courses

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