Islamic finance is expected to grow rapidly worldwide in 2014 to reach $2tn, where the share of Islamic banking will be 78% of the whole industry, 16% for sukuk, 4% for Islamic funds, 1% for the Takaful system and 1% for Islamic microfinance, AlHuda Centre for Islamic Banking and Economics (CIBE) said in a statement.
The growth rate of the Islamic finance system in Egypt will come close to that of the traditional sector, said former chairman of Misr Iran Development bank Ismail Hassan.
Islamic finance has existed in Egypt for a long time, Hassan stressed, furthering that many banks are based on interest-free banking such as the Faisal Islamic Bank of Egypt and Albaraka bank.
During former president Mohamed Morsi’s rule, sukuk was deemed a financial tool which would help achieve large gains, according to the principles of Islamic sharia law. However, it has faced widespread criticism during Morsi’s administration for being “a political tool rather than an economic one”.
New rules will be submitted to the Egyptian government in January to facilitate the issuance of sukuk, Chairman of Egyptian Financial Supervisory Authority (EFSA) Sherif Samy told Reuters in December.
Samy added that EFSA emphasises the importance of sukuk as a financial tool in the Egyptian market in order to “diversify funding sources and help develop the country’s capital market.
“The Islamic finance industry can be grown more through a synergistic approach and alliance with industry stakeholders rather than unregulated competition,” CEO of CIBE Muhammad Zubair Mughal noted in the statement.
As a result of the Arab Spring, the Islamic finance industry has shrunk in some Middle East and North Africa countries, Mughal said, furthering that there are chances of revival in 2014.
The Pakistani centre expected that Dubai and London will be the main contenders this year to be the global hub of Islamic banking and finance; meanwhile, Malaysia’s Kuala Lumpur “will attempt to be among them”.
Mughal stated that this industry’s growth will go into the double digits in 2014 to climb from the $1.6tn volume of trade in December 2013, adding that it will embrace the business of North African countries like Tunisia, Libya, Morocco, Senegal and Mauritania. However, he anticipated that it may face some troubles in Tunisia as well as Nigeria on political and religious grounds.
India and China may step towards Islamic finance in the current year “as more than 200 million Muslims are in search of a compatible financial system with their religious beliefs”.
Mughal expected that sukuk will grow with a rapid pace in 2014, and non-Muslim countries will benefit from it; however, the Takaful system is not expected to match such growth, he said.
The statement mentioned that international institutions such as the Islamic Development Bank (IDB) have declared that the Islamic microfinance industry can be a potential tool for poverty alleviation around the globe.