In 2014, global Islamic finance assets climbed to $1.814 trillion, representing a 9.4 percent rise from $1.66 trillion in 2013. This increase was driven by strong growth in all sectors Islamic banking, takaful, sukuk and Islamic funds. The value of assets in the Islamic finance sector is expected to increase by 10 percent per annum over the next five years, reaching $3.24 trillion by 2020. Those are some of the data from the Islamic Finance Development Indicator (IFDI) Report 2015.
The Islamic Corporation for the Development of the Private Sector (ICD), the private sector development arm of the Islamic Development Bank (IDB) and Thompson Reuters released today the key findings of the Islamic Finance Development Indicator (IFDI) Report 2015.
“The Islamic finance industry has demonstrated tremendous growth over the last few year. We have seen the industry develop a conducive eco-system that made it possible for many countries to enter this space. Currently, there are more than 1,000 Islamic financial institutions most of which are located in the GCC and Southeast Asia and we expect this number to increase significantly in the next decade,” said Nadim Najjar, Managing Director, Middle East & North Africa, Thomson Reuters
Malaysia, the first in Islamic foreign direct investment
According to the report, Malaysia leads IFDI (Islamic foreign direct investment) again while GCC countries continue to dominate the top of the rankings for a third year in a row. Among the GCC (Gulf Cooperation Countries) markets, Bahrain maintained its second position globally, while UAE switched positions with Oman to come 3rd, with the latter dropping to 4th. Saudi Arabia, which is the world’s 2nd biggest jurisdiction in terms of Islamic finance assets, jumped to 6th from 9th overall, largely due to improvement in its CSR activities.
Pakistan, Jordan, Hong Kong, India, Botswana and Ivory Coast are some of the countries that have demonstrated positive movements in the IFDI 2015 ranking.
Governance indicator highlights more transparent and secure financial markets
Bahrain and Malaysia maintained their respective 1st and 2nd positions on the overall Governance indicator.
Bahrain, Malaysia, Pakistan, Nigeria, and Indonesia are the jurisdictions with the most complete set of Islamic finance regulations. These are the jurisdictions providing best practice models for Islamic finance governance, and which are considered as models by new markets such as France, Germany, Ghana, and Russia
But there remains a huge gap between the two leaders and the rest of the countries.
On Corporate Governance, Oman, Maldives and Kuwait are the strongest, with South Africa and Malaysia not far behind by the number of corporate governance items disclosed and the composition of Board, and Risk Management and Audit committees.
The Overall Governance Indicator.considers three factors: Regulations, Corporate Governance, and Shariah Governance.
Saudi Arabia, the leader in the Corporate Social Responsibility indicator
With highest amount of zakat (annual Islamic charitable donation) disbursed, Saudi Arabia tops the Islamic Corporate Social Responsibility (CSR) ranking.
Total CSR funds disbursed in 2014 amounts to US$ 526 million, which we know it is significantly lower than the actual funds disbursed.
There is a serious lack of disclosure of CSR activities and funds disbursed. Only 25 out of 108 countries that make up the IFDI universe contributed to the CSR indicator. Of the 25 countries that had any CSR Disclosure, not all institutions disclosed the amount of zakat, charity or qard al hasan (interest-free loan) funds. As per available data,
Palestine was the only jurisdiction whose financial institutions all disclosed CSR activities and funds disbursed. Saudi Arabia disbursed the most CSR funds (driven by mandatory zakat payments), resulting in its leadership on the CSR Funds sub-indicator. There is a very big gap between Saudi Arabia and 2nd placed Jordan. All other GCC states are in the top ten,. Qatar (14th place), is the exception among GCC countries in this point.
Third consecutive edition
The report was launched at the World Islamic Banking conference (WIBC) held in Bahrain under the patronage of His Royal Highness Prince Khalifa bin Salman bin Hamad Al Khalifa, Prime Minister of the Kingdom of Bahrain.
The Islamic Finance Development Indicator, which was released for the third consecutive year, examines the key statistics and trends across five indicators that are deemed to be significant for measuring the development of the US$1.8 trillion Islamic finance industry. These include Quantitative Development, Knowledge, Governance, Corporate Social Responsibility and Awareness. These indicators are tracked across 108 countries, which had contributions in all or some of these indicators.
Image over the headline.- © ICD.
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