Global Islamic finance assets up 6.02pc to reach $2.431tr: GIFR



The 9th edition of the Global Islamic Finance Report (GIFR) 2018, the oldest yearbook in Islamic banking and finance, was launched yesterday in Astana Congress Centre, Kazakhstan by Nurlan Kussainov, CEO of Astana International Financial Centre (AIFC). The launching ceremony was held in conjunction with the Astana Islamic Economy Forum organized by AIFC.
The report, which was released for the ninth consecutive year, carries the central theme of “Global Islamic Economy System”. The GIFR 2018 benefits from extensive research and analyses conducted by Edbiz Consulting and Cambridge IFA; along with inputs, perspectives and feedback from some of the top industry leaders.
According to GIFR 2018, the estimated figure for the global Islamic financial industry in 2017 was US$2.431 trillion after recording a growth of 6.02%. However, this is the fourth consecutive year that the industry registered a single digit growth and the fifth consecutive year that the growth rate has been on a declining trend.
In last year’s report, several factors were attributed to the slow-down in growth including political conflicts in a number of Muslim countries, particularly in the Middle East, historically low-oil prices, which have affected the countries in the Gulf Corporation Council (GCC) and others where IBF is a major component of the financial markets; receding enthusiasm of Western financial institutions towards Islamic banking and finance and maturity of Islamic banking and finance in key markets like the GCC (barring Oman) is leading to natural slow down. While these factors continued to remain relevant, GIFR 2018 identified additional factors that might have contributed to this phenomenon. These included structural issues, stifled innovation and macroeconomic factors.
Speaking at the launching ceremony, Dr Sofiza Azmi, CEO of Edbiz Consulting, said “In most markets, Islamic financial institutions are fast exhausting the captive Shari’a-sensitive market they have historically relied on to remain profitable,” she explained. She added that unless Islamic banking and finance develops a distinct economic value proposition of its own, this economic-value drag will continue to slow down growth.
Dr Sofiza Azmi also shared that the industry continues to be plagued by 3 types of gaps – financial inclusion, talent and perception gap. Commenting on the perception gap, she said, “Islamic banking and finance continues to face perception gap issues due to rising scepticism amongst consumers whether the industry is actually living up to its Shari’a values.”
“Given the declining growth rate, this is certainly the right time for industry stakeholders to ponder over the real reasons for the slow down”. She added that “Fundamental questions need to be asked. Is it just a natural and temporary slowdown caused by macroeconomic conditions in the countries where Islamic banking and finance is significant or are there some fundamentals issues that have started biting the industry?”
The GIFR 2018 also reported its latest ranking of about 50 countries of the world in terms of their leadership role in Islamic banking and finance. The Islamic Finance Country Index (IFCI) is the oldest such index developed by Edbiz Consulting in 2010 and first published in the second edition of GIFR in 2011. Malaysia maintained its position as the number 1 leader in the Global Islamic finance industry. Nonetheless, countries in the Middle East dominate the list with Saudi Arabia, UAE and Kuwait retaining their position at number 3, 4 and 5; respectively.—Zawya/Reuters

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