Islamic start-up funding for small businesses is set to boom in Britain as the UK cements its position as the top Western centre for Sharia-compliant finance.
The UK has five fully Sharia-compliant banks licensed with banking assets for around $4.7 billion, some of which offer start-up finance for SMEs.Intriguingly, business owners do not have to be Muslim to access Islamic finance, which, unlike regular debt, does not charge interest. However, because Islamic finance is concerned with the good of the community, it may be best suited for socially conscious or ecologically driven businesses.
Total Sharia-compliant banking assets in the UK — including Islamic finance offered by conventional high street banks — were around £4.1 billion in the first half of 2018, according to a report published today by TheCityUK and law firm Trowers & Hamlins.
According to Global trends in Islamic finance and the UK market 2019, there is a growing need for Islamic finance in Britain. “Islamic banking has considerable growth potential,” says the report.Global Islamic banking assets totalled around $1.7 trillion at the end of 2017, an increase of 2.7% year on year. Thomson Reuters expects the average growth rate of Islamic business assets will be around 7% during 2018-2023, up from an average of 6.1% between 2012 and 2017.Assets of UK-based institutions offering wider Islamic finance services total around £6 billion in 2017.Considerable potential exists for Islamic finance to expand.
The global Muslim population of around 1.8 billion accounts for around 25% of the world’s population, but Sharia-compliant banking assets make up only 6% of the world’s banking assets.The global market for Islamic finance rose by 6.5% between 2016 and 2017 to £2.4 trillion.—Agencies/Reuters