Dr Bandar M H Hajjar, the President of the Islamic Development Bank (IsDB) Group has written for CityAM and has said that London can lead the way in the Islamic Financial Revolution.
This Monday, many of the world’s leading investors and experts will meet in the heart of the City of London.
They are gathering to discuss one of the oldest but – conversely – also one of the most under-developed elements of the global financial market: Islamic finance.
Delegates to the summit will focus in particular on the Sukuk: a bond structured to generate returns to investors without infringing Sharia Law, which prohibits taking or charging interest.
The Sukuk market represents a key component of the Islamic financial system, which has grown at a double-digit rate for the last decade and reached $3.5 trillion (£2.4 trillion) last year. Yet despite this growth, the sector has traditionally been seen as little more than a niche activity within western economies.
Now we have a real opportunity to realise the potential of Islamic finance and build a truly global marketplace – starting right here in the UK.
There are three key reasons why I believe that this is a crucial time for Islamic Finance here in Britain.
First, as the prolonged double-digit growth suggests, Islamic finance and the Sukuk are now performing strongly on the global stage. Total Sukuk issuances grew from $85bn in 2016 to almost $100bn in 2017, showing that, although the international market is in its nascent stages, there is enormous potential for growth.
Second, Islamic finance has grown significantly within the UK in recent years. The UK now has the largest sector of any OECD country and London is increasingly regarded by banks, governments, and corporate firms (both Islamic and non-Islamic) as an important global centre for Islamic finance.
In 2014, the UK became the first non-Muslim country to issue a Sukuk, while last month the Birmingham-based Al Rayan Bank became the first bank in the world to issue a public Sukuk in a non-Muslim country. These are just some of the reasons we chose to host our Sukuk Summit here in London.
Third, it’s not just about the financial returns. The Islamic finance sector has a proven record of promoting financial, social and economic stability, as well as financial inclusion and shared prosperity.
We have seen that financial success and responsible investment need not be mutually exclusive.