Volume of Islamic Finance to Reach $3 Trillion in 2021

Rise of Global Islamic Finance Assets

Somalilandsun: The sun of 2021 has risen for the remnants of the Corona catastrophe and even in 2021 the fading shadows on economics, finance and banking still remain.

The year 2020 was not encouraging to Islamic banking and finance industry rather the situation remained static and a similar situation was seen in all the subsidiaries of Islamic finance including Takaful, Islamic Microfinance, Islamic Capital Market, Sukuk, Islamic Fund and leasing sectors. According to an estimate, the volume of Islamic finance reached at $2.9 trillion by the end of 2020, and it is fairly expected that despite the ongoing destruction of the corona in 2021, its volume will cross the $3 trillion, due to the increasing demand in Africa and Central Asia. While in 2021 it is expected that Takaful and Islamic MSMEs will continue to grow as compare to Sukuk and Islamic capital markets due to the destruction of the corona virus in 2020 and slow economic growth.
If we look at the $2.9 trillion Islamic finance industry, Islamic banking accounts for about 81%, bringing the total to about $2.3 trillion. Sukuk’s share in Islamic finance is 12% with a total volume of $348 billion. Takaful and Islamic microfinance’s share in Islamic financial industry is 1%, 2% with the volume $58 billion $2.9 billion respectively, while the remaining 4% belongs to Islamic funds etc. with the total volume of $116 billion.
Geographically, in 2020, Islamic finance took a different turn, with the Sukuk and Capital markets in the Middle East remained same, while the African and Central Asian markets saw some developments, with Takaful companies in Ethiopia, East and West African countries with an increase in Islamic banking and Islamic microfinance industry. The Islamic finance market remained stable in Malaysia, Turkey and other few countries. It is hoped that Islamic microfinance would be utilized in charitable and welfare activities during 2021 for post-covid situation.
As far as Islamic Financial Institutions are concerned, more than 2500 Islamic Financial Institutions are operating in 108 countries including Islamic Banks, Takaful Companies, Sukuk Operators, Islamic Funds, Islamic Microfinance Banks / Institutions, Leasing Companies, Islamic Financial Institutions. In terms of Islamic financial assets, Iran, Saudi Arabia, Malaysia, UAE and Qatar are in the top five countries respectively while Pakistan is not even in the top ten and Bangladesh is at number ten.
The year 2020 brought a lot of messages to the Islamic financial industry, one of which was that those who do not keep up with the technology will remain behind, and we have seen that those financial institutions have FinTech with them earned huge profits even in the difficult situation of current pandemic.

Muhammad Zubair

Unfortunately, 2020 was a bad year for Sukuk, Islamic Funds and Capital Markets, but Takaful companies continued to do better with its health products, while MSMEs and Islamic microfinance performed relatively good and one of the reasons was the better utilization of FinTech.
The writer Mr. Muhammad Zubair Mughal- CEO, AlHuda CIBE is an Islamic banking and finance expert and have 15 years of experience of the industry.

He can be contacted at: zubair.mughal@alhudacibe.com

About AlHuda CIBE:

AlHuda Center of Islamic Banking and Economics (CIBE)

AlHuda Center of Islamic Banking and Economics (CIBE) is a well-recognized name in Islamic banking and finance industry for research and provide state-of-the-art Advisory Consultancy and Education through various well-recognized modes viz. Islamic Financial Product Development, Shariah Advisory, Trainings Workshops, and Islamic Microfinance and Takaful Consultancies etc. side by side through our distinguished, generally acceptable and known Publications in Islamic Banking and Finance.
We are dedicated to serving the community as a unique institution, advisory and capacity building for the last twelve years. The prime goal has always been to remain stick to the commitments providing Services not only in UAE/Pakistan but all over the world. We have so far served in more than 35 Countries for the development of Islamic Banking and Finance industry. For further Details about AlHuda CIBE, please visit: http://www.alhudacibe.com