The Eurasian Development Bank wants to develop Islamic finance in Central Asia

The Eurasian Development Bank has announced its commitment to promoting Islamic finance in Central Asia. The bank's administration made this announcement at the annual meeting of the World Bank held in Morocco on October 11th.

According to the published statement, at the beginning of 2022, the share of Islamic finance in global assets will only be 1 percent. This segment is experiencing rapid growth at a rate of 5%. In the period from 2019 to 2021, the average annual growth in the volume of Islamic assets worldwide was 10.5%, compared to 5.8% for conventional income.

The statement also highlights that the majority of the population in the countries of Central Asia, which are member states of the Eurasian Development Bank (Kazakhstan, Kyrgyzstan, and Tajikistan), are Muslims. Consequently, the demand for Sharia-compliant financing is increasing.

By the end of 2021, Islamic assets in Kazakhstan constituted 0.2 percent of all bank assets, 1.5 percent in Kyrgyzstan, and 1.1 percent in Tajikistan. It's worth noting that such statistics have not been published for Uzbekistan and Turkmenistan.

The statement further explains that although the share of total bank assets in Central Asia is relatively small, several countries in the region have adopted legislation to regulate financing in accordance with Sharia, facilitating the development of segments of Islamic finance such as banking and leasing.

The organization estimates that the potential size of Islamic financial assets in Central Asia may reach $10 billion between 2030 and 2035.

The bank is actively expanding its cooperation with financial institutions in the Persian Gulf countries to support the development of Islamic finance in Central Asia, including partnerships with organizations within the Islamic Development Bank group.

In 2024, the bank plans to issue a $500 million sukuk (the Islamic equivalent of bonds) to the international market to finance projects in Central Asia, potentially setting a benchmark for the region. A list of potential projects for fund allocation has already been prepared.

The Eurasian Development Bank is a regional financial organization focused on investment activities in the region, with an authorized capital of $7 billion. The bank's portfolio primarily consists of projects with an integration effect in the fields of transport infrastructure, digital systems, green energy, agriculture, industry, and engineering.