EDB to Launch $500 Million Sukuk Issuance Plan for Central Asian Islamic Finance Boost
EDB Plans to Issue $500 Million Sukuk to Fund Projects in Central Asia
The Eurasian Development Bank (EDB) has announced its plan to issue $500 million worth of sukuk in international markets. The multilateral institution unveiled this plan during the International Monetary Fund and World Bank Annual Meetings in Morocco on October 11.
Sukuk is a sharia-compliant bond-like instrument used in Islamic finance. The purpose of issuing these sukuk is to fund projects in the Central Asian region and potentially set a benchmark for other Central Asian countries.
The EDB has identified a list of potential projects to be financed through this issuance. Their calculations indicate that the size of Islamic financial assets in Central Asia could reach $10 billion by 2030-35.
To support the development of Islamic finance in Central Asia, the EDB has established its Islamic division and is expanding collaboration with financial institutions within the Gulf Cooperation Council. The bank aims to foster the growth of Islamic finance in Central Asia through affiliations with organizations within the Islamic Development Bank Group.
The global share of Islamic finance in total assets stood at 1% in 2022 and is experiencing rapid growth, according to the bank’s statement. Between 2015 and 2021, the annual average growth rate of Islamic assets worldwide was an impressive 10.5%, surpassing the 5.8% growth rate observed in traditional finance assets.
Kazakhstan, the Kyrgyz Republic, and Tajikistan, which are member countries of the EDB in Central Asia, have a predominantly Muslim population. There is a growing demand for Sharia-compliant financing in these countries. As of the end of 2021, Islamic assets accounted for 0.2% of all banking assets in Kazakhstan, 1.5% in the Kyrgyz Republic, and 1.1% in Tajikistan.
Kazakhstan stands out as the regional leader in the development of Islamic finance, due to its economy’s size and consistent approach to establishing the Islamic finance sector. On the other hand, the Islamic financial sector in the Kyrgyz Republic and Tajikistan is evolving within the context of smaller economies and receives less support from the scale effect. However, Kyrgyzstan has the highest share of Islamic finance in its asset structure at 1.5%, with a substantial network of financial agents operating based on Sharia principles.
The EDB, an international financial institution, has been investing in Eurasia for over 17 years to enhance economic ties and foster development in its member countries. With a charter capital of $7 billion, the EDB’s portfolio focuses on various sectors, including transport, digital systems, green energy, agriculture, manufacturing, and mechanical engineering projects that align with the United Nations Sustainable Development Goals.
The issuance of $500 million sukuk by the EDB demonstrates its commitment to promoting the development of Islamic finance in Central Asia and supporting the region’s economic growth through infrastructure projects and other initiatives. The EDB’s efforts are expected to contribute to the expansion of Islamic financial assets in Central Asia and strengthen economic ties within the region.
