‘Long-term financing options will ensure sustainable growth’

Islamic banking industry must look to add long-term financing options in order to ensure sustainable growth of the industry, according to a new report. The Islamic Research and Training Institute (IRTI) of the Islamic Development Bank (IsDB) Group published the second edition of the Global Report on Islamic Finance, which highlights steps needed to help unleash the potential of Islamic finance.

Titled “The Role of Islamic Finance in Financing LongTerm Investments”, the report was launched yesterday by the Acting Director-General of IRTI, Dr. Sami Al Suwailem, during the 25th World Islamic Banking Conference. Speaking to Tribune, Dr. Al Suwailem said, “Islamic commercial banks by nature are medium to short term, that is the structure of their liabilities. So to close this gap the industry needs other institutions to cater to the long-term side.

Islamic banks are important but we need to close the long-term gap for the sustainable growth of the industry. The new institutions would have a liability structure and capital structure that would allow them to get into long-term projects.” “Currently, whenever the direction of the economy takes a hit, we lose heavily as it is all short-term. We have to have a long-term vision for our economies to grow in a sustainable manner,” Dr. Al Suwailem told Tribune.

“The report presents global perspectives on the challenges of financing the 2030 global agenda for sustainable development and highlights the prospects of Islamic finance towards addressing the funding gap. Development partners have identified that the scale of funding required to achieve sustainable development goes beyond the scope of traditional financing sources, underscoring the need to tap from alternative sources,” IRTI stated.