Today's Edition
BATOOL GHAITH (ABU DHABI)
The UAE is well placed to drive the next phase of Islamic finance by connecting capital with high-growth markets across South Asia and Africa, as the industry increasingly focuses on improving cross-border investment flows rather than generating new liquidity, according to Standard Chartered.
Standard Chartered’s latest report on Islamic finance says that the industry’s greatest opportunity lies in connecting liquidity-rich markets with high-growth economies through stronger financial, trade and digital connectivity.
According to the report, global Islamic finance assets are approaching $6 trillion, while only 6% of global sukuk capital currently reaches South Asia and Africa, despite both regions having significant financing needs.
Rather than a shortage of capital, the challenge is connecting Islamic liquidity with investment opportunities more efficiently across borders, the Standard Chartered report said.
According to the report, the UAE is well positioned to help bridge that gap, as the country has established itself as a regional hub connecting capital, trade and investment across the GCC, Europe, Asia and Africa.
The UAE’s mature financial ecosystem, internationally recognised regulatory framework, and strong links with regional and global markets make it an effective platform for mobilising cross-border Islamic finance.
Khurram Hilal, CEO of Group Islamic Banking at Standard Chartered, said that Islamic finance is becoming a critical enabler of cross-border connectivity, noting that the UAE is uniquely positioned to connect pools of Islamic capital with the financing needs of high-growth markets across South Asia and Africa.
“The report highlights that demand for Shariah-compliant financing continues to grow across emerging markets, particularly in infrastructure, energy transition, trade finance, and private capital.
At the same time, institutional investors are seeking diversified, long-term investment opportunities aligned with their values,” Hilal told Aletihad.
He added that the UAE brings both sides together by providing an efficient environment for structuring, distributing and managing Islamic financial solutions.
“As one of the world’s leading centres for sukuk issuance and Islamic capital markets, the country is well placed to facilitate greater investment flows into high-growth economies,” he added.
This is especially relevant given the deep trade and investment corridors the UAE has established with South Asia and Africa, Hilal noted.
The report points to significant untapped potential in South Asia and Africa, where financing demand continues to outpace access to Islamic capital, arguing that expanding cross-border issuance, strengthening distribution channels, and improving market connectivity could help direct more investment towards these underrepresented markets.
Additionally, digital capability is expected to play an equally important role. Hilal said that digital innovation and regulatory leadership will be fundamental as Islamic finance becomes increasingly cross-border.
“The UAE has invested significantly in developing a progressive regulatory environment while fostering innovation across digital payments, digital identity, fintech, and capital markets. This creates an ecosystem that enables Islamic financial institutions to scale solutions across jurisdictions more efficiently and with greater confidence,” he explained.
Hilal added that the future competitiveness of Islamic finance will depend not only on product innovation, but also on ecosystem innovation.
The report identifies technologies such as tokenisation, digital assets, and digital payment infrastructure as important tools for improving cross-border capital mobilisation and expanding investor access.
