Jeddah, Kingdom of Saudi Arabia – In conjunction with the G20 Summit being held in Saudi Arabia on 21-22 November 2020, the Islamic Research and Training Institute (IRTI) of the Islamic Development Bank (IsDB) Group has launched the Kingdom of Saudi Arabia Islamic Finance Country Report.
Under the theme “Islamic Finance in Saudi Arabia: Leading the Way to Vision 2030”, the report is the first comprehensive analysis of the Islamic finance sector in the Kingdom.
Saudi Arabia, the largest economy in the Middle East, plays an important role in stabilizing the global economy. The Kingdom is undergoing socio-economic reforms under the Vision 2030, closely aligned with the core G20 objectives of macroeconomic stability, sustainable development, women empowerment, enhanced human capital, and increased flow of trade and investment.
The timing of the Saudi Arabia G20 2020 Presidency offers a unique moment for the world and the Kingdom. Saudi Arabia is in the third year of implementing the Vision 2030 and can therefore share success stories as well as lessons learned, while also being in a prime position to welcome G20 Members’ experiences in these relevant areas.
The new IRTI report finds that Islamic finance has a promising future in Saudi Arabia, especially considering the country’s position in the global landscape.
According to the report, by the end of 2018, Islamic finance assets in Saudi Arabia reached a remarkable USD 879.2 billion (SAR 3,297 billion), making the Kingdom the largest Islamic finance market globally in economies with dual financial systems comprising both conventional and Islamic financial sectors.
With its vast natural and human resources, a unique position as a religious tourism center, an advanced and resilient financial system, and a visionary leadership, the Kingdom has the necessary ingredients to tap into the immense value that Islamic finance can bring to economic progress and social prosperity.
In his Foreword to the report, H.E. Dr. Bandar Hajjar, the President of the IsDB Group, stated, “Saudi Arabia is unquestionably a major hub of the Islamic financial industry not only in the Middle East, but also worldwide. With Vision 2030, and with an energetic and innovative youth population, Saudi Arabia has a great potential to lead the industry in the 21st century. Not surprisingly, Islamic finance is one of the key pillars of the Financial Sector Development Program set out by the Government of Saudi Arabia”.
According to the report, the banking sector will continue to play a vital role in the process of the implementation of the Vision 2030 to achieve sustainable development and a flourishing economy for the Kingdom.
The report further highlights the Kingdom’s actions in the area of digital transformation, evidenced by the formation of “Fintech Saudi” to act as a catalyst to develop the Fintech ecosystem alongside the vibrant regulatory sandbox set out by the Kingdom’s monetary authority.
In his comments on the release of the report, Acting Director General of IRTI, Dr. Sami Al-Suwailem, said, “the Kingdom is endowed with a unique set of advantages and has the potential to lead the Islamic finance industry at the global level. We hope that this report contributes to the progress of the industry to fulfill the Vision of 2030.”
Given the Kingdom’s immense potentials and its unique comparative advantages, Saudi Arabia could become a global leader in the Islamic financial services industry particularly by capitalizing on its distinctiveness in two areas:
- Awqāf: As a spiritual destination for Muslims worldwide, the Kingdom offers favorable incentives and can benefit from sizeable opportunities in terms of investment and spending. Awqāf can be an ideal channel for investment as awqāf require sustainable income generation.
- Small and Medium Enterprises (SMEs): Mobilizing resources for the SMEs through sukūk, equity, crowdfunding, and venture capital would give the Islamic finance industry an edge in innovation, diversity and economic impact. Since SMEs are the engine of job creation, investing in the SMEs sector is essential for sustainable economic growth.
The new report is part of a series of Islamic Finance Country Reports initiated in 2013 to provide analyses on the Islamic financial outlook of countries for the benefit of prospective investors and other stakeholders. IRTI, along with partners, has issued so far 11 such reports.
The report is available for download from IRTI website here.
© Press Release 2020