JEDDAH: Global Islamic finance assets are projected to reach $10.5 trillion by 2030, up 61.5 percent from $6.5 trillion in 2025, as the industry expands across established and emerging markets.
The 2026 Islamic Finance Development Report, issued by the Islamic Corporation for the Development of the Private Sector, or ICD, and the London Stock Exchange Group, forecasts average annual growth of 9 percent through 2030.
Malaysia ranked first in the Islamic Finance Development Indicator with a score of 136, followed by Saudi Arabia on 113, and the UAE on 95. Indonesia and Pakistan completed the top five.
African sovereign issuance reached $4.5 billion in 2025, up from $1.7 billion in 2021. Benin’s debut $500 million sukuk attracted orders exceeding $7 billion.
The report stated: “Growth is expected to be supported by continued expansion in Islamic banking, increasing sukuk issuance and stronger adoption of Islamic finance in emerging markets.”
It added that the global IFDI score reached 12 in 2026, driven by the performance of 140 countries across the five main indicators.
The improvement from a 2025 score of 11 reflects “stronger performances across the industry, with 71 percent of countries covered by the IFDI recording higher scores,” the report said.
Saudi Arabia leads as sukuk issuance rises
Global sukuk issuance rose 14.5 percent to a record $291.4 billion in 2025, with Saudi Arabia becoming the world’s largest market by outstanding value. Saudi Arabia and Malaysia together accounted for around two-thirds of global outstanding sukuk.
Khaled Ramadan, an economist and head of the International Center for Strategic Studies in Cairo, told Arab News that the Kingdom’s position could support economic diversification.
“Saudi Arabia’s emergence as the world’s largest sukuk market, alongside the expansion of Islamic finance into emerging markets such as Central Asia, offers significant opportunities to support economic diversification,” he said.
Sukuk can finance long-term infrastructure projects in renewable energy, transport, tourism and industry, helping reduce dependence on oil revenues, the economist added.
Ramadan also cited government support, rising demand and digitalization as drivers of further growth.
Islamic banking expands amid regional risks
Global Islamic banking assets grew 8 percent in 2025, with the sector operating in 84 countries. Ghana is developing a framework for non-interest banking, while Uzbekistan introduced legislation supporting Islamic banking.
Bangladesh’s Islamic banking asset growth slowed to 3 percent amid a crisis of confidence linked to alleged financial misconduct, governance failures and liquidity pressures. Authorities merged five banks into Sammilito Islami Bank to address balance-sheet stress.
GCC banks remained resilient amid regional conflict, supported by strong capitalization, asset quality and sovereign backing.
In Malaysia and Indonesia, the impact is expected to be “manageable due to the largely domestic focus of their banking sectors.” Bangladesh and Pakistan face additional risks from higher inflation, energy costs and foreign-exchange pressures.
Islamic non-bank finance grows
Other Islamic financial institutions recorded the fastest percentage growth among Islamic finance segments in 2025.
The sector includes more than 1,200 financing companies, microfinance firms and Islamic fintech businesses, most based in Saudi Arabia, followed by Indonesia, Pakistan, and the UAE. Saudi Arabia was the sector’s second-largest market by assets.
Central Asia reforms open new markets
Kazakhstan remains Central Asia’s largest Islamic finance market. As of January, two Islamic banks held combined assets of about $660 million.
The country recorded its first retail sukuk listing on the Astana International Exchange in 2025.
The report said reforms allowing conventional banks to establish Islamic windows would expand access to Shariah-compliant products for retail and small and medium-sized enterprise clients.
“Islamic financing structures such as musharaka (partnership financing), mudaraba (profit-sharing financing) and murabaha (cost-plus financing) could also improve access to finance for small and medium-sized enterprises, particularly those facing difficulties meeting conventional collateral requirements,” said Ramadan.
Tajikistan has one Islamic bank, four Islamic windows and 38 branches and banking service centers.
“Islamic banking assets account for 1.1 percent of the country’s total banking sector,” the report said, adding that the National Bank of Tajikistan is prioritizing regulatory reform and capacity-building.
Uzbekistan’s 2026 legislation allows Islamic windows at conventional banks and fully fledged Islamic banks.
Islamic financial products rose eightfold year on year to 11.2 billion soms ($950,000) in the first quarter, while a planned sovereign sukuk program could raise up to $10 billion.
Stronger links with major Islamic finance centers in the Middle East and Southeast Asia “can help attract investment, expand capital market activity, and support the financing of large regional development projects,” the report said, citing Ruslan Dalenov, deputy chairman of the management board of Eurasian Development Bank.
Takaful assets rise 9% to $146 billion
Global takaful assets grew 9 percent to $146 billion in 2025, with 401 operators and windows across 54 countries.
The GCC accounted for 21 percent of global assets. Uganda launched its first takaful provider in March 2026, while Somalia approved seven operators after introducing a formal framework in 2025.
Islamic funds and sustainable finance expand
Islamic fund assets rose 22 percent to $375 billion in 2025, partly driven by US equity performance. Kenya approved the Ziidi Shariah Money Market Fund, while Nigeria’s Afrinvest Asset Management launched a 2.5-billion-naira fund, worth about $1.7 million.
In the UK, Shariah-compliant pension strategies target an estimated £12.8 billion ($17.2 billion) retirement-savings gap among Muslims, while at least 60 countries had Islamic finance regulations in 2025.
ESG sukuk issuance climbed 54 percent to a record $23.8 billion, while ESG Islamic funds reached $10.7 billion.
UAE lenders Emirates Islamic and Dubai Islamic Bank issued sustainability-linked sukuk worth $500 million and $1 billion, respectively.
In Malaysia, 30 climate-related projects requiring more than 4 billion ringgit ($950 million) in funding had been onboarded by January 2026.
Ramadan warned that differences in regulatory and Shariah standards, limited secondary-market liquidity, and shortages of specialized professionals as well as high issuance costs could constrain expansion.