Islamic finance makes headway in Arab Spring countries (By IFN)

GLOBAL: A year on from the Arab Spring, prospects for Islamic finance to play a role in the rebuilding of affected countries has gathered pace; even as the countries continue to grapple with the impact of the uprisings.

The industry’s progress in the MENA countries has been especially marked in the first two months of this year. Markets such as Libya have announced the establishment of a Shariah compliant fund; the Libyan Foreign Bank said that it will offer Islamic banking services in tandem with the completion of the country’s Islamic finance regulations next month; Tunisia is looking to team up with the IDB to strengthen its banking sector, especially in Islamic banking; and the Yemeni government has announced plans for a sovereign Sukuk sale.
Furthermore, while Egypt has seen speed bumps in its effort to launch Islamic bonds due to uncertainty over the country’s financial system, optimism remains that the Islamic financial industry has a major role to play in the recovery of the Arab Spring countries as a whole.

In Syria, Islamic banks have grabbed the spotlight as the banking industry braces for a tough year ahead amid continuing political bedlam. Privately-owned Islamic bank Chambank’s net profits soared by 533% in 2011; while Qatar International Islamic Bank-owned Syria International Islamic Bank reported a 12% rise in pre-tax profit. The strong showing last year may put the banks on a firmer footing for this year; as the banking industry expects to face declining deposits and rising bad debt.

With its positive performance, Syria could emerge as the next country in a long list suffering from political turmoil to tap into Islamic finance to restore itself to its former glory.