The 17th Islamic Finance Global Forum organized by the Islamic Development Bank took place on May 12th, 2023, simultaneously with the Annual Meetings of the IsDB Group held in Jeddah, Kingdom of Saudi Arabia. During his keynote speech, the Chairman of the Islamic Development Bank Group, H.E. Dr. Muhammad Al Jasser, stressed the importance of leveraging disruptive technologies and the ethical principles of Islamic finance to foster inclusive development.
Al Jasser emphasised in his speech that policymakers are under extreme pressure to explore innovative ways to deal with the dynamic challenges that the world is facing. To create effective solutions for member countries, he stressed that disruptive technologies must be integrated with business processes in order to be successful. It is possible to champion product solutions that can help tackle various global economic challenges by combining modern technology’s efficiency with sustainable and ethical principles of Islamic economics by applying the efficiency of modern technology to the principles of Islamic economics.
As well as that, Dr. Al Jasser urged the IsDB Group and its partners to collaborate on innovative solutions to the various challenges that member countries and Muslim communities worldwide face. It is important to note, however, that any disruptive development needs to be supported by proper governance, oversight, and monitoring mechanisms that anticipate potential instability risks.
On the first day of the forum, the IsDB Institute released a book titled “The Islamic Development Bank and Dr. Ahmad Mohammad Ali: History of an Institution and the Journey of a President” which was titled “The Islamic Development Bank and Dr. Ahmad Mohammad Ali”. In this book, Dr. Ahmad Ali describes the historical evolution of the IsDB from its founding in 1975 to its retirement in 2016. Dr. Al Jasser thanked Dr. Ahmad Ali for attending the forum and praised him for his efforts to remain a champion of development and for leading the IsDB to become a multilateral development bank of world-class stature.
According to Dr. Ahmad Ali, the remarkable success of the IsDB Group has been attributed both to the confidence of the Member Countries and to the faith of its employees. In his remarks, he said that the Bank has become a great institution that has led development projects in 57 Member Countries in addition to 78 non-Member Countries, approving a total of 170 billion dollars worth of funding by the year 2022.
The forum included two panel sessions in which senior financial technology and innovation leaders discussed the prospects of technological disruptions in fostering resilient economies in the face of technological disruptions. The first panel focused on how current and future applications of digital vouchers could help create a more financially inclusive society, whereas the second panel discussed the structure of the Sukuk Enhancement Fund (SEF) as a product that aims to support the Islamic finance ecosystems in IsDB member countries as a whole.
In addition to IsDB Institute, three knowledge partners also participated in the forum, namely the King Abdullah University of Science and Technology (KAUST), Effat University, and the University of Business and Technology (UBT), Jeddah, Kingdom of Saudi Arabia.
A brief overview of the Islamic Development Bank Group and its role in Islamic Finance The Islamic Development Bank Group (IsDB Group) is a multilateral development bank (MDB) that was established in 1975 with the primary objective of promoting the economic and social development of its member countries. Among the five entities that make up the IsDB Group are the Islamic Development Bank (IsDB), the Islamic Research and Training Institute (IRTI), the Islamic Corporation for the Development of the Private Sector (ICD), the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), and the International Islamic Trade Finance Corporation.
In order to provide sharia-compliant financial and non-financial services, the IsDB Group offers a wide range of services including project financing, trade financing, capacity building, and technical assistance. A number of sectors are covered by its financing solutions, including infrastructure, energy, agriculture, health, education, and finance. In addition to promoting Islamic finance as a viable alternative to conventional finance, the IsDB Group also promotes the virtues and principles of Islamic finance as a viable alternative to conventional finance.
Traditionally, Islamic finance has been regarded as a system of financial management that is based on Panel Sessions on Technological Disruptions
After the opening session, two panel discussions were conducted in order to discuss the prospects of technological disruptions in fostering a resilient economy in the future.
In the first panel, the discussion focused on the way digital vouchers can be used to make society more financially inclusive for all citizens. The panel included speakers such as Dr. Mohamad Hammour, Chairman and MD of Guidance Financial Group, and Member of IsDBI’s Board of Trustees; Mr. Rami Alkarmi, Executive Chairman, Ab(new)normal Ventures, and Member of IsDBI’s Board of Trustees; and Dr. AJ Abdallat, CEO and Founder of Beyond Limits.
There was discussion among the speakers regarding the benefits and potential challenges of digital vouchers as a tool for financial inclusion. In their opinion, digital vouchers can be used in a more efficient and transparent way to distribute funds to marginalized communities, such as refugees and those living in poverty.
However, the speakers also noted that digital vouchers may pose certain risks, such as fraud, if proper security measures are not in place, as they could pose a danger to consumers. To ensure the safe and effective implementation of digital vouchers, a number of stakeholders, including governments, financial institutions, and technology companies, need to work together.
This panel discussed the structure of the Sukuk Enhancement Fund (SEF) as a product designed to support Islamic finance ecosystems in the member countries of the International Islamic Finance Development Bank. Dr. Suminto Sastrosuwito, Director General of Budget Financing and Risk Management, Ministry of Finance, Indonesia; Mr. Ijlal Ahmed Alvi, CEO, International Islamic Financial Market (IIFM); and Ms. Sabeen Saleem, CEO, of the International Islamic Rating Agency (IIRA) were the speakers in this session.
Speakers discussed the potential of the Sukuk Enhancement Fund (SEF) in aiding in the development of Islamic finance ecosystems as a tool to enhance the growth of Islamic finance. It was stressed that a supportive regulatory framework was essential to promoting the growth of the Sukuk market, and a variety of ways to achieve this goal were discussed by the SEF.
Dr. Al Jasser’s Call for Leveraging Disruptive Technologies
Dr. Al Jasser emphasized the importance of leveraging disruptive technologies to promote inclusive development in his keynote address. In order to address various global economic challenges, he stressed the importance of integrating modern technology’s efficiency with Islamic economics’ ethical and sustainable principles.
To anticipate potential instability issues associated with disruptive developments, Dr. Al Jasser stressed the importance of proper oversight, governance, and monitoring mechanisms. His remarks focused on the role of the IsDB Institute in finding innovative solutions for member countries and Muslim communities around the world.
A growing trend in the global financial sector has echoed Dr. Al Jasser’s call for leveraging disruptive technologies. Financial institutions continue to explore ways to integrate disruptive technologies into their business processes as technological advancements continue to transform various industries.
Disruptive technologies, such as blockchain and artificial intelligence, can help financial institutions save money, improve efficiency, and improve customer service. There are, however, risks and challenges associated with the adoption of disruptive technologies, including cybersecurity threats and ethical concerns.
Disruptive technologies can be adopted and implemented in the financial sector in accordance with the ethical principles of Islamic finance. In Islamic finance, fairness, transparency, and risk-sharing are key principles, which ensure that the benefits of disruptive technologies are distributed equally and that potential risks are addressed responsibly.
Launch of the Book on IsDB’s History
A book titled “The Islamic Development Bank and Dr. Ahmad Mohammad Ali: History of an Institution and Journey of a President” was launched during the opening session of the forum by Dr. Al Jasser and H.E. Dr. Ahmad Mohammad Ali. A second panel of the forum discussed the Sukuk Enhancement Fund (SEF), a product aimed at supporting the Islamic finance ecosystem in IsDB member countries. This book documents the historical evolution of the IsDB since its establishment in 1975 and its retirement by Dr. A new initiative known as the SEF aims to reduce the cost of issuance and attract more investors by providing a guarantee mechanism for Sukuk issuance.
The panel featured Dr. Suminto Sastrosuwito, Director General of Budget Financing and Risk Management at Indonesia’s Ministry of Finance, who discussed Indonesia’s experience with Sukuk, the challenges it faced, and how the SEF could help reduce issuance costs and attract more investors by reducing issuance costs.
The International Islamic Financial Market’s CEO, Ijlal Ahmed Alvi, discussed the role of the IIFM in developing standardized documentation and processes for Sukuk issuance and how the SEF can benefit from them.
Sabeen Saleem, CEO of Islamic International Rating Agency (IIRA), discussed how the Islamic Sukuk Foundation can work with rating agencies to enhance the credit ratings of issuers of Sukuks.
SEF could significantly enhance the Islamic finance ecosystem in IsDB member countries by reducing issuance costs, attracting more investors, and providing a mechanism for Sukuk issuance guarantees.
A number of presentations on innovative Islamic finance solutions were included in addition to the panel sessions. An example of one presentation discussed the potential of green Sukuk to fund environmentally sustainable projects and how blockchain technology can be used to improve transparency and reduce costs in Islamic finance.
Three knowledge partners in Jeddah, Kingdom of Saudi Arabia, participated in the 17th IsDB Global Forum on Islamic Finance: King Abdullah University of Science and Technology (KAUST), Effat University, and University of Business and Technology (UBT). Knowledge partners contributed valuable insights into Islamic finance trends and developments, enriching the forum discussions.
Experts in Islamic finance and financial technology discussed disruptive solutions to build a resilient economy at the forum. Disruptive technologies like blockchain and digital vouchers can facilitate inclusive development and enhance the Islamic finance ecosystem in IsDB member countries, according to the discussion. IsDB’s commitment to promoting innovation and leveraging technology to address the world’s dynamic challenges was also highlighted at the forum.
