RIYADH: It is time for Muslim countries to start exploring the broader range of instruments available in Islamic finance, particularly in aiding middle-income and low-income countries, says Islamic Financial Services Board (IFSB) secretary-general Dr Ghiath Shabsigh.
He said the broader area can be explored by not only the multilateral development banks (MDBs), but also the private sector, central banks and international organisations.
“We have to think of how can we help these countries, so we need to explore various options ... can we provide investors with alternative options? By doing this, can we generate more funding, more tractability, greater trust in the system, and reduce costs.
“At the end of the day, and ultimately, hopefully, God willing, everyone is better off,” he said.
He was speadking during a panellist session titled “Leveraging Islamic Finance for Developing Sustainable and Resilient Infrastructure” on the first day of the 2024 Islamic Development Bank Group’s (IsDB) Annual Meetings and Golden Jubilee Celebration yesterday.
Before his recent appointment as the fourth secretary-general of the IFSB, Shabsigh served as the assistant director at the International Monetary Fund’s monetary and capital markets department where he played a pivotal role in driving IMF’s central banking and fintech initiatives.
During the 90-minute dialogue session, Shabsigh, one of the four panellists, said Islamic finance has made significant contributions to global finance over the years, during which it expanded the spectrum of financial instruments available to investors.
He said it created solid financing instruments akin to those found in the conventional sector.
“While it is primarily equity-type (financing) based on the profit-sharing principle, in between, it also offers a whole range of hybrid instruments that provide different profiles in terms of risk, liquidity or returns to satisfy the different niches of investor preferences.
“This is very important because it broadens the horizons of de-risking options available to investors, thereby reducing overall risk, and encourages more investors to participate in the market.
“So, this is something that investors can bring to the table. It’s a major contribution to finance but that would require cooperation from the regulators,” he said, adding that the intention is for the betterment of humanity in general.
“At the end of the day, with the deeper financial markets and broader options, investors who want investments will be happy and everybody will feel slightly better,” he said, adding that trust is a keyword when it comes to finance.
Meanwhile, during his opening remarks, IsDB president Dr Muhammad Al Jasser said there could be an estimated funding gap of US$15 trillion by 2030 for infrastructure projects worldwide.
“Institutional investors, including large pension funds, government retirement funds, and global asset managers, increasingly seek unlisted infrastructure assets for their portfolios.
“IsDB’s recent strategic realignment prioritises resilient recovery and green economic growth and its focus on sustainable infrastructure financing helps bring about bankable infrastructure projects,” Muhammad said. — Bernama
