On Thursday, the World Bank said that less than 20 percent of Muslims, currently, use conventional banking systems worldwide. This is in spite of the growth of Islamic finance and the increasing number of Islamic financial products being made available to them.
The statement was made by the World Bank’s Vice President and Treasurer, Ms. Arunma Oteh, in Washington during the World Bank High-Level Seminar on Islamic finance.
Islamic finance basically refers to the way in which corporations in the Muslim world, which include banks and other lending institutions, raise capital in accordance with Sharia, or Islamic law. It also refers to the types of investments that are permissible under the Sharia law.
Ms. Arunma Oteh said that the World Bank had conducted a survey and found that there were approximately 1.6 billion Muslims in the world and that less than 20 percent of that population used conventional banking worldwide.
She continued along those lines, saying that despite the increase in the number of Islamic financial products, they (the World Bank) were finding it hard to bridge the huge financial gap.
She then explained that:
“This statistics is scary but with the emergence of Islamic financial products, there is the tendency that many Muslims will access financial services of their choice.”
“During the last fiscal year, the World Bank issued 63.5 billion dollars of bonds across different markets, 22 different currencies and some of them innovative from the developing countries around the world.”
On the problem that promotes the reluctance of Muslims to get with banking services, she said;
“Sometimes, people may like to access financial services but they are unable to do so because of factors that are prohibitive to their faith … The lack of trust of financial service providers is another reason for the disparity.”
“Islamic finance is a tool for achieving Sustainable Development Goals (SDGs) with Islamic investors applying the ethical and quantitative measures in their investment decisions … Islamic finance is uniquely well suited to promote infrastructure development which is critical in promoting many of the SDGs.”
The question, therefore, is how soon Islamic finance will be able to catch up to that huge financial gap.