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10 I Companies & Markets bne August 2024
Eurasian Development Bank moves into Central Asia’s Islamic finance sector
Clare Nuttall in Almaty
The Eurasian Development Bank (EDB) is moving into Central Asia’s small but growing Islamic finance sector, with plans to open an Islamic banking window in 2025.
The regional development bank’s chairman Nikolai Podguzov told journalists during the EDB annual meeting and business forum in Almaty on June 27 that the bank sees “great demand” for Islamic finance in Central Asia, where its members include Kazakhstan, Kyrgyzstan and Tajikistan.
“Our focus is to establish an Islamic window in the Eurasian Development Bank. This is not an easy process, but I hope all the preparations will be finished by the end of the year and next year we will be able to start producing our first instruments,” he said.
He anticipates that the bank could deploy as much as $100mn of Islamic finance in 2025, though admits “this is a bumpy road”.
EDB deputy chairman Ruslan Dalenov told journalists that as an international development bank, the EDB can open up Islamic banking access, while commercial banks cannot currently do this under Kazakh law.
The bank also announced its first pilot project in the area – a $5mn murabaha project – on June 27. It plans to launch several additional pilot projects, after which it will embark on larger investment projects.
To finance the larger Islamic finance projects, the bank will issue a sukuk (Islamic bond).
Dalenov told bne IntelliNews that the location for the bond issue has yet to be decided – it could opt either for one of Kazakhstan’s stock markets, the Astana International Exchange (AIX) or the Kazakhstan Stock Exchange (KASE), or use an international stock exchange such as Dubai or Malaysia.
Cooperation agreements
The EDB will work alongside the Islamic Development Bank (IsDB) to support the development of Islamic finance in its countries of operation in Central Asia.
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Eurasian Development Bank chairman Nikolai Podguzov (left) and Dr. Sami Al- Suwailem, acting director general of the Islamic Development Bank Institute, signed a memorandum on cooperation in Almaty on June 27. / bne IntelliNews
The two development banks signed a memorandum on cooperation on Islamic finance development in Central Asia in Almaty on June 27.
“The memorandum extends our cooperation, and promotes our activity and our plans to open an Islamic window in Central Asia for our bank,” said Podguzov at the signing ceremony.
“We need to build trust and a new environment for Islamic finance to be spread across Central Asia for the benefit of all people which live in the region,” he added.
“We need to build trust and a new environment for Islamic finance to be spread across Central Asia for the benefit of all people which live in the region”
“It is our honour and delight to sign this agreement on cooperation between the Islamic Development Bank Group institute and the Eurasian Development Bank,” said Dr. Sami Al-Suwailem, acting director general of the Islamic Development Bank Institute.
“We share our commitment to serve our member countries to create prosperity for communities – both Muslim and other faiths. Islamic finance is for everyone.”
A separate agreement was signed between the EDB and Ammar Ahmed, CEO of Dar Al Sharia, which Podguzov described as an important practical step enabling the two organisations’ work together.
Ahmed said Dar Al Sharia is proud to be working with the EDB, initially to set up its Islamic window.