Interview: Iyad Asali
How would you assess the capacity for further growth in the Islamic banking segment?
IYAD ASALI: The Central Bank of Jordan (CBJ) reported that 69% of the population in Jordan are financially excluded. This gives Islamic banks an opportunity to develop new financial services for this segment at reasonable costs, along with easy terms and conditions for their clients. Islamic banks’ global portfolios and revenues have been growing steadily over the past few years, and as a result their capacity to meet the needs of this specific segment have increased. As far as Jordan is concerned, the demand for Islamic financial services is widespread throughout the whole country, and the constant rise in branch openings in Irbid, Zarqa, Al Karak and Aqaba reveals that demand remains strong in places where demand increases outside the capital. It is worth nothing that at our bank more than 50% of retail business currently takes place outside Amman.
What are the main factors driving the growth of sharia-compliant services in Jordan?
ASALI: Due to the minimal effect that the global financial crisis had on Islamic banks, the increased trustworthiness of these institutions has certainly contributed to the growth of the segment. Sharia-compliant services cover a market that has been undervalued in the past. Jordan’s Islamic banks are currently trying to take advantage of this situation to raise awareness of their services. They are also working to improve financial literacy through media, events, social networks and conferences in order to drive the growth of the sharia-compliant solutions segment in Jordan.
To what extent can sharia-compliant financial institutions meet the demands of small and medium-sized enterprises (SMEs)?
ASALI: SMEs and family businesses play a considerable role in Jordan’s economy, and access to credit for these entities has been a challenge when it comes to economic growth and social development. Over the past five years our bank has developed a new framework for sharia-compliant SME financing in coordination with the CBJ, to benefit from soft loans offered by international donors like the World Bank, the Arab Fund for Economic and Social Development and local partners. This cooperation led to the first sharia-compliant guarantee scheme in Jordan, the founding of an Islamic tool for mobilising funds to SMEs at subsidised costs and the establishment of a sharia-compliant fund to guarantee start-ups financing. This financially tailored programme empowers a large segment of SMEs across various sectors, especially those owned by young entrepreneurs and women, and those located outside Amman.
How has the CBJ helped support the Islamic finance sector, and in what ways will this continue?
ASALI: I would like to seize this opportunity to praise the CBJ’s efforts in developing banking regulations and taking into consideration the specificities of Islamic banking. They have helped Islamic banks develop new sharia-compliant products and services in response to growing customer demand. It is expected to continue to keep pace with the growth of Islamic banking.
How can local Islamic financial services companies work to improve ties with regional counterparts?
ASALI: Jordan is a promising market for regional counterparts for many reasons. Indeed, the country relies on strong competitive advantages. These include the kingdom’s remarkable political and economic stability in the face of regional turmoil, the efficiency of Islamic financial services’ framework and regulations, and a highly educated population. As the segment is still relatively young in Jordan, specific areas, such as sukuk (Islamic bonds) and project finance, have high-potential opportunities for investment and cooperation with Islamic financial services providers across the region.
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