The UAE is well placed to connect Islamic capital with high-growth markets as the global Islamic finance industry approaches $6 trillion in assets, according to Standard Chartered.
Only 6 per cent of global sukuk capital currently reaches South Asia and Africa, highlighting substantial scope to direct more Shariah-compliant funding towards emerging economies, the bank said in its latest report.
The report, Islamic Banking for Financial Institutions: The Islamic Finance Connector Era, said the industry’s next phase would be shaped by its ability to mobilise liquidity, support trade and link investment opportunities across borders.
Standard Chartered said stronger financial, trade and digital connections would be needed to move Islamic capital more efficiently between markets.
UAE positioned as regional connector
The bank said the UAE’s location between East and West, combined with its role as a regional financial and trade hub, positioned it to connect capital flows across the GCC, Europe, Asia and Africa.
The country’s expanding digital finance ecosystem and regulatory frameworks for virtual and digital assets are also strengthening the infrastructure needed to support cross-border investment.
The UAE’s National Strategy for Islamic Finance and Halal Industry 2031 seeks to reinforce the country’s status as a global Islamic finance centre by expanding Islamic capital markets and increasing domestic Islamic banking assets.
Standard Chartered said new economic corridors linking the GCC with Asia, Türkiye and Africa would be an important driver of the industry’s growth.
These connections are expected to create opportunities in infrastructure finance, private credit, private markets, blended finance and sustainable investment.
Liquidity must connect with opportunity
Khurram Hilal, Chief Executive Officer of Group Islamic Banking at Standard Chartered, said Islamic finance was becoming an increasingly important enabler of cross-border trade and investment.
“As its role in facilitating trade, investment and capital flows continues to grow, institutions need recognised financing structures and operational capabilities that enable Shariah-compliant capital to move seamlessly across borders,” he said.
Hilal said the main challenge facing many markets was not a shortage of liquidity, but the ability to connect available capital with investment opportunities.
Financial institutions that build trusted links between capital, markets and digital infrastructure would be better positioned to support sustainable growth in emerging economies, he added.
Digital infrastructure expands access
The report highlighted the potential of tokenisation, digital assets and payment infrastructure to improve cross-border capital mobilisation and broaden investor access.
It said financial institutions should move beyond treating Islamic banking as a standalone product and develop capabilities that connect investors, clients and markets across several jurisdictions.
Standard Chartered said the UAE could play a central role in this transition by channelling Islamic capital towards investment opportunities across the GCC,
