The United Arab Emirates continues to strengthen its position as a leading global center for Islamic finance and the halal industry, in line with a comprehensive developmental vision that promotes economic diversification and enhances the country’s competitiveness in global markets.
The sectors associated with Islamic finance and halal products are experiencing significant growth, reflecting the UAE’s commitment to building a resilient and sustainable economy. This is supported by continuous governmental backing, an advanced legislative framework, and prominent financial and industrial hubs built on knowledge, technology, and innovation.
In May, the UAE launched a strategy focusing on Islamic finance and halal industries, which aims to create an integrated environment for Islamic financing activities, including banking, takaful, sukuk, and non-banking financial services, in accordance with best global practices and standards.
Regarding Islamic finance, recent data from the central bank indicates that assets held by Islamic banks comprise around 18% of the overall assets in the banking sector, whereas Islamic banks account for approximately 22.8% of the total credit in the country’s banking industry.
The market for Islamic sukuk has notably expanded within the UAE, with the federal government issuing local currency Islamic treasury sukuk for the first time in 2023, acting as a stimulus for other sector entities. The UAE is recognized as one of the largest listing hubs for sukuk globally.
As of May, the total value of sukuk listed on Nasdaq Dubai exceeds $95.7 billion, as per the latest available data released in June, solidifying its standing as one of the premier destinations worldwide for listing sharia-compliant fixed income instruments.
The UAE ranked fourth globally among Islamic finance markets based on assets, according to the Islamic Finance Development Index Report for 2023.
Major Progress
Jamal Saleh, the Director General of the UAE Banks Federation, emphasized that the UAE’s strategy for Islamic finance and halal industries has set ambitious goals that are expected to create a transformative impact on the contribution and presence of the Islamic economy at local, regional, and international levels.
In statements to the UAE’s news agency, Saleh noted that the UAE has developed financial and economic systems over recent years that have enhanced the role of the Islamic financial sector in the country’s economic diversification strategy. He highlighted that Islamic banking has experienced notable advancements, particularly in sukuk issuance and listing, alongside the Islamic banking sector’s overall growth.
He also confirmed that Islamic banks in the UAE are registering significant growth rates, reflecting increased confidence in the national economy and the sharia-compliant banking model.
Saleh referred to the latest statistics from the central bank for February, which revealed a rise in total credit extended by Islamic banks to 503.5 billion dirhams, showcasing an annual growth rate of 16%. He also highlighted the role of Islamic banks in bolstering the national economy, noting that the credit extended to the private sector by Islamic banks reached 350.4 billion dirhams at the end of February, marking an annual increase of 13.2%. Furthermore, the deposits in Islamic banks showed remarkable growth, hitting 595.3 billion dirhams, up by 16.9% year-on-year.
Alongside the development of Islamic finance, the UAE is emerging as a global platform for the halal industry, driven by a national vision that aims to raise the country’s share in halal product exports from 74 billion dirhams to approximately 315 billion dirhams by 2031, as per the latest strategy in this area.
Competitive Products
In this context, Saleh Lutah, Chairman of the UAE Food and Beverage Manufacturers Group, remarked that the national strategy for Islamic finance and halal industries represents a significant step toward solidifying the UAE’s position as a global center for halal product manufacturing.
He added that the national industry has made substantial progress in developing food products, with increasing interest from local manufacturers to expand in this vital sector, especially given the accelerating global demand for halal products, which presents a major economic opportunity.
Lutah suggested that achieving the set targets can rely on three fundamental factors: innovation, increased investment in research and development to deliver competitive halal products globally, alignment with global demand, and promotional support.
He emphasized that meeting the strategy’s objectives requires close cooperation between the public and private sectors, noting that the UAE Food and Beverage Manufacturers Group is committed to playing an active role in supporting manufacturers and providing platforms for dialogue and development, as well as driving exports to new markets.
According to a report by Unifed Research on the halal food and beverage market in the UAE, it is anticipated that the sector will exceed $31.27 billion by 2029, driven by the UAE’s strategic position as a global commercial and tourism hub, attracting local and international consumers seeking halal-certified products.