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Prospects and Challenges for North African Free Trade Zones

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By Pierre Boussel

As part of the ongoing global geoeconomic transformation into a multipolar order, countries and regions worldwide are looking to boost their economic prospects and security outlooks. On Europe’s doorstep, the highly competitive Mediterranean and North African region is a prime contender for growth driven by foreign investment.

Countries in the Maghreb, in particular, are creating free trade zones (FTZs) to lure multinational corporations seeking favorable taxation arrangements and regulatory frameworks with assurances of transparency and security in locations adjacent to centers of global demand. However, low labor costs, geographical proximity to the European Union and malleable trade unions, while appealing, are not yet sufficient to transform North Africa into an attractive economic area.

In a region where inter-state collaboration is weak, each country typically attracts as much foreign investment as possible and asserts regional superiority while trying to rid itself of the Maghreb’s old demons: corruption, money laundering and political insecurity. Promoted as islands of economic security, free trade zones are as heterogeneous as their host countries.

Local dynamics remain a sword of Damocles for investors, as does the issue of recruitment. The labor pool here is of uneven quality, between the abilities of Algerian workers, who require extensive training programs to upgrade their skills, and Moroccans, who are too often relegated to perform repetitive tasks and are not inclined to the relocation requirements of high-tech companies. Tensions and rivalries between states can quickly complicate investment conditions, for example, in terms of profit repatriation or currency transfers.

What North Africa offers multinationals

In the absence of political and economic cohesion, let alone tax harmonization, North Africa is a region of contrasting conditions. With 12 industrial acceleration zones dedicated respectively to the automotive, aeronautics, offshoring, green energy, defense and fisheries sectors, Morocco is a leader in North Africa. While these zones securing tenants testifies to Morocco’s dynamic policy of integration into the global economy, they do not shield the country from substantial variations in performance: Foreign direct investment inflows to Morocco fell by nearly 50 percent in 2023, and unemployment is currently close to 14 percent, a level not seen for two decades.

In addition, foreign companies operating in Morocco still find it challenging to fill managerial positions that bridge the gap between production lines and plant management. The staffing is available, but it is a long and tortuous road to fill key positions.

Tunisia is keen to attract investments in high-value-added sectors but faces significant obstacles in this pursuit. Its two free trade zones lack adequate infrastructure, particularly in transport and logistics, reducing their competitiveness. The FTZ Zarzis Park suffers from considerable logistical shortcomings despite its proximity to a port. Local economic operators point to a heavy administrative burden and criticize the opacity of procedures and the inflexibility of Tunisian regulations. These factors hamper the country’s ability to attract cutting-edge industries despite ambitions to diversify the economy.

Algeria is approaching the development of free trade zones with an ideology inherited from the post-Soviet era, meaning inflexibility and pesky local ownership rules. The Bellara free zone (in the wilaya, or administrative district, of Jijel) is specialized in the steel industry as part of the country’s effort to diversify its economy, which is mainly dependent on hydrocarbons. New free zones are planned at the port of Djen Djen, in Bouchebka, and in the wilaya of El Tarf. Nonetheless, the country’s structural challenges remain enormous.

For foreign companies in Algeria, the complex bureaucracy and frequent regulatory changes create challenges such as import quotas, restrictions on access to foreign currency, and the 51/49 rule, which requires 51 percent Algerian ownership of projects. One of the difficulties for foreign companies is to retain the employees they have trained, who are often tempted to resign to earn double their salaries outside the free trade zone. Some headhunting firms specialize in recruiting these highly sought-after talents on the local market, cannibalizing the country’s human resources pool.

The search for an economic model for the Maghreb

Contemporary business in the Maghreb is characterized by different types of economic zones: free trade zones, industrial acceleration zones and special economic zones. In the absence of a coordinated regional strategy, each country has developed its own model, enabling each to capitalize on its comparative assets and attract investments according to its priorities. However, the lack of harmonization of fiscal, customs and regulatory frameworks between Maghreb countries hampers the fluidity of intra-regional trade crucial to North Africa’s attractiveness.

This absence also hinders the creation of an interconnected labor market that could benefit the entire region. The notion of talent mobility and what Europeans or North Americans would call the entrepreneurial spirit, however, remains alien to local habits.

The Maghreb’s free trade zones face intense global competition from places such as China or Central and Eastern Europe. The Shenzhen FTZ in China generates prodigious amounts of foreign direct investment – around $140 billion in 2023 alone. Its lure is based on advanced infrastructure and high-tech expertise available locally, creating an attractive environment for innovative companies. By comparison, the economic zones in the Maghreb have limited high-tech capabilities, and industries that require highly skilled labor often look elsewhere.

In the EU’s eastern regions, countries such as Poland have created more than 14 special economic zones with the support of the bloc’s subsidies, attracting nearly $15 billion of investment in the technology and automotive sectors. This is in direct competition with the ambitions of the Maghreb, particularly in the automotive industry, in which Morocco and Tunisia are trying to make their mark.

To attract multinationals for the longer haul, the Maghreb’s economic zones must offer not only favorable taxation schemes but also an innovation-friendly ecosystem that enables companies to benefit from local expertise. So far, Maghreb countries have not developed a technological environment comparable to other global or African regions, which limits their attractiveness for cutting-edge industries. A lack of high-tech infrastructure and advanced skills, particularly in areas such as Artificial Intelligence, reduces the ability of these areas to develop into technology hubs.

Tactical options for North African trade

For investors seeking access to national markets in the Maghreb, a critical question is whether the use of free trade zones can unlock local demand. Are these zones merely links in global production chains, or can they play a strategic role in facilitating deeper penetration of local and regional economies? As multinationals consider accessing domestic and regional markets from this perspective, several obstacles are worth noting.

Free trade zones in the Maghreb struggle to integrate their activities into the local economy and contribute to sustainable development. They often operate in isolation from the local economic fabric, with workers mainly assigned to basic tasks such as assembly. The standardization of tasks limits the need for higher skill sets, for example in engineering or research and development. This, in turn, reduces skills development in the local workforce and limits the reach of multinationals beyond the special zones.

The current situation in North Africa presents a significant challenge for investors seeking to enter industrial activities such as new materials chemistry or electromagnetics. The highly specialized nature of these fields makes it challenging for new entrants to gain the expertise needed to succeed, as there is a limited pool of individuals with the requisite skills.

International corporations seeking to utilize the region to complement operations in nearby areas, such as Europe, can develop local capacity by transferring expertise and know-how to local companies. However, local small and medium-sized enterprises, often organized on an informal basis, have few links with multinationals and gain little from their presence.

For multinationals seeking access to local markets from the vantage point of free economic zones, the issues are complex. In many cases, access depends on the ability to mobilize political support. For Renault in Morocco, the support of the government in Rabat was crucial in raising the brand’s profile and facilitating its integration into the national market. The importance of political intervention underlines the business climate that international corporations must adapt to for their investments to pay off.

The dark side of the Maghreb’s free zones

As logistical hubs for the import and export of goods, free trade zones in the Maghreb face problems of smuggling and counterfeiting. Tax incentives attract unscrupulous operators who see an opportunity to engage in illegal activities, a scourge in the textile and consumer goods sectors. Large fast-fashion clothing chains suffer from the theft of products later found in local souks at bargain-basement prices, still with their original labels.

It is difficult to estimate the percentage of products smuggled out and sold locally. A French car manufacturer discovered that spare parts were disappearing from assembly lines to be resold locally. Site security is entrusted to local companies that pay low wages and impose difficult working conditions – so untoward that some less scrupulous employees become corrupted and look the other way.

North Africa’s free trade zones are also facing a growing problem of industrial espionage, affecting roughly 15 percent of companies. Although the percentage is approximate and varies from zone to zone, it underlines a serious threat to companies located in these areas. Espionage techniques use sophisticated cyber attacks such as Trojans and man-in-the-middle attacks to gain access to sensitive corporate data.

The weakness of security systems and anti-corruption measures exposes companies to the risk of undetected intrusions, compromising the confidentiality of their know-how. This lack of protection is a problem, especially in an environment of increasing global competition and digitalization. Reports by industrial security consultancies such as Control Risks, PwC and Deloitte, highlight these structural weaknesses in North African special economic zones, pointing to recurring threats of cyber espionage and infrastructure vulnerabilities.

Scenarios

Less likely: Regional enterprise zones modernize and harmonize

Faced with global competition, a less likely scenario entails the Maghreb countries regularly undertaking reforms to bolster the potential of their free trade zones. Steps to be taken include improving administrative transparency, strengthening tax incentives and positioning the broader area as an attractive economic bloc. Morocco, Tunisia and Algeria implement technology transfer policies enabling the local workforce to acquire skills in cutting-edge sectors such as AI, renewable energy and advanced engineering.

Thanks to these efforts, the Maghreb’s centers of excellence could become legitimate technology hubs, attracting not only manufacturing companies but also digital multinationals keen to benefit from local talent, low labor costs and proximity to Europe. Maghreb cooperation intensifies, creating an integrated value chain that strengthens intra-Maghreb trade.

While this may not be the most realistic scenario in the current market, it is a potential future scenario that should be considered. There will likely be an increased demand for foreign investment in the Maghreb in the future, which will provide potential investors with the opportunity to establish themselves on more favorable terms. Destinations currently perceived as riskiest, such as Libya, or as most complex, such as Algeria, can be considered high-yield investments with substantial room for improvement.

More likely: Maghreb economies remain fragmented

A more likely outcome in the foreseeable future is that despite their enormous potential (proximity to the EU, political stability, competitive labor costs), the Maghreb free trade zones do not develop into centers of innovation; rather, they remain isolated production islands with few links to local economies. The multinationals present will continue to be export-driven and not integrated into the local economic tapestry, which ultimately limits their impact on employment and the development of skills.

Tunisia and Algeria, having failed to modernize their infrastructure and administrative apparatus, will struggle to attract high-value-added companies. The potential for regional value chain growth remains untapped, and North African economic zones will gradually be marginalized in the face of competition from Asia and Europe.

For the investor, two principal avenues of geoeconomic engagement are worth consideration. The first is to capitalize on the robust government support by investing robustly, thereby placing a wager on the durability of the local regime. This is the approach adopted by Renault. The second is to limit the engagement to niche manufacturing sectors that involve advanced technology. This strategy allows investors to position themselves for future openings, with the expectation that the Maghreb will eventually embrace a regional free-market economy in order to prevent stagnation and economic decline.


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BUSINESS & ECONOMY

Trump’s Tariff Battles: The Global Fallout

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Baba Yunus Muhammad

Tariffs are a form of taxation on goods crossing national borders. While proponents argue that they can protect local industries by making imports more expensive, most economists view them as a blunt instrument that can harm both the target country and the domestic economy while also escalating trade conflicts. Here’s an overview of Trump’s latest tariff threats and their potential impact worldwide.

China: Retaliation and Countermeasures

During his campaign, Trump threatened a 60% tariff on Chinese goods, but the actual figure has been set at 10%. When combined with existing tariffs, this brings the average rate on Chinese imports to between 20% and 30%. Trump claims these measures are aimed at pressuring Beijing to crack down on the smuggling of fentanyl and its precursors into the US. However, analysts see broader economic motives at play.

With 14% of China’s exports directed to the US, the impact of Trump’s tariffs is somewhat limited. Many Chinese firms have already relocated parts of their supply chains to circumvent these barriers. Still, Beijing has responded forcefully by imposing 15% tariffs on US coal and liquefied natural gas, and 10% tariffs on crude oil, farm equipment, and large vehicles. Additionally, China has imposed export restrictions on critical materials such as tungsten and tellurium, which are vital for US industries.

Perhaps more consequentially, China has initiated an anti-trust investigation into Google, raising concerns that this could be the beginning of a broader crackdown on American tech firms operating in the country. The deepening divide between the world’s two largest economies could have long-term global repercussions.

Mexico: Short-Term Relief, Long-Term Uncertainty

With 83% of Mexico’s exports going to the US, the impact of tariffs would have been significant. However, a last-minute deal has paused the proposed tariffs for a month.

While the official justification for the tariffs was Mexico’s alleged cooperation with criminal organizations facilitating illegal immigration and fentanyl trafficking, critics argue that the real motivation is Trump’s opposition to trade deficits. Economist Paul Krugman has warned that measures designed to eliminate trade deficits could also deter foreign investment.

In response, Mexican President Claudia Sheinbaum dismissed Trump’s claims as baseless but agreed to deploy 10,000 troops to the border. The US, in turn, has pledged to curb the flow of high-powered weapons into Mexico. Despite this temporary resolution, business leaders worry about long-term instability, with Brian Winter, a Latin America expert, warning that companies may reassess Mexico’s role in North American supply chains.

Canada: Last-Minute Reprieve Amid Economic Anxiety

A temporary pause on tariffs against Canada was announced following urgent discussions between Trump and Prime Minister Justin Trudeau. Given that 77% of Canada’s exports go to the US, this was a crucial development.

The justification for targeting Canada—stemming the flow of fentanyl—was unconvincing, as only 19kg of the drug was seized at the US-Canada border last year compared to 9,600kg from Mexico. However, the vagueness of Trump’s objectives may actually work in his favor, allowing him to declare victory without a clear benchmark.

Canada had prepared retaliatory tariffs on $106 billion worth of US goods, primarily from Republican-leaning states. Meanwhile, a grassroots movement in Canada has emerged in response to Trump’s threats, with campaigns encouraging domestic purchases and branding pro-Trump figures as “Vichy Canadians.”

European Union: Preparing for Retaliation

Trump has vowed that new tariffs on the European Union will “definitely happen,” citing the US’s goods trade deficit with the bloc, which he claims exceeds $300 billion. However, official data from 2023 puts the deficit at approximately $160 billion. Furthermore, when services are included, the US actually runs a trade surplus of $107 billion with the EU.

In anticipation of Trump’s measures, the European Commission has devised a “carrot and stick” strategy—offering increased imports of US liquefied natural gas while preparing retaliatory tariffs on American goods. The outcome of these negotiations will be pivotal for transatlantic trade relations.

United Kingdom: A Balancing Act

While Trump has suggested that the UK might face tariffs, he also indicated that a resolution could be found, citing his positive relationship with Prime Minister Keir Starmer. For now, this uncertainty leaves Britain in a precarious position.

With 68% of the UK’s exports being services, which are not subject to tariffs, the immediate impact may be lower than for other countries. However, the UK’s trade relationship with the EU complicates matters. If Trump’s tariffs escalate into a full-scale trade war, Britain could be forced to choose between aligning with the US or the EU—its largest trading partner.

Conclusion: A Risky Game

Trump’s tariff threats have created economic uncertainty across multiple regions. While some countries have secured temporary relief, the long-term impact of these measures remains unclear. If trade tensions continue to escalate, the global economy could face significant disruptions, with repercussions extending far beyond the US and its trading partners.


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African Nations Target 300 Million New Power Connections by 2030

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In a bold initiative to address Africa’s persistent electricity deficit, several African nations have committed to opening up their energy sectors to attract investment and provide electricity to 300 million people by 2030. This effort, known as Mission 300, was launched in April by the World Bank and the African Development Bank (AfDB) and aims to mobilize at least $90 billion in funding from multilateral banks, development agencies, private investors, and philanthropies.

Bridging Africa’s Energy Gap

Africa remains the region with the highest number of people lacking access to electricity, a major hindrance to economic growth and development. To tackle this, Nigeria, Senegal, Zambia, and Tanzania, among other nations, have pledged to reform their electricity utilities, integrate more renewable energy, and increase national electrification targets. These commitments were made at an energy summit attended by African heads of state in Tanzania’s commercial capital.

Kevin Kariuki, Vice President for Infrastructure at the AfDB, emphasized the need for cost-effective expansion and rehabilitation of national electricity grids. “We want to expand and rehabilitate our electricity grids using the least cost possible,” Kariuki stated.

Financing the Mission

World Bank President Ajay Banga highlighted that the initiative’s success hinges on unlocking significant private sector investment. The World Bank plans to contribute $30-40 billion, while the AfDB will provide an additional $10-15 billion, with the remainder expected from private investors and other sources.

To encourage private sector participation, the World Bank will only disburse funds to countries that implement necessary regulatory and policy reforms. Historically, investors have been hesitant due to concerns over unfriendly regulations, bureaucratic delays, and currency risks.

Renewable Energy at the Core

Half of the planned new electricity connections will be through expanding national grids, while the other half will rely on renewable energy sources, including solar and wind-powered mini-grids. This approach aligns with Africa’s growing push toward sustainable energy solutions, reducing dependence on fossil fuels and enhancing energy resilience. Ajay Banga underscored the developmental significance of electrification, noting that access to power is a key enabler of economic growth, job creation, and poverty reduction.

Looking Ahead

As African nations embark on this ambitious journey, the success of Mission 300 will depend on effective implementation, transparent governance, and sustained investor confidence. If successful, this initiative could mark a turning point in Africa’s economic transformation, unlocking new opportunities for businesses and communities across the continent.

The coming years will be critical in determining whether these commitments translate into tangible results, providing millions of Africans with the electricity needed to power industries, businesses, and households.


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Pakistan’s Bold Gamble: Can it Build a Riba-Free Economy?

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Imagine a world where money doesn’t just grow—it heals. That’s the vision 2,000+ global leaders brought to life at the 8th World Islamic Economics and Finance Conference (WIEFC) with Islamic Finance Trends 2024 in Lahore this January. Forget stuffy lectures—this was a revolution. Pakistan, often overlooked in global finance debates, suddenly became the heartbeat of a $4.5 trillion ethical finance movement. From AI tools sniffing out hidden interest to ‘green Sukuk’ funding hurricane-proof homes, this conference didn’t just talk about change—it blueprinted it.

Why should you care? Whether you’re a student, investor, or just tired of Wall Street’s greed-first mindset, Islamic Finance Trends 2024 is reshaping how money works for everyone. Think climate action funded by ethical bonds, apps that calculate Zakat in seconds, and microloans lifting farmers out of poverty—without interest.

Stick around. We’re breaking down the conference’s biggest reveals, from Pakistan’s bold legal reforms to the tech tools making ethical finance as easy as ordering Uber Eats. Spoiler: This isn’t just about halal banking—it’s about building a financial system that doesn’t leave anyone behind.

Pakistan’s Legal Revolution—A Model for the World

Pakistan’s bold legislative reforms have turned heads globally. The 2022 Federal Shariat Court (FSC) ruling, which declared interest-based systems unconstitutional, set off a chain reaction. By 2024, the 26th Constitutional Amendment cemented this shift, mandating a full transition to Shariah-compliant finance by 2028. But what does this mean in practice?

  • Pakistan’s Islamic banking assets soared to 50 billion in 2024, up from 30 billion in 2022. This growth now represents 22% of the nation’s total banking sector, with projections hitting 35% by 2027. Analysts attribute this surge to regulatory incentives, including tax breaks for Shariah-compliant institutions and public awareness campaigns.
  • Globally, the Islamic finance industry expanded by 14% in 2023, driven by Sukuk issuances worth 250 billion a record high. Saudi Arabia’s12 billion sovereign Sukuk and Indonesia’s blockchain-based offerings contributed significantly.

Malaysia, a pioneer in Islamic finance with a $900 billion industry, recently signed a knowledge-sharing pact with Pakistan. “Their regulatory framework is a gold standard,” noted Bank Negara Malaysia’s governor, citing Malaysia’s dual banking system, which allows conventional and Islamic banks to operate side-by-side. Key features include:

  • Shariah Advisory Councils: Independent bodies that audit financial products.
  • Tax Neutrality: Equal tax treatment for Islamic and conventional instruments.

Saudi Arabia’s Vision 2030 has allocated $1.2 billion to develop fintech solutions compliant with Shariah principles. The Saudi Central Bank (SAMA) launched a sandbox in 2023, testing 40+ startups focused on digital Zakat platforms and AI-driven Murabaha contracts.

Dr. Hussain Qadri’s Vision: Beyond Compliance

In his keynote, Dr. Hussain Mohi-ud-Din Qadri warned against “checklist Islamization.” He argued:

“Replacing ‘interest’ with ‘profit’ in contracts isn’t enough. True Islamic finance must dismantle systems that perpetuate inequality.”

His speech highlighted Pakistan’s new Zakat-based social safety net, which redistributes 2.5% of assets annually to 8 million low-income families. The program uses biometric verification to prevent fraud, ensuring 98% of funds reach intended recipients.

Converting Pakistan’s $130 billion interest-based debt into Shariah-compliant instruments is a Herculean task. The solution? Asset-backed Sukuk—a financial instrument that ties returns to tangible assets like infrastructure or renewable energy. Unlike conventional bonds, Sukuk holders own a share of the asset, aligning with Islam’s prohibition of speculative risk.

In March 2024, Pakistan issued $2 billion in green Sukuk to fund wind farms in Sindh. The offering was oversubscribed by 300%, attracting investors from the UAE and Singapore. By 2025, these projects are expected to power 1.2 million homes and cut carbon emissions by 4.5 million tons annually. Key terms:

  • Tenure: 10 years.
  • Profit Rate: 7% annually, tied to energy sales.
  • Guarantor: International Finance Corporation (IFC).
  1. Nigeria: Lagos State’s $1.25 billion Sukuk funded the Lekki Deep Sea Port, creating 170,000 jobs. Investors receive profits from port operations, with returns averaging 9% since 2024.
  2. Indonesia: The world’s first blockchain Sukuk raised $500 million in 2024, with 60% of buyers under 35. Built on Ethereum, the platform allows real-time tracking of proceeds.
  3. Germany: Tesla’s Berlin Gigafactory secured €750 million via hybrid Sukuk, blending Islamic finance with ESG principles. Proceeds fund solar panel installations and worker housing.

In Punjab, a pilot project offers micro-Sukuk to small farmers. Instead of loans, investors receive a share of harvest profits. Early results:

  • 40% rise in crop yields due to better equipment access.
  • Default rates below 2%, compared to 15% for traditional microloans.
  • Farmers like Ali Raza, 42, report higher incomes: “I used to pay 20% interest. Now, I share 10% of my wheat profits—it’s fairer.”

Education Crisis—Building the Next Generation of Experts

The Islamic finance talent gap is staggering. With 1.9 billion Muslims worldwide, the industry needs 1 million new professionals by 2030—but current graduation rates meet only 30% of demand.

Since 2006, Kuala Lumpur’s International Centre for Education in Islamic Finance (INCEIF) has trained 25,000 professionals across 100 countries. Its secret? A curriculum blending Shariah, finance, and tech. Courses include:

  1. Fintech Ethics: Balancing AI with Shariah principles.
  2. Climate Finance: Structuring green Sukuk.
  3. Pakistan’s new National Islamic Finance Development Fund (NIFDF) aims to replicate this, targeting 10,000 graduates by 2030. The fund partners with 15 universities to offer scholarships and internships.
  • Egypt’s NowPay: This AI platform offers “halal investing” tutorials to 500,000 users monthly. Interactive modules simulate real-world scenarios, like screening stocks for Shariah compliance.
  • Saudi Arabia’s Hala: A robo-advisor that screens 10,000+ stocks in real-time using algorithms vetted by scholars. Users grew by 300% in 2024.

A 24-year-old graduate of Lahore’s Islamic Finance Academy, Rahman now designs Sukuk for a Dubai-based bank. “My internship at Malaysia’s CIMB Islamic changed everything,” she says. “We need more cross-border programs.” Rahman’s team recently structured a $500 million Sukuk for a Saudi solar project, integrating ESG metrics.

Ethical Finance Goes Global—Unexpected Adoption

Islamic finance is no longer confined to Muslim-majority nations. From London to Tokyo, ethical banking is resonating with ESG-focused millennials.

Launched in 2024, Britain’s first fully Shariah-compliant pension fund attracted £300 million in six months. “Even non-Muslims are opting in,” says fund manager Amina Khan. The fund excludes companies with debt-to-asset ratios above 33%, aligning with Shariah’s risk-sharing ethos. Top holdings include Unilever and Nestlé, both screened for ethical supply chains.

Goldman Sachs’ Islamic ESG ETF saw $1.2 billion in inflows in Q1 2024, outperforming conventional funds by 8%. The ETF uses a dual screening process:

  1. Shariah Compliance: No alcohol, gambling, or interest-based income.
  2. ESG Metrics: Companies must score B+ or higher on climate audits.

Toyota’s $500 million Sukuk funded a hydrogen-powered vehicle plant in Osaka. Meanwhile, 40% of Japanese homebuyers now consider “ethical financing” a priority—up from 12% in 2020. Firms like Japan Islamic Finance Consultancy (JIFC) facilitate Musharaka (partnership) agreements, where banks and buyers co-own properties.

Pakistan’s 2028 Roadmap—Bold or Overambitious?

Dr. Qadri’s WIEFC address laid out a three-pillar strategy:

  1. National Islamic Finance Development Fund:
    • $200 million pool with 30% reserved for women-led startups.
    • First project: A blockchain Zakat platform to track donations from source to beneficiary. Pilot launches in Karachi in 2025.
  2. Regulatory Sandbox:
    • Testing AI Shariah auditors that scan contracts in seconds. The AI cross-references 50+ scholarly opinions to flag non-compliant terms.
    • Pilot with Karachi’s Stock Exchange begins Q3 2025.
  3. Rural Inclusion:
    • 15 million unbanked Pakistanis to gain mobile Islamic banking access by 2027.
    • Partnering with China’s Alipay to deploy 10,000 agent networks in villages. Agents earn commissions for onboarding users.
  • Skeptics: “Egypt took 15 years; Pakistan’s 2028 deadline is reckless,” argues Cairo-based economist Dr. Farid. He cites Egypt’s 2004-2019 transition, which required rewriting 120+ laws.
  • Supporters: “Iran eliminated interest in 18 months post-1983,” counters Dr. Qadri. The Central Bank of Iran replaced interest with “expected profit rates,” though critics argue this is semantics.

Climate Action—The Unlikely Role of Islamic Finance

A surprise WIEFC theme was climate change. With 63% of Sukuk funding green projects, ethical finance is becoming a climate ally.

In March 2024, the UAE’s $1.5 billion green Sukuk for Dubai’s Mohammed bin Rashid Solar Park sold out in 3 hours. The project will offset 6.5 million tons of CO2 yearly—equivalent to taking 1.4 million cars off roads. Investors include BlackRock and Norway’s sovereign wealth fund.

After 2022’s catastrophic floods, Pakistan launched Qard al-Hasan (benevolent loans) for rebuilding. Features:

  1. 0% interest, 5-year repayment grace period.
  2. 200,000 homes rebuilt by 2024, using climate-resilient designs like raised foundations and bamboo frames.

Technology—A Double-Edged Sword

As AI reshapes finance, WIEFC speakers debated: Can algorithms uphold Shariah ethics?

  • Bahrain’s Rain: A crypto exchange screening tokens for Shariah compliance. Rain’s scholars reject tokens linked to gambling or excessive debt.
  • Pakistan’s Nayapay: Mobile app offering AI-driven Zakat calculations to 2 million users. The app scans bank statements and suggests donations based on income and assets.

Dr. Kamarul Zaman Yusoff warned:

“Technology can’t replace scholars. An AI might miss the maqasid (higher purpose) of a transaction.” He cited a 2024 case where an AI approved a contract with hidden interest (Riba), later overturned by scholars.

Lagos State Governor Babajide Sanwo-Olu:

“Our Sukuk-funded port proves Islamic finance can drive development without debt traps. We’re replicating this model for schools and hospitals.”

France’s Ethical Banking Experiment

Société Générale’s Paris branch now offers Shariah-compliant mortgages. Client Marie Dupont:

“I’m not Muslim, but I prefer their transparent pricing. No hidden fees—just a fixed profit rate.”

Finance Minister of Indonesia Sri Mulyani Indrawati:

“Young investors want tech and ethics. Blockchain Sukuk delivers both. Our next step? Tokenizing Waqf (endowment) assets.”

The WIEFC 2025 made one truth undeniable: Ethical finance isn’t a niche—it’s the future. As Dr. Qadri concluded:

“Profit and piety can coexist. Our task is to build systems that honor both.”

What began in Pakistan’s flood-ravaged villages with interest-free Qard al-Hasan loans now echoes on Wall Street through Goldman Sachs’ billion-dollar Islamic ETFs. Islamic Finance Trends 2024 aren’t just reshaping markets—they’re rewriting the rules of ethical wealth. From Saudi Arabia’s $12 billion green Sukuk funding solar megaprojects to Indonesia’s blockchain-powered bonds attracting Gen Z investors, this year has proven one truth: money can uplift communities and portfolios when guided by conscience.

Pakistan’s bold legal reforms—eliminating Riba by 2028—show how nations can balance faith and finance. Malaysia’s education hubs and Nigeria’s Sukuk-funded ports prove this isn’t a niche movement. Even skeptics can’t ignore the numbers: a $4.5 trillion industry growing 14% annually, 63% of Sukuk funding climate projects, and apps like Egypt’s NowPay making halal investing as easy as TikTok.

But the real win? Islamic finance’s DNA—zero interest, shared risk, and ESG alignment—is pushing all finance toward fairness. Whether you’re a farmer in Punjab accessing micro-Sukuk or a Tokyo salaryman choosing ethical mortgages, 2024’s trends offer a roadmap: profit doesn’t have to come at humanity’s expense.

Courtesy: Halal Times


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