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EDITORIAL

Islamic Finance Growing in Bangladesh Despite Structural Issues

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The Bangladeshi Islamic finance industry is likely to continue growing over the medium term, driven by rising public demand, new branch openings, and supportive government policies, says Fitch Ratings. Many conventional banks are focusing on Islamic products, either by opening new Islamic branches or windows or by converting into full-fledged Islamic banks. Islamic capital markets remain nascent, but the government started issuing domestic sovereign Sukuk in 2020, with its fourth auction in April 2022. This supports fiscal funding diversification and enables Islamic banks and takaful firms to invest their liquidity. Structural issues include underdeveloped regulations and a weak banking sector.

More lax prudential requirements have supported Islamic banking growth and motivated conventional banks to provide Islamic products. The regulator, Bangladesh Bank, has set the statutory liquidity ratio limit for Islamic banks (5.5%) much lower than for conventional banks (13%). Islamic banks also benefit from higher prudential limits, such as an advance-deposit ratio of 92% in contrast to 87% for conventional banks. We estimate the Bangladeshi Islamic finance industry to be over USD58 billion at end-1H22.

Bangladesh’s positive economic growth prospects (real GDP growth 2023F: 5%), due to rising private consumption, exports of ready-made garments, government spending, and investment, should support Islamic and conventional banking performance over the medium term.

The Islamic finance industry faces long-standing challenges, including Islamic banks’ limited branches and digital banking networks in rural areas – where 61% of the Bangladeshi population resided in 2021, according to the World Bank. The Islamic finance regulatory framework is underdeveloped, with a lack of Sukuk investment options and Islamic derivatives or hedging instruments, low awareness of Islamic products, lack of standardization, inadequate fintech usage, lack of incentives for Sukuk issuers, and under-skilled human capital.

Part of the Islamic liquidity-management infrastructure exists for Islamic banks, who can deploy and receive interbank placements from both Islamic banks and conventional banks, and invest in short-term government Sukuk in the form of Bangladesh Government Islamic Investment Bonds. However, no Islamic repurchase agreement or Islamic lender-of-last-resort facilities exists with the central bank. Potential remains to expand the range of Islamic liquidity-management products.

The Bangladeshi financial sector is also underdeveloped in general. The banking sector’s asset quality, capitalization, governance, and regulatory quality are weak, especially for public-sector banks. Banking penetration remains very low. About 47% of Bangladesh’s adult population didn’t have a bank account in 2021, and 8% of adults cited religious reasons for not having them, according to the World Bank. Insurance and takaful penetration was also very low at 0.5% in 2021. While a challenge, it underpins the high long-term growth potential for Islamic finance in Bangladesh, which has the fourth-largest Muslim population in the world.

Islamic banking has a domestic market share of 28.5% of total industry loans and advances at end-1H22 (June 2021: 28%). Islamic banks’ global market share was 2.7% – higher than Indonesia (1.9%), Pakistan (1.3%), Egypt (1.3%), and Jordan (0.9%), based on Islamic Financial Services Board’s latest available data. The outstanding Sukuk volume was about USD 1.7 billion. The takaful segment’s end-2020 domestic market share of 14.4% placed it seventh-largest globally, ahead of Oman (13.9%), Pakistan (12.6%), Bahrain (12%), and the UAE (10.2%).

Several initiatives could support Islamic finance development. In August 2022, the Bangladesh Securities and Exchange Commission released regulations on forming a Shariah Advisory Council, which should help in the push for standardization and support of Sukuk issuance. In September 2022, Bangladesh Bank issued a policy on green bond financing for banks and financial institutions, which covers Islamic securities. Standards issued by Accounting and Auditing Organization for Islamic Financial Institutions are partially adopted in Bangladesh.


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EDITORIAL

The Illusion of Inclusion: Why Davos Fails the Developing World

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Each year, the World Economic Forum (WEF) in Davos assembles the world’s most powerful leaders—government officials, corporate executives, and influential policymakers—to discuss the future of the global economy. With its elite gatherings and grand rhetoric, Davos projects itself as a platform for shaping a more inclusive and sustainable world. Yet, beneath the surface, a fundamental question remains: how does Davos truly serve the interests of the developing world, especially Africa?

For decades, Davos has been a stage for promoting globalization, technological innovation, and financial integration. However, the interests of the Global South – Africa, Latin America, and much of Asia – often take a back seat to the priorities of developed economies. The agenda is dominated by topics like artificial intelligence, climate change, and financial stability, which, while crucial, are typically framed through the lens of Western economic models and corporate priorities.

Africa and other developing regions rarely set the agenda at Davos; they remain largely passive participants in a conversation that profoundly affects their economic futures. Decisions about debt restructuring, trade policies, and technological investments are made in rooms where African leaders have limited influence. This structural imbalance reflects a deeper issue – the persistence of an economic order that prioritizes Western financial and corporate interests over the developmental aspirations of the Global South.

Despite its claims of global inclusivity, Davos continues to reinforce economic structures that disadvantage developing nations. Three major areas of concern stand out:

  1. Debt and Financial Dependency

African nations continue to struggle with unsustainable debt, much of it owed to Western financial institutions. While Davos discussions often highlight debt restructuring, they fail to address the fundamental flaws of the global financial system – flaws that keep African economies trapped in cycles of dependency. The absence of genuine structural reforms ensures that the developing world remains financially subordinate to Western creditors.

  1. Climate Hypocrisy

Developed nations at Davos aggressively push for green transitions, often pressuring African countries to abandon fossil fuels. Yet, they provide little funding or technology transfer to help Africa transition on its own terms. While Western economies continue benefiting from decades of industrial carbon emissions, African nations – rich in natural resources – face restrictions that limit their ability to harness their own energy wealth. This selective environmental advocacy reveals a glaring hypocrisy: Africa is expected to comply with sustainability mandates without receiving adequate support for alternative energy development.

  1. Trade and Economic Policies Favoring Corporations over Sovereignty

Davos promotes free trade agreements and investment policies that overwhelmingly benefit multinational corporations. African nations, in turn, find their local industries sidelined by powerful Western firms that dictate market terms. The promise of globalization, rather than fostering true economic inclusion, has largely reinforced Africa’s position as an exporter of raw materials and an importer of expensive finished goods—perpetuating economic stagnation.

The dominant economic models promoted at Davos-rooted in neoliberal capitalism – prioritize profit maximization, financial speculation, and corporate interests over ethical governance and social well-being. This is where the Islamic economic paradigm offers a moral and practical alternative.

  1. Ethical Finance over Speculative Capitalism

Islamic finance promotes risk-sharing and prohibits exploitative financial instruments such as interest (riba). If global economic policies were more aligned with these principles, developing nations could break free from debt dependency and adopt financial models that encourage shared prosperity.

  1. Sustainable Development over Profit-Driven Growth

Islamic economics emphasizes Maslaha (public interest) and Tawheed (unity of purpose), ensuring that economic policies serve humanity rather than corporate greed. A global economic system built on these principles would prioritize sustainability, ethical trade, and community welfare over sheer GDP growth.

  1. Economic Justice over Corporate Domination

Islamic economics champions Zakat (wealth redistribution) and Waqf (social endowments), offering an alternative to the exploitative financial models that dominate Davos. If African economies structured their development around these principles, they could foster self-reliance instead of remaining dependent on Western institutions.

Davos, in its current form, does not represent the interests of Africa or the developing world. It remains an exclusive club where global elites set the rules of the economic game—rules that have historically kept developing nations at the margins.

It is time for Africa and the Islamic world to spearhead a new kind of global economic dialogue—one that prioritizes justice, ethical finance, and true economic sovereignty.

The rise of the Islamic economy, along with Africa’s growing economic and demographic strength, presents an opportunity to build a model of economic governance rooted in fairness, sustainability, and self-reliance. Instead of looking to Davos for solutions, African and Islamic economic leaders must chart their own path—one grounded in ethical economics, financial sovereignty, and global equity.

For decades, Davos has positioned itself as the world’s premier economic think tank, but its impact on the developing world remains limited. The Islamic economic model offers a compelling alternative—one that is not only more just and sustainable but also more resilient against the excesses of speculative capitalism.

Rather than waiting for Davos to acknowledge its concerns, the Global South must seize the initiative. It is time to move beyond rhetoric and towards action—creating a new economic order where Africa and the Islamic world lead, rather than follow.

This is the challenge for Islamic economists, policymakers, and visionaries: to build an economic system that serves humanity, not just the financial elite gathered in Davos.


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EDITORIAL

The Gaza Betrayal: A New Chapter of Colonialism and the Palestinian Struggle for Liberation

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The recent announcement by U.S. President Donald Trump at a press conference with Israeli Prime Minister Benjamin Netanyahu, at the White House on 4th February 2025, that the United States could “take over” the Gaza Strip and support Israel in discussions on the annexation of the West Bank marks a dangerous and unprecedented escalation in the Palestinian struggle. The audacity of such a proposal—framed as a strategic solution—betrays the long-standing historical pattern of dispossession, occupation, and oppression that has defined Palestine’s modern history. This is not merely a geopolitical maneuver; it is a continuation of a colonial project that seeks to erase Palestinian identity and sovereignty.

A History of Betrayals and Resistance

This is not the first time Palestine has faced the threat of erasure. The region has been a battleground of imperial interests for centuries, from the Crusader occupation (1099–1187) to the British Mandate (1917–1948) and the creation of Israel in 1948. Yet, history has also shown that oppression breeds resistance. Salahuddin al-Ayubi (Saladin) liberated Jerusalem from the Crusaders in 1187, proving that no occupation is permanent when met with determined resistance. Today, the Palestinian people—though battered by decades of occupation, displacement, and war—continue to embody this unyielding spirit of defiance.

The Saudi and Gulf Position: A Delicate Balancing Act

The response from key Arab and Muslim-majority nations, particularly Saudi Arabia and the Gulf states, has been telling. Saudi Arabia has officially rejected Trump’s proposal, reiterating its commitment to a two-state solution. However, Riyadh’s increasing engagement with Israel in economic and security matters has raised concerns about whether its public stance aligns with its strategic actions. The United Arab Emirates and Bahrain, both of whom normalized relations with Israel under the Abraham Accords, have yet to forcefully challenge these latest developments. Their silence or diplomatic caution exposes the broader dilemma of regional politics: balancing Western alliances with the moral and religious obligation to defend Palestinian rights.

Would This Solve the Palestinian Question?

The notion that a U.S. occupation of Gaza and an Israeli annexation of the West Bank could lead to peace is deeply flawed. The root cause of instability is the denial of Palestinian self-determination, not the lack of American or Israeli control. Decades of occupation, forced displacements, and the systematic erasure of Palestinian identity have only fueled resentment and resistance. The American-Israeli plan does not aim to solve the Palestinian issue—it seeks to eliminate it entirely through forced expulsion and demographic engineering.

Our Perspective

We boldly state that the continued occupation and economic strangulation of Palestine highlight the need for self-reliance and economic resistance. The financial blockade imposed on Gaza has deliberately crippled its economic potential, making it dependent on foreign aid rather than self-sufficiency. Islamic economists argue that developing an independent Palestinian economy—free from Israeli control—is essential for long-term resilience. The establishment of trade networks between Palestine and friendly Muslim nations, the creation of alternative financial institutions that bypass Western economic dominance, and the implementation of Islamic financial instruments like waqf (endowments) and sukuk (Islamic bonds) could serve as viable means to sustain Palestinian economic sovereignty.

A Call to Action: Practical Steps for Liberation

Given this grave injustice, what should be the response of the Muslim world, particularly those committed to justice and the liberation of Palestine? Words alone will not suffice. The time for practical, coordinated action is now.

  1. Economic Sanctions and Boycotts: The Muslim world must strengthen the BDS (Boycott, Divestment, and Sanctions) movement to apply economic pressure on Israel and its allies. The refusal to engage in trade with businesses that support Israeli expansionism is an ethical duty.
  2. A Unified Arab and Muslim Stance: The Organization of Islamic Cooperation (OIC) must move beyond symbolic condemnations and demand the immediate recognition of a sovereign Palestinian state. It should also push for an international military and diplomatic strategy to defend Palestinian territories.
  3. Reviving Pan-Islamic Solidarity: The Muslim world has the wealth, influence, and military capacity to assert itself in global politics. If Salahuddin al-Ayubi could unite fractured Muslim states to reclaim Jerusalem, then today’s leaders must rise to the occasion and form a cohesive strategy to liberate Palestine.
  4. Supporting Palestinian Resistance: The Palestinian people must not be left to fight alone. International Muslim organizations should increase their financial, logistical, and political support for resistance movements striving for liberation.
  5. Rejecting Western Hegemony: The Muslim world must reassess its reliance on Western powers that have continually supported Israel’s expansionist policies. Instead, it should seek alliances with emerging global powers that respect the sovereignty and rights of oppressed peoples.
  6. International Legal Action: The Israeli occupation violates international law. The International Criminal Court (ICC) and the UN must be utilized to prosecute war crimes committed against Palestinians. Legal action against Israeli officials, similar to what was done to Serbian war criminals, must be pursued.
  7. Reviving the Spirit of Salahuddin Al-Ayyubi: History shows that Palestine was not liberated through negotiations alone. Diplomatic efforts must be coupled with strength. Muslim nations must modernize and strengthen their defense capabilities. A powerful Muslim world is necessary to counterbalance Israel’s military supremacy.

A Defining Moment for the Muslim World

The Trump-Netanyahu proposal is not just an attack on Palestinians—it is an affront to all Muslims and a challenge to global justice. The Muslim world must rise to the occasion, not with empty words but with decisive action. The world has seen countless peace talks, ceasefires, and negotiations, but none have changed the reality of Israeli occupation. The time for passive diplomacy is over. It is time for the Muslim world to act decisively.

The lessons of history remind us that oppression can only last as long as resistance is weak. Palestine has resisted for decades; now, it is the duty of the entire Muslim Ummah to stand in solidarity and ensure that this latest attempt at colonialism is met with unwavering opposition. Another lesson from history is clear: no occupier lasts forever. Whether it takes years or decades, Palestine will be free. The question is not if, but when. And for that day to come sooner rather than later, the Muslim world must rise to the challenge—economically, politically, and militarily. The road to liberation will not be easy, but history has shown that justice always prevails.

The time to act is now. History will judge whether the Muslim world stood by as another betrayal unfolded—or if it reclaimed its rightful role as the defender of justice, sovereignty, and liberation.

Palestine should never be allowed to be erased!


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EDITORIAL

A Crisis of Compassion: The Treatment of Migrants in the United States

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In an era that prides itself on human rights and global solidarity, the sight of migrants deported from the United States in chains and handcuffs presents a grave contradiction. These individuals—labeled “illegal immigrants” for lacking valid documentation—are not criminals. They are human beings: fathers, mothers, children, and the elderly, seeking safety, opportunity, and a better future. Stripping them of their dignity is not just an administrative failure; it is a failure of humanity itself.

As Islamic economists and advocates of justice, we are compelled to view this crisis through a moral and humanitarian lens. The Qur’an reminds us:

“Indeed, We have honored the children of Adam” (Qur’an 17:70).

This divine honor is universal, transcending borders and legal statuses. Deporting individuals in dehumanizing conditions—shackled like criminals—violates this principle and should trouble the conscience of any society that claims to uphold moral leadership.

The plight of these migrants is not incidental; it is the direct result of systemic injustices. Many flee poverty, violence, and instability—conditions often exacerbated by decades of exploitative policies and economic imbalances driven by wealthier nations, including the United States. These individuals are not opportunists; they are victims of a global system that perpetuates inequality, forcing them to seek refuge and survival elsewhere.

Migration is Not a Crime

The absence of proper documentation does not strip a person of their humanity. Islam teaches compassion toward the indigent and the traveler. The Prophet Muhammad (peace be upon him) profoundly stated:

“None of you truly believes until he loves for his brother what he loves for himself.”

This principle demands that we extend our concern to the vulnerable, ensuring they are treated with dignity, not as criminals. The current policies of mass deportations, conducted with excessive force and humiliation, betray the very ideals of justice and fairness that civilized societies claim to uphold.

A Call for Humane Solutions

Rather than criminalizing migrants, governments must adopt humane policies that respect their dignity and address the root causes of migration. Islamic economics offers a just alternative—one that prioritizes equity, wealth redistribution, and poverty alleviation. By addressing economic disparities at their root, we can reduce forced migration and create conditions where people are not compelled to flee their homelands in search of basic human security.

Deporting migrants in chains does not solve the problem; it merely deepens the wounds of an already broken system. History will judge harshly those who fail to uphold basic human dignity. As a global community, we must demand policies that reflect the values of compassion, inclusivity, and justice. Every human being deserves the opportunity to live with dignity, and it is our collective responsibility to ensure this becomes a reality.

The haunting images from the United States remind us that technological and economic progress are meaningless if they lack humanity. We cannot afford to turn a blind eye. Instead, we must strive for a world where migration is a choice, not a necessity—where no one is forced to flee their home, no one is treated as less than human, and where justice and compassion are the guiding principles of governance.


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