KFH CEO emphasizes role of Islamic finance in financing solutions
KUWAIT CITY, Nov 12: Group Chief Executive Officer at Kuwait Finance House (KFH), Mazin Saad Al-Nahedh emphasized the role of Islamic finance instruments in providing effective financing solutions, indicating the opportunity size in the Islamic Finance space is over USD 2.5 trillion and expected to grow by a CAGR of over 9% to reach USD 4 trillion mark by 2022.
Al-Nahedh statement was made during his participation in the 2018 IIF MENA Financial Summit held in Abu Dhabi under the theme “The Future of the MENA Financial Sector: Deepening and Diversifying MENA’s Financial Markets”.
He added: “On sector basis, Islamic banking assets contribute over USD 1.5 trillion and expected to grow at a CAGR of 7% to over USD 2 trillion in the next 5 years. The other major sector includes Sukuk with a total of over USD 350 billion while Islamic Asset Management size is over USD 100 billion. The key opportunities for Islamic Finance includes Sukuk as an instrument to fund key infrastructure projects. Thus, Sukuk acts as an Instrument to tackle government budget deficits. Further, corporate Sukuk issuances act as alternative financing opportunities.”
He pointed out that Kuwaiti banks have a great role to play in financing investment projects in the framework of the country’s vision of development (Kuwait National Development Plan 2035) and paving the way for making Kuwait as a distinct center for Islamic finance.
Al-Nahedh said that KFH has successfully engaged in the financing of many projects such as Euro 200 Million Credit facilities for Limak Insaat for the construction of a bridge in Turkey, Islamic portion of USD 831 million syndicated facility for Kuwait Airport (jointly with conventional), KD 120 million credit facility transactions in favor of MINA HOMES, financing a company entering into contract with the Ministry of Electricity and Water with total value amounting KD 120 million, financing a transaction for purchasing 3 aircrafts with value amounting KD 124 million in favor of ALAFCO Aviation Lease and Finance Company.
He indicated that KFH has taken the leading position amongst main traders in the premier Sukuk issuances, representing a share of 30% of its value amounting USD 10 billion, noting KFH Group trade volume in the Sukuk market exceeded USD 16 billion in 2017. He continued: “KFH supports over 1,000 customers of SMEs, which contributes in boosting the economy and creating new jobs for the youth.”
Al-Nahedh explained that the development of the financial system is a cornerstone of economic development, indicating the importance of modernizing capital markets in a way that it can steer economic growth higher. He added that financial reforms solidify investor trust in capital markets through promoting fairness, transparency, efficiency, and protection from market and operational risks. Moreover, financial reforms increase the liquidity of the market by attracting foreign institutional investors that invest long term like pension funds, endowments, and large global fund managers