Although Islamic banking is a relatively recent addition to the financial systems of a number of Arab and Islamic countries, it is making a significant contribution to the economies of these countries through its financing of viable investment projects.
The Islamic banking industry started in Oman several years ago compared to the rest of the Gulf Cooperation Council (GCC) countries, where Islamic banking was launched at the beginning of the 1970s.
Barely a decade has passed since the establishment of the first Islamic banks in Oman after 2011.
As Oman prepares to begin the implementation of its new economic vision (Oman Vision 2040) early next year, the role of Islamic financing will be significant.
In an example of the contribution of Islamic finance, Bank Nizwa — which is one of the main Islamic banks in Oman — recently signed a strategic financing agreement with Nakheel Oman Development Company to fund establishment of an industrial complex for dates and related industries in Nizwa.
This initiative will contribute to strengthening food security, as well as implement best practices in the field of food processing.
Bank officials believe that the partnership in such vital projects comes within the framework of the foundations and values upon which the Islamic bank has been established in this industry.
This means that the efforts are not limited to financing people in personal projects, but also in funding investment projects that are economically feasible for the country.
Such ventures will contribute to the production and marketing of Omani products, and enable young people to obtain job opportunities in their local communities, thereby mitigating migration from rural areas into the capital region.
Khalid al Khalili, Chairman of the Bank’s Board of Directors, said that the institution’s works by supporting such vital projects not only generate high returns, but also contribute to economic and social development.
This particular project will also achieve the strategic goals of the One Million Date Palms Project, and contribute to the preservation of natural resources, supporting sustainable development in the agricultural sector and achieving food security – goals that are enshrined in the Vision 2040 strategy.
Amid the economic slump triggered by the decline in global oil prices since mid-2014, coupled with impacts caused by the pandemic, many organisations and companies have suffered while employment opportunities have shrunk.
But Islamic banks, among other institutions, have the opportunity to create real partnerships with public and private sector organisations to support economic diversification, open up new sources of national income, and boost exports by commercialising local resources.
Haider al Lawati
haiderdawood@hotmail.com
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