MODERN ISLAMIC FINANCE has developed rapidly since its inception in the 1970s. Most of the advances have been in banking, however, and Islamic asset management, which only started to take off in the mid-1990s, remains relatively underdeveloped. Substantial hurdles still inhibit growth but nearly everyone in the market is convinced that it will soon come into its own.
Industry sources estimate that there is $100 billion to $150 billion invested in a Shari'ah (Islamic law)-compliant fashion. This relatively small figure highlights the potential. The world's 1.3 billion Muslims control vastly greater assets. Private assets in the Middle East alone are estimated at $800 billion but most of it is either salted away under mattresses or invested in conventional products.
A huge proportion of Muslims would, however, prefer to invest in Shari'ah compliant products given the opportunity. "There is a lot to be done in this area," says Mohammad Toufic Kanafani, CEO of Noriba Bank, the new Islamic financial services institution started by UBS in September 2002.