As Goldman Sachs prepares to borrow via sukuks for the first time, Islamic financing could soon hit the mainstream. Britain has already issued sukuks and other non-Muslim countries look set to follow. One problem: the Islamic academics who interpret sharia law have their focus far above the bottom line.
Goldman understands how this can happen. In 2011 it had to scrap a $2 billion sukuk issue after some Islamic scholars said that its sukuk was not compliant with sharia, which forbids charging interest because it is considered to be usury. For agnostic capitalists, the customer is always right, even if religion must sometimes provide the guidelines. Global sukuk issuance in the first half of 2014 rose 6% to $66 billion, according to the International Islamic Finance Centre, on track to beat its 2012 record of $140 billion (up 50% from a decade ago). Global companies are keen to tap the new sources of wealth in the Middle East, Asia and Africa. Ernst & Young predicts that Islamic banking will grow to $3.4tn by 2018, up eightfold from 2010.
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