Government initiatives to tap funding from the Gulf Cooperation Council (GCC) countries and Islamic multilateral institutions, diversifying the financial sector and boosting financial inclusion, could support the growth of the Islamic finance industry in Central Asia, Fitch Ratings has indicated.
In a commentary released last week, Fitch said that Kazakhstan and Kyrgyzstan could lead Central Asia’s Islamic finance industry growth over the medium-to-long term, although the industry is likely to remain niche.
Fitch estimated that Central Asia’s Islamic finance industry exceeded $500m as of end-2024 (excluding multilateral financing). There are some signs of the ties with the GCC being deepened, which could help Islamic finance penetration. For example, the Islamic multilateral bank and Saudi Arabia-headquartered Islamic Development Bank (IsDB) Group also supports CIS countries across various projects. Total IsDB funding to CIS countries reached $9.1bn at end-2023, with the largest shares in Uzbekistan (41%), Kazakhstan (18%), Turkmenistan (13.6%), and Azerbaijan (13.2%).
Fitch said the Central Asian bond market is mostly underdeveloped, with the sukuk market more embryonic. In 2023, the first tenge-denominated sukuk was issued by the Islamic Corporation for the Development of the Private Sector. In 2024, the Astana International Exchange (AIX) announced the issuance of the first local sukuk by Gamma-T SPC. AIX also cross-listed sukuk for the first time in 2020, issued by Qatar International Islamic Bank. This was followed by the cross-listing of IsDB’s sukuk.
Eurasian Development Bank
Separately, the Eurasian Development Bank (EDB) announced in January 2025 that it had become a member of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), as part of the bank’s moves towards promoting financial inclusion, diversification of the financial market and supporting the development of Islamic finance products across its member states and Central Asia as a whole.
The EDB’s partnership with AAOIFI is integral to fostering the adoption and integration of Islamic finance standards, strengthening cooperation and partnerships of financial markets globally.
This partnership will enable training programmes, workshops and knowledge-sharing initiatives, contributing to a deeper understanding of Islamic finance principles and their application.
The EDB said it plans to establish an Islamic banking window in 2025. The bank is actively leveraging tools such as sukuk, Islamic project financing and digital financial platforms to create synergies between its member states and the broader Islamic financial market.
AAOIFI, a globally recognised Islamic finance industry organisation, is responsible for the development, advocacy and promulgation of standards for accounting, auditing, governance, ethics and shariah compliance.
The EDB is an international financial institution investing in Eurasia. Its portfolio consists principally of projects such as transport infrastructure, digital systems, green energy, agriculture, manufacturing and mechanical engineering.