The Future of Islamic Finance in Central Asia
This report provides a comprehensive analysis of the current status and prospects of Islamic finance in Central Asia. It also offers recommendations on the development of the Islamic financing market in the region.
With reported total Islamic finance assets of USD 699 million in 2024, or 0.01% of total global assets, Central Asian nations still make a modest contribution to the industry. This is despite the large average share of the Muslim population, which constitutes 85% of the total population in these countries.
The Central Asian region (comprising Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) is undergoing significant transformation. Central Asia's population is 82 million. This represents a 40% increase since 2000. It is estimated to grow at 2% per year. In 2024, the aggregate GDP of the Central Asian countries was USD 519 billion. Over the last two decades, it has grown by an average of 6.4%. Foreign trade turnover has increased almost ninefold since 2000. Foreign direct investments have increased seventeenfold. For over two decades, Central Asia has demonstrated consistent economic growth, outperforming the developing world average.
The region of Central Asia currently has 18 Islamic banks and 14 non-banking financial institutions, as well as Islamic banking windows. Islamic finance assets in Central Asia amount to USD 699 million at the beginning of 2024. According to the Islamic Finance Development Report 2024, Kazakhstan ranks 19th in the world in terms of Islamic finance development in 2024 (i.e. above the global average) and leads the Central Asian market.
In the next ten years, there is a perspective for significant growth and development in the Islamic finance industry in the region, driven mainly by the Islamic banking sector and the ṣukūk asset class (Energy, Transport & Logistics, Industry, Food Security and Social Infrastructure are priority areas of investment).
This approach assumes an increase in Islamic banking assets in Central Asia to the level of USD 2.5 billion in 2028 and USD 6.3 billion in 2033. Given the favourable demographics, strong economic growth, and the substantial size of the banking industry in each of the five Central Asian nations, Kazakhstan is expected to be the leader, followed closely by Uzbekistan. The region’s Ṣukūk market is also expected to witness significant expansion: the baseline forecasts suggest that Ṣukūk market is anticipated to grow to USD 2.05 billion by 2028 and USD 5.6 billion by 2033.
Islamic Finance market Outlook for Central Asia 
Sources: EDB, IsDBI, LSEG
The Islamic finance industry faces challenges such as lack of standardisation, and the need for robust risk management frameworks. For that reason, regulatory harmonisation across Central Asian countries is crucial to attract foreign investment and facilitate cross-border transactions.
The report stresses the need for cooperation of the multilateral financial institutions and International Islamic banks on creating Sharia-compliant products and services tailored to the specific needs of Central Asian markets, including development of “Islamic windows” in conventional financial institutions as a sustainability milestone and innovative solutions for microfinance, agriculture financing, and renewable energy financing. International Islamic banks from more mature Islamic finance jurisdictions such as the Gulf countries and Southeast Asia can help build capacity in Central Asian Islamic banking ecosystems and can enable knowledge transfers in Central Asian countries to enhance the levels of Islamic finance technical expertise they can draw upon.