Some Aspects of Islamic Banking in LDACs: Reflections on the Faisal Islamic Bank, Sudan

Abstract

In the second half of the 1970s, some Muslim countries, including the Least-Developed Arab Countries (LDACs), began to establish forms of Islamic banking and other Islamic finance institutions either side by side with the conventional (Western) banking system or within a complete new set-up of the Islamisation of the entire economy. At present about forty-five Arab and non-Arab Muslim countries have some sort of Islamic banking and other Islamic financial institutions (Khan and Mirakhor, 1990, p. 353). The creation of Islamic banking institutions was largely associated with the oil price hike of 1973–4 and the attitude towards the revival of Islam, especially in the banking practices. Sudan is no exception to these LDACs in establishing some Islamic banks side by side with the conventional banks. Islamic economic institutions in the Sudan, including the Islamic banks, were given a further push by the Islamic reforms launched in September 1983 and the enactment of the Taxation and zakat (Islamic wealth tax) Act in 1984. Like other Islamic countries, the role of the Sudanese Islamic banks in the process of economic growth has not figured prominently in the economic analysis so far.