IsDB Institute, London Stock Exchange unveil report on development traps, Islamic finance solutions

The Islamic Development Bank Institute (IsDBI), in partnership with the London Stock Exchange Group (LSEG), has launched a major report exploring how Islamic finance can help countries overcome persistent economic barriers to growth.

Titled “Development Traps and the Role of Islamic Finance: An Introduction to Development Challenges Facing IsDB Member Countries,” the report was unveiled during the 20th AAOIFI-IsDB Annual Islamic Banking and Finance Conference held on November 2, 2025, in Manama, Bahrain.

The publication marks the first volume in the new Development Traps Report Series, a joint flagship initiative between IsDBI and LSEG aimed at identifying and addressing structural obstacles that constrain development in many emerging economies.

According to the report, five key “development traps” continue to limit progress in numerous member countries – the Middle-Income Trap, Natural Resources Trap, SMEs & MSMEs Trap, Debt Trap, and Technology Trap.

It presents a data-driven analytical framework that draws from more than 20 international sources, including the World Bank, IMF, UNDP, WIPO, OPEC, and ILO. By combining these quantitative indicators with the ethical and risk-sharing principles of Islamic finance, the study highlights the potential of Sharīʿah-compliant tools – such as sukūk (Islamic bonds), waqf (endowments), muḍārabah (profit-sharing), and zakāt (almsgiving) – to promote inclusive and sustainable economic growth.

Speaking at the launch, Dr. Sami Al-Suwailem, Acting Director General of the IsDB Institute, described the report as “an important milestone in our efforts to provide actionable intelligence for policymakers.”

“It offers early warning signals to help our member countries avoid structural traps and leverage the full potential of Islamic finance for sustainable, inclusive growth,” he said.

He added that the partnership with LSEG “bridges the analytical rigor of global capital markets with the ethical and risk-sharing foundations of Islamic finance.”

Mustafa Adil, Head of Islamic Finance at the London Stock Exchange Group, said the collaboration demonstrates how data and innovation can drive real economic transformation.

“Islamic finance is not only ethical – it is strategically positioned to deliver impact in emerging economies,” he said.

The report also incorporates expert perspectives from global thought leaders, including Dr. Bambang Brodjonegoro, Dean of the Asian Development Bank Institute, and Dr. Mahmoud Mohieldin, UN Special Envoy on Financing the 2030 Agenda for Sustainable Development.

According to IsDBI, the publication will serve as a foundation for five upcoming thematic volumes, each delving deeper into one of the identified development traps. The next volume, focused on the Middle-Income Trap, is expected to provide detailed policy recommendations on economic diversification, productivity enhancement, and human-capital development – all within the framework of Islamic finance principles.

The launch underscores growing global recognition of Islamic finance as a viable tool for addressing structural economic challenges and achieving the United Nations’ Sustainable Development Goals (SDGs) in member countries.