Islamic Development Bank (IsDB) Institute and London Stock Exchange Group (LSEG) Launch Report on Development Traps and the Role of Islamic Finance

The Islamic Development Bank Institute (IsDBI) (https://IsDBInstitute.org/), in collaboration with the London Stock Exchange Group (LSEG), has officially launched a landmark joint publication titled “Development Traps and the Role of Islamic Finance: An Introduction to Development Challenges Facing IsDB Member Countries.”

The report was launched during the 20th AAOIFI-IsDB Annual Islamic Banking and Finance Conference held on 2 November 2025 in Manama, Bahrain. The conference brought together policymakers, economists, and industry leaders to discuss how Islamic finance can help member countries overcome persistent structural barriers to growth.

The new report is the first volume in the Development Traps Report Series, a flagship initiative of IsDBI and LSEG. It introduces a data-driven framework to identify and address five key development traps that can hinder long-term growth: the Middle-Income Trap, Natural Resources Trap, SMEs & MSMEs Trap, Debt Trap, and Technology Trap.

Drawing on data from over 20 global institutions, including the World Bank, IMF, UNDP, WIPO, OPEC, and ILO, the report integrates quantitative indicators with Islamic finance perspectives, demonstrating how Sharīʿah-compliant instruments such as sukūk, waqf, muḍārabah, and zakāt can play a pivotal role in mitigating development stagnation and promoting inclusive economic transformation.

The report also features insights from leading global economists and policymakers, 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.

Dr. Sami Al-Suwailem, Acting Director General of the IsDB Institute, said during the launching, “This report series represents 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 added that the collaboration 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 LSEG, noted: “Our partnership with IsDBI demonstrates how financial innovation and reliable data can be mobilized to address the most pressing development challenges. Islamic finance is not only ethical, it is strategically positioned to deliver impact in emerging economies.”

The newly launched report serves as the foundation for five subsequent thematic publications, each addressing a specific trap in greater depth. The next volume, focusing on the Middle-Income Trap, will analyze the challenges of economic diversification, productivity enhancement, and human-capital development, and propose policy pathways rooted in Islamic finance principles.

The full report is accessible here: https://isdbinstitute.org/product/development-traps-role-islamic-financ…