New Sukuk Fund Model Launched to Boost SME Financing

Dr Sami Al-Suwailem, Acting Director General of IsDB Institute, said the concept aligns closely with the core values of Islamic finance, including risk sharing, links to real economic activity and financial inclusion.

A new study released by the Islamic Development Bank Institute (IsDBI) and the Asian Development Bank Institute (ADBI) proposes an innovative financing model that could make it easier for small and medium-sized enterprises (SMEs) to raise capital through Islamic financial markets.

The report introduces the Ṣukūk Enhancement Fund (SEF), a mechanism designed to strengthen investor confidence, improve the risk profile of ṣukūk issuances and open new financing opportunities for businesses that often struggle to access long-term funding. The study was launched during the 20th IsDB Global Forum on Islamic Finance in Baku, Azerbaijan, alongside the 2026 IsDB Group Annual Meetings.

New Approach Tackles Financing Barriers for SMEs

SMEs play a critical role in economic growth and job creation across developing economies, yet many continue to face obstacles when seeking long-term financing. Limited credit histories, perceived investment risks and the high costs associated with issuing ṣukūk have often prevented smaller businesses from accessing capital markets.

The proposed SEF seeks to address these challenges through a shared protection framework. Participating ṣukūk issuers contribute to a collective fund that helps strengthen the overall risk profile of issuances, creating additional confidence for investors without relying on government guarantees or external financial support. The model is built around the principles of risk sharing and mutual support, which are central to Islamic finance.

Risk-Sharing Model Designed to Strengthen Markets

According to the study, the fund transforms individual issuer risks into a pooled protection system that benefits all participants. Dr Sami Al-Suwailem, Acting Director General of IsDB Institute, said the concept aligns closely with the core values of Islamic finance, including risk sharing, links to real economic activity and financial inclusion.

He noted that the initiative has the potential to unlock new funding opportunities for SMEs while contributing to the development of deeper and more resilient Islamic capital markets. ADBI Dean Professor Bambang P. Brodjonegoro also highlighted the importance of expanding access to long-term finance, describing SMEs as the backbone of many developing economies.

Research Shows Strong Potential

The study is supported by extensive quantitative analysis and Monte Carlo simulations that tested the proposed framework under a range of economic and market stress scenarios. Researchers found that the SEF could improve market stability, attract a broader range of issuers and encourage greater participation in the global ṣukūk market.

Beyond reducing investment risk, the report presents the fund as a potential building block for future Islamic capital market infrastructure. The framework could support financial inclusion, private sector development and sustainable economic growth across member countries of the Islamic Development Bank and other emerging markets.

The findings suggest that innovative market-based solutions such as the SEF could play an important role in expanding access to finance while remaining fully aligned with Sharīʿah principles.