IsDB and ADB institutes propose shared-risk sukuk fund to broaden SME finance

The Islamic Development Bank Institute (IsDBI) and Asian Development Bank Institute (ADBI) unveiled a proposed financing mechanism on 17 June 2026 to improve access to Islamic capital markets for smaller businesses. The study, introduced during the IsDB Global Forum on Islamic Finance in Baku, Azerbaijan, describes a Sukuk Enhancement Fund that would pool selected risks among participating issuers.

Sukuk are securities structured to comply with Islamic finance principles. They can help issuers raise capital, but smaller businesses may face obstacles including limited credit histories, high transaction costs and investors’ concerns about repayment and underlying assets.

Under the study’s proposed design, participating issuers would contribute collectively to a protection pool. That shared fund could provide additional security to investors without depending entirely on government guarantees or separate subsidies. The institutes described the approach as a mutualised risk-sharing mechanism rather than an already operational financing programme.

The researchers said their work included quantitative analysis and Monte Carlo simulations to test how the design might perform under different conditions. Those modelled outcomes are useful for assessing a concept, but do not establish how an actual fund would perform once issuers, investors and regulators begin using it.

The proposal could be relevant to African businesses in markets where Islamic finance already provides capital or where new securities structures might widen investor participation. However, eligibility, governance, Shariah compliance, pricing and investor protection would all need to be addressed before any market launch.

IsDBI acting director-general Sami Al-Suwailem and ADBI dean Bambang Brodjonegoro presented the fund as a potential way to support financing inclusion and deepen capital markets. The study did not announce that a named African enterprise had received financing under the proposed structure.

The June release therefore marks a research proposal and possible financial-market design, not confirmation of a funded vehicle or lending already disbursed to businesses.

Source: Islamic Development Bank Institute and Asian Development Bank Institute joint study announcement, 17 June 2026. Featured image: IsDB Institute’s original newsroom image accompanying the research announcement.