Suriname Opens Door to Islamic Banking in Western Hemisphere

In a move meant to boost the economy and increase ties to the Muslim world, the Surinamese Central Bank granted the Trust Bank a license to practice Islamic banking on October 3—the first such license in the Western Hemisphere. The license completes a process that began a year ago when Trust Bank signed an advisory services agreement with the Islamic Corporation for the Development of the Private Sector, an arm of the Islamic Development Bank (IsDB), which is a Saudi Arabia-based institution with 56 member countries. It also marks a deepening of Suriname’s ties with the IsDB, of which it became the first member in the Western Hemisphere in 1997.

Dutch-speaking Suriname, which sits on the northern edge of South America, has a culturally and religiously diverse population. While 13.9 percent of its people are Muslim, neither the Islamic Development nor Islamic banking have been common practice. Islamic banking follows Sharia law by prohibiting investment or speculation in alcohol, tobacco, and gambling as well as prohibiting interest, instead using fees or profit sharing, but still allows for customers of all religious traditions.

Officials claim that the new practice will attract investment in Suriname’s economy as well as provide capital for small and medium-sized enterprises. Just last week, the IsDB approved a $10 million loan for Suriname’s health sector, which followed a $60 million loan in early 2014 and may reportedly be followed by a $1.8 billion loan that officials from the bank will be discussing in an upcoming visit to Paramaribo.

The move also helps to establish Suriname as a financial center in the region. Its neighbor, Guyana, which recently also became a member of the IsDB, is looking to Suriname for assistance in receiving capital from the bank. In addition, Bahrain reportedly wants to invest in Suriname’s banking industry. To fortify its new foothold in the hemisphere, the IsDB is also reportedly discussing plans to open a new branch in Suriname, which would accompany its offices throughout the Muslim world.

Suriname and the other countries of the Guyana Shield are culturally, linguistically and economically separate from the rest of South America, so Suriname’s move to encourage capital and investment from a bloc that lies outside its region may serve to connect the country to the global economy and spur growth amid a slump in commodity prices upon which its economy relies.