The Participation Finance Strategy Document encompasses all sectors, products and services under the umbrella concept of participation finance and outlines the strategic framework for the development of the participation financial system as a whole.
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In the 2021-2022 period, Finance Office of Presidency of the Republic of Türkiye carried out a preparatory work and completed the Participation Finance Strategy Document. The aim of the document is to ensure that the participation financial system, which is one of the two main pillars of the İstanbul Financial Center, operates in full compliance with the tenets of participation finance; produces feasible and viable solutions for the various structural problems of the participation financial system; gains the position it deserves in the overall financial system and ensures that the İstanbul Financial Center becomes a global hub for participation finance.
Aiming to achieve a major transformation in the current framework and construct the legal, administrative and corporate infrastructure for the participation financial system in the 2022- 2025 period, the Participation Finance Strategy Document was prepared through a thorough preparation process with the contribution of a large number of stakeholders.
During the preparation process of the Participation Finance Strategy Document, best practices and implementation experiences of selected countries in Islamic finance were thoroughly reviewed and the short-term and medium-term impacts of these experiences were considered as well.
While exemplary countries were examined in detail, one of the goals of the Participation Finance Strategy Document is to come up with a Türkiye-specific model. In this context, the Stakeholder Recommendation Form has been prepared in order to obtain the thoughts, opinions, recommendations and feedback of the main stakeholders in participation finance. The Stakeholder Recommendation Form has been shared with 89 institutions and 73 persons who are experts in their fields. The feedback extracted from the Stakeholder Recommendation Form has been analysed in detail and used in construction of the basic framework for the Participation Finance Strategy Document.
Subsequently, different working groups were formed on eight topics considered as priority areas regarding participation finance. The names of these working groups are as follows:
- Participation Financing Institutions,
- Participation Capital Markets,
- Participation Insurance,
- Participation Social Finance,
- Integration with the Halal Value Chain,
- Fiqhi Governance in Participation Finance,
- Human Capital,
- Perception, Awareness and Participation Financial Literacy.
Weekly meetings were held for 6 weeks with the working groups, which were composed of 45 members from different institutions and organizations. The working group meeting notes were later compiled to form a comprehensive document, which was shared with the working group members. In addition, background reports on various topics were prepared by several academicians. The output gained from this whole process formed the backbone of the Participation Finance Strategy Document.
The Participation Finance Strategy Document basically consists of the following sections:
- The Concept, Scope and Potential of Participation Finance
- General Outlook
- Thematic Areas
- Key Findings and Recommendations
- Strategic Goals and Objectives
- Action Items
Strategic Goals and Objectives
In the preparation process of the Participation Finance Strategy Document, main findings emanated from the current outlook, feedbacks extracted from the Stakeholder Recommendation Form, consultations in the working group meeting and in-house studies based on domestic and international experiences were employed as inputs. Following the preparation process, the Key Findings and Recommendations were composed through a thorough and meticulous review of all inputs by Finance Office of the Presidency of the Republic of Türkiye.
While the Key Findings and Recommendations play an important role in the determination of the strategic goals and objectives in the Participation Finance Strategy Document, two more ingredients entitled “Global and National General Framework” and “Key Principles” have also been taken into account.
The strategic goals and objectives included in the Participation Finance Strategy Document within the scope of "Global and National General Framework" and "Key Principles" aim at the following:
- Finding realistic and viable solutions to the ongoing structural problems of the participation financial system,
- Establishing an ecosystem that is fully compliant with the tenets of participation finance and focused on the purpose-oriented principles,
- Building a financial model that will contribute to Türkiye's financial independence and strong, sustainable and inclusive growth,
- Positioning of the participation financial system as a considerable alternative in the new global architecture,
- Ensuring that the İstanbul Financial Center becomes a regional and global Islamic financial hub.
In the Participation Finance Strategy Document, 5 main goals and 18 objectives are determined. These strategic goals are listed below:
- Realizing institutional transformation,
- Establishing supportive mechanisms,
- Forming a holistic fiqhi governance structure,
- Ensuring the development of human capital,
- Increasing positive perception, awareness and participation financial literacy.
Goals and Objectives of the Participation Finance Strategy Document