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JEDDAH: A year after marking its 50th anniversary, the Islamic Development Bank remains at the forefront of global development finance, recognized for its distinctive model that blends Shariah finance principles with strategic investments.

Established in August 1974 and commencing operations in October the following year in ����ֱ��, the IsDB has grown into a distinctive institution within the global development landscape, championing ethics, equity, and solidarity among its 57 member countries and impacting one in five people worldwide.

The bank was founded through a visionary initiative led by Saudi King Faisal bin Abdulaziz and other Islamic leaders to foster development cooperation among member states of the Organization of Islamic Cooperation and enhance the wellbeing of Muslim communities.

Financial strength

The IsDB is recognized as one of the world’s most active multilateral development banks and a global leader in Islamic finance. It boasts prestigious AAA credit ratings by Moody’s, S&P, and Fitch — reflecting its strong financial stability and low risk.

With a subscribed capital of $76 billion, the bank is well-positioned to support large-scale development projects and foster economic growth across its member countries.

The Jeddah-based organization has evolved into a group of five institutions representing member states across four continents, with total approvals exceeding $182 billion for more than 12,000 development projects, as of April 2024.

Built on strong partnerships and trusted governance, the bank continues to promote sustainable socioeconomic development. ����ֱ��’s enduring support remains crucial as the IsDB charts its strategic future, committed to tackling today’s challenges and strengthening solidarity throughout the Muslim world.

Among its strongest partnerships is with Turkiye, a founding member that has received nearly $13 billion in IsDB approvals across 545 projects. In April 2024, both sides launched a new $6.3 billion framework to boost sustainability, productivity, Islamic finance, and digital transformation, reaffirming the bank’s long-term commitment to Turkiye’s development.

Speaking to Arab News, Abdulmohsen Al-Alshiekh, assistant professor and board member of the Saudi Economic Association, said over the past five decades, the IsDB has played a critical role as a development catalyst across the Islamic world.

He added that its effectiveness can be assessed on several fronts, including Infrastructure development, human capital investment, Shariah-compliant financing, crisis response, and South-South cooperation.

“IsDB has financed thousands of projects in transport, energy, water, and urban development, significantly improving connectivity and public services across its member countries,” Al-Alshiekh said.

He added that through scholarship programs, capacity-building initiatives, and education sector support, IsDB has contributed to advancing education, vocational training, and knowledge economies in low- and middle-income member states.

As for the bank’s Islamic law financing compliance, Al-Alshiekh said that one of IsDB’s unique strengths is its adherence to Islamic finance principles. “By promoting risk-sharing and asset-backed investments, it has provided an alternative to interest-based lending and contributed to the growth of the Islamic finance industry globally,” he added.

Crisis response

Al-Alshiekh said the bank has shown agility in responding to global crises, including the COVID-19 pandemic, by mobilizing special funds, providing concessional financing, and supporting resilience and recovery efforts in vulnerable member countries.

He added that the bank continues to foster cooperation among member states through trade finance, investment insurance, and technology transfer initiatives, reinforcing its role as a key platform for intra-OIC economic collaboration.

Development reach

Al-Alshiekh noted that countries across sub-Saharan Africa, the MENA region, South Asia, and Southeast Asia have benefited from IsDB’s interventions, underscoring several priority sectors including infrastructure, education, health, agriculture, and trade.

“These investments have helped close infrastructure gaps and improve regional integration, especially in landlocked and low-income countries,” he added.

On education and health, the assistant professor said the IsDB has funded scholarships, technical training, hospitals, and pandemic response. It has also supported irrigation, rural development, and agribusiness in sub-Saharan Africa and South Asia to fight poverty and boost food security.

“Countries such as Senegal, Niger, Nigeria, and Sudan have received substantial support in infrastructure, agriculture, and education,” he said.

Countries recovering from conflict or facing economic challenges, such as Yemen, Egypt, Morocco, and Tunisia, have received significant assistance, while Bangladesh, Pakistan, Indonesia, and the Maldives have also benefited from a mix of infrastructure, health, and education investments, Al-Alshiekh added.

Unequal model

Unlike conventional multilateral development banks, all the bank’s financial transactions comply with Islamic principles.

“One of IsDB’s unique strengths is its adherence to Islamic finance principles,” Alalshiekh said “By promoting risk-sharing and asset-backed investments, it has provided an alternative to interest-based lending and contributed to the growth of the Islamic finance industry globally.”

Youssef Saidi, a research fellow at the Economic Research Forum, emphasized the importance of distinguishing the IsDB’s model from that of conventional multilateral development banks.

“To understand the unique contributions of the IsDB, it is essential to examine how its development model contrasts with those of the conventional multilateral development banks, which often focus on standardized approaches that may not fully address the unique needs of developing countries, potentially limiting their effectiveness in fostering sustainable growth,” Saidi told Arab News.

He added that the IsDB focuses on Islamic finance principles, socio-economic development, and innovative approaches to financing and project implementation.

“These characteristics emphasize the importance of adaptability and responsiveness to the specific needs of member countries, which is essential for effective development financing,” he said.

He noted that this adaptability allows the IsDB to forge partnerships that boost funding and enhance project delivery, similar to other multilateral development banks.

Future priorities

As the global development landscape becomes increasingly complex, both Saidi and Al-Alshiekh agree that the IsDB must recalibrate its strategic focus to address emerging challenges.

“The challenges facing the IsDB include addressing governance issues, ensuring effective resource allocation, and adapting to the evolving needs of its member countries to enhance development outcomes,” Saidi said.

To maintain its relevance, the IsDB must navigate challenges such as regional disparities in development, ensuring equitable resource allocation, and fostering innovation in Islamic finance practices, he also said.

Looking ahead, Al-Alshiekh said the IsDB is expected to broaden its role in key areas such as climate action through green sukuk, private sector partnerships focused on small and medium enterprises, fintech, digital infrastructure and e-governance, and support for fragile regions via stabilization funds and humanitarian-development-peace frameworks.

Enduring values

While the IsDB shares several features with conventional development banks, including alignment with the UN Sustainable Development Goals, it remains rooted in a distinct ethos.

“Unlike conventional MDBs, IsDB operates entirely on Islamic finance principles. This means it avoids interest-bearing loans and instead uses instruments like Murabaha, or cost-plus sale, ijara, or leasing, and istisna’a, or construction financing, as well as sukuk,” Al-Alshiekh explained.

He added that the IsDB’s approach is value-based, emphasizing ethical finance, social justice, and equitable growth that aligns with Islamic principles. “This contrasts with the often secular and market-oriented frameworks of conventional MDBs.”

Governance is another differentiator. “IsDB’s governance model is rooted in the OIC (Organization of Islamic Cooperation), with its members being exclusively Islamic countries,” he said.

This allows for a greater cultural and strategic alignment among its stakeholders, while conventional MDBs tend to have a broader, more diverse global membership, he noted.

Al-Alshiekh also underlined the principle of solidarity that guides the bank’s resource allocation. 

“The IsDB emphasizes ‘Islamic solidarity’, often prioritizing needs-based resource allocation and South-South cooperation, in contrast to performance-based lending criteria or conditionalities common in conventional MDBs,” he said.
 

RIYADH: A surge in emotionally driven micro-purchases is reshaping retail trends in ����ֱ��, with collectibles like Pop Mart’s Labubu dolls emerging as cultural icons and commercial successes amid the Kingdom’s Vision 2030 transformation.

The global phenomenon of Labubu — a mischievous character created by artist Kasing Lung and popularized by Hong Kong-listed Pop Mart — has taken hold in the Kingdom and across the Middle East. 

These SR300 ($80) to SR400 dolls, distributed through “Blind Box” formats that conceal which design a buyer will get, feed on psychological urgency and scarcity — elements that have translated into real profits and fast-rising cultural capital.

Once niche, these figures are now clipped to luxury handbags and styled as part of fashion-forward outfits, becoming status accessories across demographics. 

Driven by social media trends and psychological triggers like fear of missing out, demand for Labubu dolls and other limited-edition collectibles is reshaping how young, tech-savvy consumers engage with retail.

Business Boom

In 2024, Pop Mart reported revenue of 13.03 billion Chinese yuan ($1.81 billion), a 106.9 percent jump from the previous year, propelled largely by Labubu sales.

In the company’s latest financial report, Pop Mart Chairman and CEO Wang Ning said: “The global phenomenon of Labubu last year propelled the revenue of The Monsters beyond 3 billion yuan, while SKULLPANDA’s ‘Temperature’ series emerged as the most successful designer toy collection in history.”

This explosive growth wasn’t by chance. Pop Mart’s global expansion strategy, coupled with its direct-to-consumer model and experiential retail approach, played a crucial role. “The year 2024 has also been dubbed the ‘Plush Year,’” Ning said.

He added: “For the first time, we have categorized our retail business into four major segments: figure toys, plush, MEGA, and other IP-related products. Among them, revenue from plush increased by 1,289 percent year-on-year, accounting for 21.7 percent of our total revenue and delivering the breakout hit — and biggest surprise — of the year.”

Today, Pop Mart boasts more than 13 IP brands generating over 100 million yuan each annually, with flagship stores in cultural hubs such as London and Paris.

Emotional spending

Behind the numbers lies a powerful behavioral-finance story. Vijay Valecha, chief investment officer at Century Financial, says Pop Mart’s success reflects the rise of emotional spending in an era of uncertainty.

“Spending on rare collectibles is propelled by a combination of emotional spending, fear of missing out, societal influences, and various cognitive biases rooted in the principles of behavioral finance,” Valecha told Arab News.

He noted that the timing couldn’t be more favorable. “These small, impulsive purchases are fueled by feelings of FOMO, exclusivity, and the thrill of surprise,” he added, explaining why even modest toys can command premium prices.

Echoing this sentiment, Pop Mart’s use of the Blind Box format — where buyers don’t know which design they’ll receive — adds a layer of gamification, increasing emotional engagement.

“Saudi and Gulf consumers are also following the emotional micro-spending trends seen in Asia. This can be evidenced by the rapid adoption of the viral Labubu collectible doll in the region,” Valecha said.

Local retail shift

This wave of consumer psychology has gained serious traction across the Gulf. In ����ֱ��, Labubu dolls are sold on platforms such as Noon.com and Amazon.sa, priced between SR99 and SR399.

Offline, events such as Riyadh Season have featured Labubu-themed installations, elevating the character to a pop-cultural symbol.

Valecha linked this demand directly to broader national trends. “This evolving trend is entirely consistent with ����ֱ��’s Vision 2030, which seeks to strengthen both its cultural and entertainment industries while advancing digital innovation,” he said.

“With a growing population of tech-savvy youth and one of the highest smartphone penetration rates globally, the Kingdom provides fertile ground for trends like viral collectibles to flourish and evolve into full-scale economic drivers.”

A similar narrative is playing out in the UAE, where platforms like Careem deliver Labubu dolls in under 20 minutes for 305 dirhams ($83).

“In the UAE, too, Labubu dolls have taken the country by storm, with their rising demand making them more challenging to find in stores. The dolls are available in physical stores located in Bluewaters, Dubai Mall, Mall of the Emirates, and Madkicks,” Valecha added, emphasizing the region’s appetite for rapid, experience-based consumption.

According to Pop Mart’s report, the company established Pop Mart Middle East Trading L.L.C. in the UAE in August 2024, with a registered capital of 2.5 million dirhams.

Fad or future?

Still, questions linger about the sustainability of such emotionally charged trends.

“The popularity of Labubu dolls is primarily driven by social media hype from major influencers and psychological behaviors like herd mentality, FOMO, and instant gratification, which outweigh broader economic factors,” Valecha said.

And while the model has so far defied economic slowdowns, he cautioned against over-optimism. “The viral collectible boom has been building momentum long before these headwinds materialized. While economic caution may affect some buyers, popularity can be linked to cultural and emotional drivers rather than a defensive budget strategy.”

Retailers in the Kingdom are responding rapidly. Riyadh’s Center Mall has hosted Labubu-themed pop-ups, while SGFR Riyadh regularly restocks new collections.

Platforms like Desertcart and other e-commerce players are helping local consumers access global Labubu releases with ease.

More importantly, local brands are beginning to mirror Pop Mart’s playbook — timed drops, influencer-driven buzz, and exclusivity — all aimed at converting one-time buyers into loyal fans. The convergence of commerce, culture, and emotion is redefining how value is created in modern retail.

Beyond the collectible

The Labubu effect ultimately demonstrates how intangible triggers — nostalgia, community, and emotional gratification — can drive tangible economic results. Pop Mart’s multi-pronged strategy of IP storytelling, retail innovation, and psychological engagement positions it as a textbook case of emotional commerce.

“We firmly believe in IP’s transcendent power to overcome linguistic barriers and transcend temporal cycles,” Wang said. “These efforts have rapidly enhanced the global recognition of the Pop Mart brand and our IPs.”

Whether its business model can withstand broader economic pressures remains to be seen. But in a region where culture is becoming commerce, the Labubu phenomenon proves that even the smallest products can yield the biggest stories.