To amplify a bit on Colonel Cathcart's post, the issue you're facing is one that is common to all languages in a script Kobo doesn't list as a supported language. I have the same issue as well, with books and Pocket articles in Yiddish (which uses the Hebrew script). Kobo supports Unicode very well so it's possible to get the script to work, but you will need to jump through a few hoops.
1. To get book titles in Arabic to display properly, you'll need to make sure you've set a supplemental font that supports Arabic. You will then need to get the Kobo to load the Arabic glyphs from the font. The easiest way to do this is to open a book or Pocket article in Arabic. Once you've done that, all titles in Arabic for books as well as Pocket articles will display properly. I've only tested this with the Hebrew script, but it should work in precisely the same way for Arabic. If the titles stop displaying, just repeat the process of opening a book or an article, and they'll start displaying again.
2. Current versions of the patches for the keyboard don't include Hebrew or Arabic. It should be possible to take the code for the Arabic keys in
this version of the patches (starting at line 1006) and adapt them for the equivalent file in the
current version. But it is probably sensible to ask someone in the Kobo Developer's Corner forum to check what you've done before you install it on your Kobo. I couldn't manage to get the original version of the Hebrew keyboard to work with the diacritics you need for Yiddish, so adapting it to the current version isn't something I've tried to do myself. But it should in principle be possible.