Arab countries can alleviate poverty through Islamic microfinance

Poverty can be reduced in Arab countries by taking Jordan as a regional hub of Islamic 
microfinance

(Jordan) Poverty is increasing rapidly in the Arab countries which are blessed with surplus of mineral and oil resources, one of the reasons is absence of financial products for poverty alleviation which are compatible with their religious, cultural and social values and beliefs While through Islamic microfinance poverty can be controlled over and poor can be brought into the financial inclusion in Arab countries. These views expressed by Muhammad Zubair Mughal, Chief Executive Officer - AlHuda Centre of Islamic Banking and Economics (CIBE) in an international workshop on Islamic Microfinance jointly organized by AlHuda CIBE and Arab Student Aid International in Amman - Jordan.

To discuss the current status of poverty in Arab World, he said that poverty is increasing rapidly in Syria, Iraq, Libya, Egypt, Yemen and Tunisia as the consequence of Arab Springs while poverty already exists in Sudan, Somalia and other Arab countries which can be addressed effectively through Islamic Microfinance as it quite suited to their religious beliefs. He, presenting the poverty index in Arab countries, evidenced the substantial existence of poverty in Arab countries including Iraq by 23%, Iran 18%, Yemen 35.8%, Jordan 13.5% and Lebanon 28% etc.

He said that if we look into the geographical location of Jordan it seems to be surrounded by the conflict zones including the neighboring countries like Syria, Iraq, Palestine and Lebanon. While Micro enterprise development, educational development, refugees issues and job creation can be enhanced quickly through Jordan taking as regional hub for Islamic microfinance.

Addressing to the event, Ameera Yaaqbeh Hilal, Executive Director – Arab Student Aid International, said that Islamic microfinance is the critical need of time through which poverty can be alleviated from society by providing Shariah compliant loans to the students and enhancing their vocational capabilities. She also announced to establish the first Islamic microfinance institution in Jordan by utilizing AlHuda CIBE expertise and technical assistance #  

اسلامی ما ئیکرو فنانس عرب ممالک میں غربت ختم کر سکتا ہے

"A Big Question Mark on Islamic Finance Industry", Muhammad Zubair Mughal

Apparently, it is a matter of pleasure that global volume of Islamic Finance Industry has crossed $ 1.3 Trillion approximately, which is, definitely, providing the best and compatible sources of finance with interest free modes. According to a careful estimate, there are more than 2000 Islamic Financial Institutions are offering Islamic Banking, Islamic Insurance (Takaful), Islamic Funds, Mudaraba, Islamic Bonds (Sukuk), Islamic Microfinance and some other institutions actively providing Islamic financial services on different modes in adherence of Shari’ah principles of Islamic Finance. If we look into the market share of above mentioned institutions, we get shocked and depressed for a while with the fact that Islamic Banking and Finance has been nearly confined to the rich people and as per the ideology of capitalism, the profit urge has captured the Islamic Financial Industry and discriminated the underprivileged people and letting them deprived from Islamic financial services. Keeping in view these facts, it should be said as the commercialism has captured Islamic Finance institutions in such a way that business with and financing to the poor has gone astray from their agenda. According to the facts and figures (March-2013) by Consultative Group to Assist the Poor (CGAP), (an associated institution to the World Bank), the global volume of Islamic Microfinance has reached at USD 800 million with serving about 1.3 million beneficiaries. While as per the latest research (July-2013) conducted by AlHuda Centre of Excellence in Islamic Microfinance, the global volume of Islamic Microfinance has reached at $ 1 billion. Total number of Islamic Microfinance Institutions is more than 300, operating around the globe while the share of Islamic Microfinance is less than 1% from the overall volume of $ 1.3 trillion of Islamic Finance Industry, which, itself, is a big question mark on Islamic finance industry and proving its misfortune. These stated facts and figures give rise to different question such as: is social segmentation between poor and rich 1% : 99% ? Does Islamic Finance have financial resources only for the rich people? Not for the Poor? Is Islamic Finance an option only for the particular segment of society? Is it justice system of Islam? etc, whereas the answers to all these questions are in negative and awful, definitely. As per the analysis of Islamic Finance in the light of Islamic teachings, we get into, the Islamic ideology of finance which aims at justice, cooperation, welfare of the poor and financially deprived people of society with its best principles. Islam is a name of revolution starting from poor and will ending at same. If we have a look at comparative study of different religions regarding the view point of poverty, then we come to know that poverty alleviation is not only the social responsibility in Islam rather a religious obligation as well. Zakat, Charity, Sadqa, Fitr, Usher and Qarz-e-Hasan etc are amongst the key religious responsibilities of Muslims, whereas it is a social responsibility in other religions rather than a religious one which recognized as branded name of “Corporate Social Responsibility” (CSR), and they doing good work for poverty alleviation and social development in the whole world, but unfortunately, Islamic Financial Industry have ignored its social or religious responsibilities. If we look at the world poverty, we get surprising facts and figures. The 46% of whole world poverty exists in Muslim World while Muslim population in the world is 26%. United Nations have marked 26 out of 57 member countries of OIC, as the least developed countries. Current statistical information is highlighting that the poverty in the Muslim World is increasing day by day which is, as per the serious observation, caused by none or least response of poor people to Microfinance facilities because of interest, none or limited Islamic Micro Financing facilities provided by Islamic Financial Institutions and the least attention and interest of International Donor Agencies (UNDP, World Bank, IFC) towards Islamic Microfinance which, in return, is throwing the Muslim world into an era of poverty. As per the praiseworthy analysis of economics experts of modern age (Mr. Tariq Ullah and Mr. Ubaid Ullah 2008), 650 million Muslims in the world are living below poverty line with less than $ 2/ per day income. While on the other hand, only the 1.3 million Muslims out of 650 million were tried to get them out of poverty through Islamic Microfinance services whereas remaining 649 million Muslim, living in poverty, are still looking forward any financial assistance through Islamic way. Islamic Finance Industry is facing lot of criticism in different aspects e.g. acceptability of Islamic Finance, objections from Shari’ah Scholars, Conflicts in Shari’ah related issues etc are the main challenges to Islamic Finance Industry. But objection to neglect the poor is very critical, once not resolved, can damage and bring a perpetual loss to the Islamic Banking and Finance Industry. The optimal results for the economic prosperity of Islamic Finance can be ensured if Islamic Microfinance Institutions established by the Islamic Finance Industry. Although Islamic Microfinance can be energized by utilizing available charity amount of Islamic Banking and Finance industry which is worth in Million Dollars. Inter alia Zakat, Sadqaat, Waqf, other Islamic Microfinance products e.g Murabaha, Musharaka, Salam and Istisna etc can be used prolifically for poverty reduction and social development. Our Shari’ah scholars are also responsible for insisting and pursuing the Islamic Financial Institutions to execute and promote Islamic Microfinance otherwise there is a definite chance of rumors that Islamic Banking and Finance services are only for rich people making discrimination of “Do Have and Have Not” and ensuring its ultimate benefits only to rich people. ( Muhammad Zubair Mughal as a Chief Executive Officer of AlHuda Centre of Islamic Banking and Economics (CIBE) has been working consistently for last nine (9) years for poverty alleviation through Islamic Microfinance concept; he can be reached at zubair.mughal@alhudacibe.com )

Shariah and BLOM Bank

In the case of Investment Dar Co KSCC v Blom Developments Bank Sal, the Investment Dar (TID) was an investment company registered in Kuwait and the Blom Development Bank (BDB) was a bank incorporated in Lebanon. A wakalah investment agreement was entered into between the two parties governed by English law. The agreement provided that Blom deposit a certain amount of money with TID, appointing TID as its wakil (agent) to manage the money as an investment. When TID defaulted on payments under the wakalah agreement, BDB sued TID in the High Court of England and applied for summary judgment on the grounds of default in payment (claim in contract) and the deposits held in trust (claim in equity). The master found that there was an arguable defence to the contractual claim, but not to the trust claim due to a misunderstanding of Shariah and the application of common law to an Islamic finance transaction.

TID raised the defence of ultra vires. TID argued that the wakalah agreement, which was approved by its own Shariah board, did not comply with the Shariah and was therefore void and against TID's constitutional documents. Although within the wakalah arrangement some issues of Shariah non-compliancy arose, since the contract was approved by the TID Shariah Board and constituted a binding contract in both common and Islamic law with valid offer and acceptance. Thus, TID should have been held to the terms of the contract.

In terms of Islamic law, the Hanafis stipulated a valid offer and acceptance as the cornerstones of the agency contract. While the Hanafis restricted the contracts cornerstones to offer and acceptance or actions implying acceptance, the other jurists enumerated four cornerstones: (i) principal, (ii) agent, (iii) object of the agency contract, and (iv) the contract language. If the compensation is a ji'alah, whereby the task and the time period are not explicitly stated in the contract, then the majority of jurists agree that the contract is non-binding on the parties.

However, the Malikis ruled that the contract was, in this case, binding on the principal once the agent begins working. If the compensation renders the contract an ijarah, then the Hanafis and most Malikis ruled that the agency contract is thus binding. In contrast, the Shafis and Hanbalis ruled that the contract was still not binding in this case. In this instance, according to the Hanafis, the contract had valid offer and acceptance with principal and an agent consenting to the terms of the contract and initiating investment activity in the form of a wakalah. In addition, the wakalah contract appears to be an ijarah and thus valid and binding according to the Hanafis and Malikis.

According to the AAOIFI Shariah standard No. 23 (4/3) and as occurred in this case, "when agency is paid, involves the rights of others, when the agent commences tasks that cannot be discontinued or phased out without causing injury to him or to the principal, and/or when the principal or the agent undertakes not to revoke the contract within a certain period, it falls under the Shariah rulings on Ijarah and is binding." The judge ignored the valid and binding contract and the original contractual intent of the parties, applied western trust law to the wakalah arrangement, and unjustly ruled that TID was only liable to pay Blom the principle amount.

In the concerned wakalah arrangement, at the end of every wakalah period, TID was obligated to pay five percent profit to Blom . The issue arose when TID defaulted on payments of Blom 's principal and the agreed profits. Blom claimed that TID should pay it the principal deposits plus the contractually agreed five percent profit. However, TID argued that the agreement was not Shariah-compliant, being an agreement for deposit taking with interest, and therefore null, being ultra vires and beyond its legal capacity to conform. The Judge concurred and stated, "I agree...that where one finds, as one does in this master wakalah contract, a device to enable...the payment of interest under another guise, that is at least an indirect practice of a non-Shariah compliant activity." Due to constraints faced by the Islamic banking industry in terms of risk management, the reality of operating in a conventional system, and the need to compete, it is difficult to adhere to true Shariah banking at this moment in time[SO1] . It may be argued that in fact all Islamic banking products are devices to enable the payment of interest in another guise.

According to the AAOIFI Shariah Standard No. 5(2/2/2) on Guarantees, "it is not permissible to combine agency and personal guarantees in one contract at the same time, because such a combination conflicts with the nature of these contracts. In addition, a guarantee given by a party acting as an agent in respect of an investment, turns the transaction into an interest-based loan since the capital of the investment is guaranteed in addition to the proceeds of the investment (i.e. as though the investment agent had taken a loan and repaid it with an additional sum, which is tantamount to riba)." In this case, TID, as agent, also guaranteed Blom a five percent return. However, even if the wakalah agreement in question really was a loan with interest in disguise or a similar contraption, due to the fact that this agreement was approved by the TID Shariah board, TID should be held to the terms of the contract. TID should not be allowed to suddenly claim that the transaction is non-Shariah compliant in order to evade its contractual obligations to Blom Bank.

According to records, Jurists agree that an agent's possession is one of trust, analogous to deposits and similar to possessions. This ruling follows from the fact that the agent would possess goods as a legal representative of the principal (who is the owner). Thus, his possession is similar (but not the same) to that of a depository, following its rules for trust and guarantee. Under Shariah, TID was holding the five percent profit on trust for Blom as agent for principal even if the guarantee combined with agency is thought by some to have turned the wakalah into a deposit taking with interest or to have simulated an interest-bearing loan.

Although under Shariah, TID was technically only supposed to receive an agency fee, in this wakalaharrangement, TID was contractually to receive an agency fee plus all return above five percent, thus bearing risk of loss. In a proper wakalah arrangement, the principal bears all risk of loss and profit, while the agent only receives an agency fee. According to the AAOIFI Shariah Standard No. 21(4/2/c), "the amount payable as remuneration for agency should be known, whether in lump sum or as a share of a specific amount of income. It may also be defined in terms of an amount of income to be known in the future, as when remuneration is linked to an indicator that may be quoted at the beginnings of different intervals of time. However, it is not permissible to leave remuneration for agency undetermined and allow the agent to take an unspecified share from the entitlements of principal." In this arrangement, the agent was to take an unspecified share from the entitlements of the principal, being any amount of return above five percent. These Shariah issues were totally ignored by the judge. In this transaction, the judge misapplied Shariah law, ignored the reality of the Islamic finance and banking industry, and then judged the contracts in relation to Western trust law, unfairly ruling that Blom was only entitled to the principal amount.

The judge ordered an interim payment to be paid to Blom based on the fact that the contract was null and void (no trust) and that the transaction was ultra vires (non-Shariah compliant). The judge should have ruled thatBlom was entitled to the deposit amount plus any profit made up to a limit of five percent (if profit was made) rather than just the deposit amount. TID ultimately withdrew the case.

About: Camille Paldi is associate with Alhuda-CIBE, She is a legal expert and founder of FAAIF Limited as well as the popular ilovetheuae.com. In addition to being a qualified Islamic finance specialist with a Masters Degree in Islamic finance from Durham University (UK), Camille is also a lawyer in four countries and nine jurisdictions around the world and has received legal training in common, civil, and Shariah law in six countries spanning five continents.

Source: Zawya

Islamic finance has taken the stage in 2013

It was the year that the Islamic economy moved from vague conceptual status, an item on Dubai’s “wish list”, to being a central part of the UAE’s economic strategy.

The tone was set early on, in January, when Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, set out the emirate’s aim to become the hub of global Sharia-compliant business within five years.

It was an ambitious plan. Dubai is already a leading financial centre for the issue of sukuk (Sharia-compliant bonds) but Sheikh Mohammed’s vision went far wider than just the sukuk market.

Sami Al Qamzi, the director general of the Dubai Department of Economic Development and one of the lieutenants entrusted with implementing the Ruler’s strategy, said the aim of the initiative was to create a global capital of Islamic industry, economy and finance.

“The plans to create an Islamic economic centre will provide access to a global market for Islamic products valued at more than US$2 trillion.”

Halal food production, pharmaceuticals and cosmetics, tourism and travel, and all other aspects of Islamic lifestyle were included in the plan, as well as the essential infrastructure of standardisation and certification of halal products.

Although nobody doubts the potential market provided by the world’s 1.3 billion Muslims, it is widely spread both geographically and sectorally. Dubai’s strategy was the first time one country had set out to be the world capital of the Islamic economy.

Dubai faces serious competition. Kuala Lumpar has been the driving force in Sharia-compliant financial business, having built up its resources in sukuk and other forms of Islamic finance over the past two decades.

London, too, was keen to augment its position as the leading financial market in the European time zone by becoming the global centre for sukuk listing and trading, a lucrative part of the Islamic financial market.

Other centres, like Dublin, Luxembourg, Indonesia and Bahrain also had plans to develop their Islamic economic capabilities. To make Dubai the centre of the Islamic business world would be a challenging task. The plan was immediately backed by leaders of the Dubai business and policymaking elite. In the Dubai International Financial Centre, the Nasdaq Dubai stock market announced it was considering a trading platform for sukuk, hoping to take away some of London’s lucrative trade.

Sultan Ahmed bin Sulayem, the chairman of Dubai World, applauded the move. “Dubai is pioneering; this is another example of how it does things before anyone else in the world,” he said.

The Dubai Multi Commodites Centre advanced plans to extend Sharia-compliant business in commodities and metals trading.

Banks beefed up their Islamic financial capabilities by hiring more experts on Sharia-compliant business, making it a growth market in the emirate’s financial scene and one of the forces behind Dubai’s recovery.

For most of the summer, the task force set up by Sheikh Mohammed was working hard behind the scenes to produce a practical strategy for the implementation of the grand plan.

By October, a master plan was in place. Seven separate strategic goals, each aiming to make Dubai a global leader in one aspect of the Islamic economy, had been identified: finance; the halal food industry; family-friendly tourism; the digital economy; fashion, arts and design; economic education; and standards and certification.

“The continued developments and changes in the global economy increase the need to constantly diversify the structure of our national economy,” said Sheikh Mohammed. “Our aim from all economic initiatives we launch is to improve the quality of life and provide opportunities that ensure a prosperous future for coming generations.”

And in a typical show of confidence that the emirate could achieve its ambition, he said that the time scale would be reduced. The aim was to make Dubai the capital of Islamic economy in three, not five years.

Early steps to be taken in 2014 include the establishment of an Islamic governance centre in Dubai, and an international laboratory for the certification and accreditation of halal products is also planned for early next year. Halal food and other products form an estimated US$3.5 billion global market.

Two other initiatives are also scheduled for the first part of next year: legislation to regulate the production of halal products locally and globally, and an international endowment authority to spread the culture of waqf, or Islamic charitable endowment.

At October’s World Islamic Economic Forum (WIEF) in London, held for the first time outside the Islamic world, the competitive pace was stepped up when Britain announced its plan to be the first non-Muslim country to issue a sovereign sukuk. But Dubai managed to steal London’s thunder when, after months of careful negotiations with the Malaysia-based WIEF, it was announced that the 2014 forum would be held in Dubai.

The final showpiece of the year was the Global Islamic Economy Summit held in Dubai in November, organised by the Dubai Chamber of Commerce and the information group Thomson-Reuters. Some 3,000 leaders of global Islamic business gathered to hear Dubai’s plans, and to give their general endorsement of the strategy.

The prize for Dubai had got bigger. A new study put the overall potential value of Islamic business at $6.7 trillion by 2018, more than the value of any national economy in the world except the United States and China.

Source: www.thenational.ae

Indonesia aims for insurance, takaful legislation in 2014

Insurers in Indonesia, Southeast Asia's largest economy, will have to wait until at least next year for a new law that will require the spin-off of their sharia compliant units, an official at the country's financial regulator told Reuters.

The move could reshape Indonesia's Islamic insurance, or takaful, market by spurring mergers as firms try to meet capital requirements for their full-fledged Islamic units.

A draft law is now with parliament but other legislative priorities means it won't be enacted this year as previously anticipated, said Alis Subiyantoro, head of the sharia insurance subdivision at the country's financial services authority.

"The draft is still in discussion. The government asked to look at other legislation so it was postponed until next year."

"It covers all areas - licensing, market conduct, corporate governance, consumer protection - for both takaful and non-takaful firms," he said.

Assets in Indonesian takaful firms grew 42.8 percent to 13.1 trillion rupiah ($1.1 billion) as of December 2012 from 9.15 trillion rupiah a year earlier, data from the regulator showed, representing 2.3 percent of total industry assets.

The law would give three years for insurers to comply with requirements to spin-off their Islamic units, although that timeframe is also under discussion, Subiyantoro added.

Minimum capital requirements for full-fledged takaful firms would be set at 50 billion rupiah, compared with 100 billion rupiah for conventional insurers, which could prompt smaller operations to either merge or close.

WINDOWS

Indonesia's takaful market is dominated by windows: there were five full-fledged takaful firms versus 37 sharia units of conventional insurers, as of December 2012.

Takaful windows enable firms to offer sharia-compliant and conventional products side by side, provided client money is segregated, but the practice is not widespread as in commercial banking where Islamic windows are commonplace.

Takaful is based on the concept of mutuality; the takaful company oversees a pool of funds contributed by all policy holders, but does not necessarily bear risk itself.

Indonesia's takaful sector has attracted global firms keen to capitalize on rapid economic growth in the world's most populous Muslim country, a market of 240 million consumers.

Firms offering takaful products include Europe's top insurer Allianz, Britain's biggest insurer Prudential, Toronto-based Manulife Financial Corporation, and French insurer AXA.

Passing Indonesia's insurance law would close the last market that allows takaful windows to operate, helping develop the country's nascent Islamic finance market which still lags behind neighbor Malaysia.

The only other regulator that has allowed takaful windows is Pakistan, which passed a law in July of last year to that effect but which has been challenged in court by local takaful firms. The law has been in legal limbo ever since.

Source: Reuters

Tunisia has big potential for Islamic Finance: Zubair Mughal

Tunisia would be the global hub of Islamic Finance for French speaking countries

Zubair Mughal, CEO, AlHuda CIBE Speaking at International conference "The Enterprise and Finance", which is jointly organized by World Bank, IMF, IFC & European Bank of Reconstruction and Development at Sousse – Tunisia

Muhammad Zubair Mughal, being the guest of honor, during his address he stated that international financial crisis can be addressed in a better way through Islamic Finance and such financial crisis could have not been happened if Islamic financial system was followed and implemented at that time, he said there are about 2000 Islamic Financial Institutions working globally as Islamic Banks, Takaful ( Islamic Insurance), Sukuk ( Islamic Bonds), Islamic Fund and Islamic Microfinance institutions etc in more than 100 countries and fortunately no Islamic Financial institution was effected by such global financial crisis which ensures the strength and rationality behind the Islamic financial system. He also added that international institutions such as Islamic Development Bank (IDB), Accounting and Auditing Organization of Islamic Financial Institutions (AAOIFI), Islamic Financial Services Board (IFSB) and International Islamic Liquidity Management (IILM) are dedicatedly working for Islamic finance around the globe which will further promote and strengthen the Islamic finance in future globally. He, responding to a question related to the relationship between religion and Islamic finance in question answer session, said that Islamic banking and finance is a name of a system not religion so all other religions can get benefit from it and that is why Islamic banking and finance is growing in the western world while non Muslims are utilizing the Islamic financial products, considerably, to fulfill their business, personal and financial needs as in only America which has more than 20 Islamic financial institutions are working, which are actively providing the Islamic financial services to fulfill the financial needs of Muslims and non-Muslims equally.

During his stay in Tunisia, he met with Dr. Amel Amri, President – Tunisian Association for Islamic Finance (TAIF), Dr. Raza, President – Islamic Economic Association Tunisia and heads of some other Islamic financial institutions. He said that Tunisia has a good recognition in Islamic financial industry having 2 full-fledged Islamic banks, Takaful companies, universities with having Islamic finance program, Sukuk Laws and some other similar institutions which are indicating the best future of Islamic finance in Tunisia but he, realizing the need of Islamic microfinance, said that Islamic microfinance is missing component of Islamic finance in Tunisia while socioeconomic development and poverty reduction can be done in better way through Islamic microfinance in Tunisia.

Pakistan a small player in global halal meat market

LAHORE: 

Pakistan is one of those countries in the world where climatic and other conditions support the livestock industry, but this industry lacks modernisation and is still a long way from becoming a leading player in the rapidly growing global halal food market.

In an attempt to give a boost to the industry, the government has made some efforts in the past few years, especially in Punjab, where the Punjab Agriculture and Meat Company (Pamco) has been established. However, it has yet to give desired results.

The private sector has been involved in this industry, but not aggressively because of issues like taxation, freight rates, energy crisis, etc. The industry needs modern and hygienic slaughter houses that can meet international standards for export of chilled or frozen red meat to countries where demand for halal meat is growing.

Pakistan is ranked 19th in terms of meat production with an annual output of 2.2 million tons. In the three-trillion-dollar halal product industry of the world, the meat segment is worth $600 billion. Pakistan’s share in it is only $115 million.

Meat exporters believe that this figure can be tripled with the right policies.

“The industry is in its initial stages in Pakistan, with literally 0% contribution to the global industry, we need relaxation in taxes, less interference from provincial departments and a clear policy to boost the industry,” said Nasib Ahmad Saifi, Chief Executive Officer of Anis Associates, a sister concern of Saifi Group, while talking to The Express Tribune.

The group is one of the largest exporters of meat in Punjab, whose export revenues have crossed $15 million annually.

“Rising tax rates, zero rebate, high freight charges and above all energy crisis are hitting us hard, otherwise our company has the potential to at least triple its export volume,” Saifi said.

He believed that total meat exports of the country could reach $500 million if the government started taking interest in this industry. Citing the example of India, he claimed that the neighbouring country, which is not even an Islamic state, was exporting halal meat worth $23 billion annually just by properly organising the industry.

He highlighted smuggling of live animals to Afghanistan and Iran as another problem that has been hitting the livestock market.

According to Pamco, around 2.5 million live animals worth $1.4 billion are smuggled every year, dealing a damaging blow not only to domestic meat sales, but also to exports.

Saifi stressed that if smuggling was brought under control, the export of red meat would grow and prices would also come down in the country.

This will also provide a boost to the local leather and tannin industry which will have access to high quality hides at lower cost. In fact it has been a long-standing demand of the local leather industry to limit livestock exports and to promote meat exports.

Source: Tribune

Islamic Microfinance should be Introduced Internationally: Dr. Fatima Al-Blooshi

(Dubai) Islamic Microfinance is an effective tool for the poverty alleviation and it should be introduced around the globe to state an effective policy for ultimate poverty alleviation from the world, these views were stated by Dr. Fatima Mohamed Yousif Al-Balooshi, Minister (Ministry of Social Development – Bahrain) as a Chief Guest in the 3rd Global Islamic Microfinance Forum (GIMF) held on 6th to 8th October, 2013 at Dusit Thani Hotel, Dubai in which delegates from more than 30 countries participated actively and this Forum was organized and conducted by AlHuda Centre of Islamic Banking and Economics (CIBE). She also added that Islamic Microfinance should be presided and supported by the Government in different countries of the world to promote the Islamic Microfinance Institutions. She also admired the endeavors of AlHuda CIBE at the inauguration of 3rd Global Islamic Microfinance Forum on 6th Oct, 2013 and also proposed to conduct the 4th Global Islamic Microfinance Forum in Bahrain.

Muhammad Zubair Mughal (CEO – AlHuda CIBE), addressing to the Forum, said that Poverty is increasing in the Muslim countries rapidly and consequently the half of the world poverty has, approximately, been confined to the Muslim countries in the current age. The involvement of interest in micro financing is one of the major causes behind this phenomenon and that is why Muslims hesitate to avail microfinance facility. If Islamic Microfinance is not introduced resolving this issue, the world’s poverty will increase extraordinarily. He said that the forum aimed at gathering all the Islamic Microfinance Institutions at single platform, to streamline the policies for poverty reduction, to promote the Research and Education in Islamic Microfinance industry and to enhance its outreach on global canvas. He said that current facts to the failure of microfinance system require an alternative and prudent Islamic Microfinance system to the world to enhance the financial inclusion globally and ultimate global economic prosperity.

Addressing to the forum Mr. Mr. Hamdan Mohamed Al Murshidi (President & Chairman of the Board, Arab Business Club, United Arab Emirates) said that there is no other argument to address poverty through Islamic Microfinance as it is the ultimate solution to this problem and also he committed with his reward less services to promote Islamic Microfinance globally. While Mr. Amjad Saqib (Executive Director – Akhuwat) said that Islamic Microfinance is a Hope for the Poor which they (poor) are looking forward to resolve their Social and Economic problems, so Islamic Microfinance should be promoted globally. He, by presenting Akhuwat as a case study, figured out that there are about 380000 families benefitting through Qarz e Hasana from Akhuwat. Meanwhile its portfolio has crossed PKR. 5 billion with an increasing trend day by day.

The forum was attended by Researchers, Scholars and Islamic Microfinance practitioners including: Justice (R) Khalil Ur Rehman (Shariah Advisor – AlBaraka Islamic Bank, Chairmen – Punjab Halal Development Agency – Govt. of Pakistan), Mufti Aziz Ur Rehman (Manager-Shariah, Mawarid Finance – Dubai), Dr. Ajaz Ahmed Khan (Microfinance Advisor, CARE International UK), Mr. Atef Ebrahim (Chief Executive Officer, Family Bank - Bahrain), Mr. Zeinoul Abedien Cajee (Founding CEO/ Management Board, National Awqaf Foundation of South Africa), Mr. Mamode Raffick Nabee Mohomed (Founder/ Secretary, Al Barakah Multi-purpose Co-operative Society Limited – Mauritius), Ms. Rehab Lootah (Managing Director - Mawarid Consultancy Dubai - U.A.E), Mr. Mohamed El Mehdi Zidani (Author - An Islamic Analysis of the Grameen Bank and Director Baraka Editions – France), Mr. Pervez Nasim (Chairmen & CEO, Ansar Financial and Development Corporation – Canada), Mr. Abdul Samad (Shariah Advisor, The Bank of Khyber – Pakistan), Mr. Humayun Saeed Jamshed (Senior Director - Islamic Banking & Finance, SAB – France), Mrs. Thamina Anwar (Founder and CEO, Awqaf New Zealand Mrs. Helena Lutege (Founder and Managing Director, BELITA Fund – Tanzania), Mr. Ali Tariq (Executive Director, Iraqi Microfinance Network – Iraq), Dr. Mohammed Kroessin (Global Microfinance Advisor – UK), Mufti Barkatulla (Sharia Advisor, Islamic Bank of Britain, London, UK) and some other prestigious international speakers addressed in this forum.

ASEAN Countries have big potential for Islamic Finance: Zubair Mughal

(Manila - Philippines) There are multiple opportunities in Association of Southeast Asian Nations (ASEAN) countries to promote Islamic Finance, through which Halal Industry can be flourished rapidly in the region. These views were expressed by Muhammad Zubair Mughal, Chief Executive Officer, AlHuda Centre of Islamic Banking and Economics (CIBE) during his speech at “First National Halal Forum” in Manila which was organized by Department of Science and Technology, Government of Philippines at a local hotel (Shangri-La Makati) on 29th- 30th October, 2013, in order to grow Halal Industry and Economy on both regional and international level. 

During his address to the Forum, he stated that Islamic Finance and Halal Industry are complement to each other. Micro and Small Medium Enterprises (MSME’s) can be energized by utilizing Islamic Finance concept in the region which will be cause to reduce in poverty and ultimate socio-economic prosperity in the ASEAN member Countries. He, presenting an analysis on ASEAN countries (Malaysia, Indonesia, Brunei Darussalam, Loa PDR, Myanmar, Singapore, Thailand and Vietnam), stated that the approximate total population of ASEAN countries is 600 million including the Muslim Population more than 40% (240 million) which is a potential indicator for Islamic Finance growth whereas in Malaysia, Indonesia and Brunei Darussalam already have significant contributions in Islamic Banking, Takaful, Sukuk and Islamic Funds, while Philippines and Thailand are being considered as future potential markets for Islamic Banking and Finance in ASEAN countries. 

He explained that Islamic Banking and Finance is the system not a religion which can be utilized by Muslim and Non-Muslims to get absolute benefits from the best services of Islamic Banking and Finance as its best example is the South Africa where Muslim population is less than 2% of the whole population but it has more than 5 Islamic Banks, 13 Islamic Funds and 2 Takaful companies working actively, which are equally famous among Muslims even non-Muslims communities because of their best practices and services. He said that Philippines is an important country of the region with having 100 million populations, approximately, containing Muslim population by more than 7% which bears it out that there are momentous chances for the promotion of Islamic Finance and, apparently, government of Philippines found active in this concern and it will, definitely, energize Islamic Banking and Takaful in result. He also stated that government of Philippines can generate financial resources for national level mega projects by utilizing the concept of Sukuk (Islamic Bonds). 

National Halal Forum continued for two days at Manila where experts from different countries of the world participated including Pakistan, Turkey, Malaysia, Indonesia and Thailand.

Takaful has global potential, say experts

Dubai: The takaful industry has huge potential to join the mainstream insurance business outside Muslim countries as a viable alternative to conventional insurance, say experts.

The global takaful (Islamic insurance) industry, which has a relatively small share of about $17 billion (Dh62 billion) in underwritings compared to the $3 trillion held by the mainstream industry, needs to attract wider audience and underwrite insurance requirements of larger businesses, said delegates at the Global Islamic Economy Summit 2013.

“There are a large number of big businesses such as huge infrastructure projects, oil and gas installations and power projects including nuclear projects coming up in the region,” said Fareed Lutfi, Secretary General of Emirates Insurance Association.

“Currently the takaful industry’s role in underwriting big-ticket risks is minimal while the industry is focused mostly on life and family takaful, motor insurance and relatively small businesses. This situation calls for creation of larger re-takaful companies that have the capital size to cover larger size risks.”

While the creation of new takaful giants is a solution, industry players said the merger of existing players and the entry of insurance multi-nationals into the business could help the industry to achieve critical mass in the Islamic re-insurance business. “Currently there are just 16 re-takaful companies,” said Firas El Azem, General Manager of Takaful Re. “These companies have the capacity to cover small- to medium-size risks. But when it come to larger risks the size is a constraint and it needs to be addressed.”

The total size of the insurance business in Islamic countries is estimated at $80 billion, with takaful accounting for less than $20 billion (including the industry in Iran). Industry representatives said that while there is huge growth potential for the takaful industry within the core markets such as the Middle East, Africa and south-east Asia, industry representatives said, takaful should look beyond the 1.2 billion Muslims and appeal to a wider global audience.

“In Malaysia, the Chinese populations constitute a big component of the takaful customers,” said Sohail Jaffar, Deputy CEO of FWU Global Takaful Solutions. “In the UAE there is a growing segment of non-Muslim takaful customers such as non-resident Indians. The industry should offer innovative insurance solutions that are competitive.” While Saudi Arabia, the UAE and Malaysia hold the lion’s share of the takaful market, the acquisition of market share has not necessarily translated into profitability in many instances. Panelists at the summit said most takaful companies in the region are relatively young and are at the early stage of their business development. Most operators have yet to achieve critical business volume despite incurring substantial establishment costs over their formative years.

Industry representatives said there are a number of untapped business areas such as the private pension market, insurance-linked products in education and longer-term saving schemes. However, all agreed that the GCC region requires comprehensive regulatory reforms to tap into these business segments. “Private pension schemes are virtually non-existent in the region,” said Hatim Al Tahir, Director Islamic Finance Knowledge Centre, Deloitte. “This is an area where takaful has huge growth potential if right regulatory framework is in place.”

Given the short-term nature of the work contracts of expatriates in the region, experts suggested that regulations should be tailored to suit portability of insurance schemes to their home markets or offshore financial centres.
Refference: gulfnews.com/business/banking/takaful-has-global-potential-say-experts-1.1259741