British Surprise: UK announces sukuk plans.
World Islamic Economic Forum comes to Dubai
British Surprise: UK announces sukuk plans.
Yes, I know it’s a picture of David Cameron from last year’s conference in London. That was him telling the world London was open for Islamic business, and proving it by announcing the issuance of a £200 million sovereign sukuk.
It was once again the turn of the British to deliver the surprise at this year’s World Islamic Economic Forum in Dubai. This time it was Andrea Leadsom, Economic Secretary to the Treasury, announcing to delegates that the UK would soon be guaranteeing sukuk on export credit transactions. In addition, the Bank of England will soon be offering a long overdue and much needed Shari’a compliant liquidity facility for Islamic banks.
However even though WIEF is a unique gathering of individuals who are influential in the Islamic economy – and the main conference is often a platform for major announcements – on the whole mega-conferences of this nature tend to provide a public platform for statements of self congratulation. Introspection is not generally a prized asset in the fast moving world of high finance or politics. Whenever a gathering of CEOs or world leaders is asked to present on one panel, ideas become homogenised and thought leadership from thought leaders dies an ironic death. Without the healthy tension of a balancing opinion, the status quo cannot be challenged.
Nevertheless on this occasion it was encouraging to see steps taken to present some alternative opinions. In particular, the topic of zakat was raised for what may have been the first time ever at WIEF. One session was also held discussing Islamic finance as a form of alternative equity participation rather than the replication of conventional finance that we see in many of today’s ‘reverse engineered’ Shari’a compliant products. How refreshing! If only the organisers could resist the urge to retweet banal platitudes on the big screen above…
I sincerely hope WIEF continues to build on these alternative themes in the future. As a result of these somewhat more thoughtful panel sessions, Islamic finance was widely discussed on the sidelines – where the real work at such events takes place – as a force for social change, for good. And so senior bank executives, charitable organisations, entrepreneurs, economists and diplomats discussed more thought provoking topics such as the funding of SMEs and the real economy through Shari’a compliant growth capital; the provision of infrastructure like social housing; the institutionalisation of zakat and how the Islamic finance industry can help in this regard through CSR initiatives. Aren’t these themes at the beating heart of the Islamic economy?
These essential discussions can so easily be drowned out in the perennial white noise of the Islamic finance industry’s apparent runaway success. X% growth in assets. Y number of new funds. There still exists a heavily entrenched view amongst seasoned practitioners that the success of the industry is measured in trite metrics. But it shouldn’t be, and no clearer demonstration of this is the lack of penetration in the retail market. See PriceWaterhouseCooper’s research on the level of suspicion harboured by the typical buyer of Islamic financial products – and that’s in the Middle East where one would imagine the general public to be more accepting of Islamic finance. The man and woman in the street are profoundly suspicious of the motives of banks and perhaps even more so in the Islamic sphere, where the products and the culture are often accused of being reflections of their conventional counterparts.
If the Islamic economy is to present itself as a credible alternative economic system, perhaps WIEF can galvanise the debate by focusing on the purpose and culture of our industry. Is it truly ethical? Can we find commonalities with other world religions? With social movements that decry the gap between the wealthy and the impoverished? Is Islamic finance a lubricant for the real economy, or a sophisticated preserve of the super-rich?
Let’s build on the success of WIEF 2014 to progress this essential debate. If Mufti Taqi Usmani – one of the world’s leading Islamic scholars – can be invited to the World Economic Forum in Davos to present a paper on alternative economic theory (as he did in 2010), then why not at WIEF in 2015?
This article was originally published in heavensbankers.com, on 20 November 2014. A version of this article was also published in MENA Fund Manager December 2014.