The missing link in Sharia finance

The missing link in Sharia finance

By Rushdi Siddiqui, Special to Gulf News Available at:

Financial editors and news bureau chiefs of major conventional and western media organisations have to look at not only the importance of a news story, but also its time sensitivity. Islamic finance stories must compete against numerous “conventional” news stories like central bank news on interest policies and inflation, earnings announcements from Fortune 500 companies, buyouts by major private equity firms, trade and unemployment numbers, and so on.

Today in Islamic finance we do not have an Islamic finance central bank, either at the country or global level.

We do not have Islamic financial and economic indicators (though existing indicators provide preliminary insights), but, we do have infrequent developments on acquisitions, funds launched, sukuk issued, etc.

The local media is the first to cover many of the press releases on Islamic bank branch openings, charge/credit card or product/fund launch, speaking/sponsoring at conference, winning awards, Ramadan tents, etc. But, its rare to find such ‘news’ covered by the (western) media based in Islamic finance hubs. Why?

Coverage variance?

The local media, as part of its ‘civic’ duty, to their readers, who may also be Islamic bank customers, are providing an information service that is often-times overlooked by major western media.

The major western media is typically the first one to break news on some controversy in Islamic finance, be it a sukuk default, fund closing, etc. Obviously, this says something about western media’s definition of ‘news-worthiness’ of news.

To capture the pulse of Islamic finance is not only about finding the balance between press releases and time sensitive news, but also providing supporting data alongside conventional data for benchmarking.

Islamic finance has many stakeholders, such as regulators, industry bodies, scholars, etc., but, interestingly enough, dedicated media is incomplete. There is coverage of Islamic finance by western and local media, but capturing, covering and analysing the daily pulse of Islamic fin-ance for a country, region or globally, comparable to conventional, is missing.

We have been hearing from many quarters about the lack of awareness (and education) about Islamic finance over the last decade, implying the media formula, as part of Islamic finance, has not succeeded. The message we have repeatedly heard about Islamic finance can be said to be more aligned towards “cheerleading”, and less about its functionality.

As a result, the buy-in by Muslims, especially those residing in the West, is tepid, at best, and the cross sell to non-Muslims is still a distant dream. For example, Islamic Bank of Britain, the only deposit-taking Islamic bank in the UK, established in 2004 with 50,000 customers (UK Muslim population is 2 million), recently had a rescue capital injection of £20 million from its founding shareholder, Qatar Iinternational Islamic Bank. A preliminary conclusion may be that in the UK, retail Islamic finance is not well known with target expectations not met.

The question then becomes, who is filling the media’s role for Islamic finance insights? Today’s Islamic finance bloggers provide two important and gap-filling media functions: frequent news coverage and deeper analysis without an editorial boss. The internet has, at one level, has removed the ‘monopoly’ of news coverage by traditional news sources, hence, anyone with a strong opinion and ability to write is an amateur roving ‘reporter’ of a story in real time.

However, blogging is only the beginning of the deeper dive into Islamic finance media.

Weak link

To build global awareness about Islamic finance, does the industry need to (initially) establish a dedicated online version of an Islamic Wall Street Journal or Financial Times or dedicated business channel like CNBC? But, a more precise question would be: is there sufficient content of news and data to initiate such a project for this $1 trillion (Dh3.67 trillion) industry?

The industry continues to float ideas of an Islamic mega bank, international liquidity management platform, establishing infrastructure to increase intra-OIC trade and investment, etc, but where are the proponents for Islamic finance media company for building a global Islamic finance media entity in real time?

Today, dedicated media is a weak link in the Islamic finance chain. Local papers, like the widely circulated Gulf News, in the major Islamic finance hubs, and major West-based papers carry the major equity indexes, currency pair, rates, price of oil and gold, etc., on the front page of their business sections, yet do not carry the closing of a Sharia compliant equity or sukuk index. Why? Do stories need to be complimented with data?

After 40 years, the time has arrived for a dedicated Islamic finance media entity to cover the increasing number of asset classes, hubs, regulations, standards, institutions, players, products, indexes, etc, extend to the halal industry, Muslim lifestyle, and showcase the link between conventional finance and capital markets.

Best Regards

Islamic universities rating system launched

IRAN: Islamic universities rating system launched

Wagdy Sawahel Available at: Islamic universities rating system launched

The Iran-based Islamic World Science Citation Center has launched a new classification system for Islamic universities, using the criteria of research and education performance, international cooperation and scientific impact. The first phase of the system has been implemented by ranking Iran’s universities and research institutes.

Extracting data from databases such as ISI, Scopus and Google Scholar allows for powerful and useful analysis for evaluating research performance from an international perspective. But this is inadequate for assessing scientific research in Islamic universities, as most of the Islamic countries’ journals are not covered – especially those not using English.

The new Islamic World Science Citation Center (ISC) classification system uses key performance indicators, including research (50%), education (35%), international outlook (7%), facilities (3%) and socio-economic impact (5%). The system extracts data both from direct contact with universities and from institutions’ research journals, which are collected and processed in different subsystems of the ISC.

ISC databases provide access to current and retrospective bibliographic information and cited references found in approximately 1,352 titles, covering engineering, science, agriculture, medicine and the humanities. Currently the languages used by the ISC include Farsi (Persian), Arabic and English.

Using the new system, on 10 January the ISC published a list detailing the ranking of top universities in Iran based on their activities in the period June to December 2010. The top five institutions were the University of Tehran, Tehran University of Medical Sciences, Sharif University of Technology, AmirKabir University of Technology and Iran University of Science and Technology.

Hassanuddeen Abd Aziz, dean of the Centre for Postgraduate Studies at the International Islamic University Malaysia, welcomed the new ISC system, which he sees as “an ideal tool for improving the international profile of Islamic universities and research publications in domestic journals”.

“The Islamic universities classification system will also provide policy-makers with a good guide for formulating appropriate higher education policies,” Abd Aziz told University World News.

“Malaysia has taken the Islamic lead and produced its national universities classification system, by measuring the performance of undergraduate teaching and learning in universities and university colleges,” he pointed out.

Abd Aziz concluded: “The ISC will increase the visibility and citation of scientific research, leading to promoting national and regional cooperation among Islamic universities and this, in turn, will improve the position of the Islamic universities among world-class universities.”

While the three oldest universities in the world are located in the Islamic world – including the Morocco-based University of Al-Karaouine, the Egypt-based Al-Azhar University and the Iran-based Nizamiyya – none of the 1,700 universities located in the Islamic world were included in the most recent list of the top 100 world-class universities.

Best Regards



Available at:

“Without beating around the bush or postponing or playing us for fools and without more false promises, we, the people of Egypt, demand all of our long forgotten rights to be granted and this time there is no turning back … we have learned our lesson …we have finally broken free of all fears
… thus stated a written flier that has been circulating – by banned oppostion -all over major cities of Egypt in thousands of copies on the night before January, 25th or what is now known as the Egyptian day of wrath.

The flier contained a lot of economic and political demands amongst which;

* Salaries and pensions increase that would cope up with the high prices and to include financial aid to the unemployed wide segment of the youth.
* Cancel the law of emergency – that gives the government the right to abduct any citizen without need for any law warrant.
* Egypt is no monarchy. 30 years are more than enough for Mubarak. He must go and his son Gamal- the probable successor or heir to his father’s presidency.
* The dissolution of the current parliament- whose elections deemed fraudulent.
* Fair and democratic parliamentary and presidential elections.
* Ban Egyptian exports to Israel and mainly the Egyptian natural Gas.

The paper had been written in Arabic slang with a language that reflected a lot of spontaneity and simplicity, nevertheless, it managed to reflect how the Egyptians felt toward their current regime.

Egypt is ruled by an authoritarian and oppressive regime headed by Hosni Mubarak who has been in power for almost 30 years now.

Egypt under Mubarak’s regime

Egypt – once known amongst Arabs as the mother of the world- that used to be the leader nation of the Arab world during the presidency of late President Nasser has turned during Mubarak’s reign into a shadowy and subordinate political entity.

The deeply rooted corruption of the Mubarak regime has turned one of the oldest agricultural societies on earth into one of the world’s biggest importers of wheat.

Mubarak’s agricultural cooperation with Israel has destroyed Egypt’s production of the world’s finest cotton to be replaced by fields of carcinogenic[i] fruits and vegetables.

Mubarak’s autocratic rule has never allowed the emergence of actively participating secular parties and free democratic elections.

The education and health care systems have dramatically declined during Mubarak’s regime.

Freedom of speech and demonstration has been widely denied and human rights have been violated.

Mubarak has been busy setting the stage for his son Gamal to take over the kingdom he thought was immune from mutiny.

On Tuesday thousands of ordinary Egyptians took to the streets – drived by years of opprssion and not by any foreign agenda – chanting slogans calling for change and freedom.

Throughout the long history of Egypt its people seldom rallied in huge numbers except during the first half of the twentieth century when Egyptians were trying to liberate the country from the British colonialism and one unprecedented time when they spontaneously swarmed the streets in June 1967 denouncing president Nasser`s decision to resign following the setback brought about by the six -day war with Israel
What is happening now in Egypt is historic by all means and all parties involved should acknowledge that and deal with it as such.

Egyptian protestors and clashes with security

The security forces managed to disperse the nearly thirty thousands protestors who were going to stay afoot and spend the night of Tuesday at Tahrir square in Cairo but that did not deter them, they hit the streets again the following day despite the prosecution and the brutality of the police forces which began to be more aggressive and to even fire live ammunition at protestors especially at the city of Suez [ii] whose citizens are putting up a courageous street to street fight with police forces.

Egypt could not be compared to Tunisia as far as the security and military apparatus is concerned. Egypt enjoys one of the biggest military and police forces in Africa and the Middle East. But Tunisia has to be given the credit for the domino effect that is sweeping across the Arab world now.

Mubarak – being a former military man – knows very well that he needs the support of the army and police forces to keep his reign safe and secure. That’s why he keeps himself surrounded by a close ring of loyal and strong men in the police and the military and that’s why the downfall of Mubarak won’t be an easy job nor without sacrifice.
The demise of 30 years of authoritarianism

The authoritarian regime of Mubarak has been so stunned and taken by surprise by the swift and abrupt uprising of the Egyptians; it failed to respond yet by any official statement to what has been happening.

One thing is sure now, Mubarak’s credibility has been shattered, he can no longer look in the eyes of any ordinary Egyptian, and to me, this is the clear sign of the end of his long and agonizing reign over Egypt.

What is characteristic of any Muslim Metropolis city like Cairo is the peak of crowd of people that fills the streets and mosques after Friday prayers which often witness reference to the latest national events during its speech – khotbah- delivered by imams.

Most of the historic demonstrations in Egypt – against the French campaign (1789-1803) and against British occupation (1882-1936) erupted by people gathered after they had finished their assembly for Friday prayers at Al-Azhar mosque. Likewise, and keeping this legacy alive, free Egyptians are now calling for the assembly of around one million protestors next Friday to go on a never seen before rallies that will demand that Mubarak should go.

This political unrest in Egypt might take a while, the stubborn regime of Mubarak might buy some time and concede to some of the protestors demans, he might announce that this would be his last term in office and he might want to drive his son – as rumours say-out of the country but what is certain is that the downfall of Mubarak will be -if not next Friday- on any given Friday.

The Egyptian addiction to Authoritarianism is finally coming to an end.

Best Regards

Sharia banking creates multiple consumers of financial services

Sharia banking creates multiple consumers of financial services

Collins Nweze Available at:

The move by the Central Bank of Nigeria (CBN) to introduce Sharia banking is generating divergent views. Former Executive Director of Bank PHB, Richard Obire, said it made sense for the CBN to increase the scope of banking choice.

According to him, the platform creates multiple consumers of financial services as it will make banking available to more target markets. He said it can also benefit the economy as sizeable portions of the population are Muslims. “I think the Sharia banking plan will take banking to more people, especially, the Muslim population,” he said.

A financial commentator based in Abuja, Martins Obi, said the concept of Sharia banking is a welcome development as long as it remains an option to bank customers. “I have no problem with this banking concept as long as it is targeted at those whose religious faith encourages them to do so,” he said. He said it should be voluntary and not enforced on any customer or institution. He said that the CBN has done well by taking a look at that type of banking system.

Special Adviser to the CBN Governor on Sharia Banking, Dr. Bashir Aliyu Umar, said Islamic Finance is a socially inclusive financial system. Within a large segment of the Muslim community, compliance of financial services with Shariah rules and principles is a primary concern for the users of these services.

Umar, who spoke in Bauchi during a training programme organised by Nigeria Deposit Insurance Corporation (NDIC), said there is a plan underway to enhance the access of Muslim communities and societies to these services but the success of the plan will depend, among other factors, on the extent of the compatibility of these services to their religious beliefs. ‘’In other words successful, financial sector development in countries with such communities requires the promotion of Islamic financial services within appropriate regulatory frameworks. Such strategies will enable a much larger proportion of the population across the world to participate actively and effectively in the process of economic development,” he said.

He said Shariah-compliant financial services could appeal to other segments of the population so long as the quality of these services is at least comparable with other alternatives.

Umar explained that in Islamic banking model, deposits are not interest-based but come as profit and loss sharing or as interest-free loans. Banks get a share of the profit from the business venture to which it is a party, and in case of loss without any negligence on the part of the bank, the investor forgoes the reward for the activity during that period. Losses are shared based on the equity participation, while profit is shared based on a pre-agreed profit sharing ratio.

Besides, the managers of this line of business are not permitted to deal in unlawful goods and services. No provision to charge any extra money from loan defaulters while the bank pays the annual prescribed alms when it becomes obligatory. There is a provision for the establishment of Shariah Supervisory Board to ensure that all business activities are in line with the Islamic law requirements especially auditing.

He said the introduction of non interest banking in Nigeria would herald the entry of new market and institutional players such as the Islamic Money Market, Islamic asset management companies, Islamic insurance companies and will no doubt, deepen the financial market. The entry of non interest banks is expected to bring about healthy competition in the industry with positive impacts in the economy.

But part of the challenges facing this line of banking is that it cannot hold conventional treasury bills or other interest bearing securities and therefore cannot participate in conventional Open Market Operations. This has implication for monetary policy and in the development of appropriate liquidity management products. Non interest banks cannot benefit from such a facility because such funds are usually provided on the basis of interest. There are taxation issues that need to be addressed when dealing with the products and services offered by non-interest banks, in order to avoid double-stamp duty.

The CBN recently unveiled an operational structure for running Islamic banking otherwise called non-interest banking in the country. The framework, allows Islamic bank owners to operate as a regional and national banks based on their ability to meet up with specified conditions.

The statement from the Acting Director, Financial Policy and Regulation Department, CBN, Chris Chukwu, said a non-interest bank with regional banking authorisation shall be entitled to carry on its banking business operations within a minimum of six and a maximum of 12 contiguous states of the Federation, lying within not more than two geo-political zones, as well as within the Federal Capital Territory (FCT).

The apex bank says it was the increasing number of requests from persons, banks and other financial institutions desiring to offer Shariah compliant products and services in Nigeria that prompted the development of this framework. The rule requires that non-interest bank with national banking authorisation shall be entitled to carry on banking business operations within every state of the federation including the Federal Capital Territory (FCT), Abuja.

Chukwu said the new framework also covers guidelines on Shariah Governance for Non-Interest Financial Institutions in Nigeria as well as those on Non-Interest Window and Branch Operations of Conventional Banks and Other Financial Institutions. The new framework dated January 13 defines Non-Interest Financial Institution (NIFI) as a bank or Other Financial Institution (OFI) under the purview of the CBN, which transacts banking business, engages in trading, investment and commercial activities as well as the provision of financial products and services in accordance with Shariah principles and rules of Islamic commercial jurisprudence.

It stipulates that transactions, instruments and contracts under this type of services are non-permissible if they involve interest; uncertainty or ambiguity relating to the subject matter, terms or conditions, gambling, speculation and unjust enrichment among others. All NIFIs are required to comply with this and any other guidelines that may be issued by the CBN from time to time. The objective of the framework is to provide minimum standards for the operation of institutions offering non-interest banking and financial services


Robert Fisk: A new truth dawns on the Arab world

Robert Fisk: A new truth dawns on the Arab world

Available at:

Leaked Palestinian files have put a region in revolutionary mood

The Palestine Papers are as damning as the Balfour Declaration. The Palestinian “Authority” – one has to put this word in quotation marks – was prepared, and is prepared to give up the “right of return” of perhaps seven million refugees to what is now Israel for a “state” that may be only 10 per cent (at most) of British mandate Palestine.

And as these dreadful papers are revealed, the Egyptian people are calling for the downfall of President Mubarak, and the Lebanese are appointing a prime minister who will supply the Hezbollah. Rarely has the Arab world seen anything like this.

To start with the Palestine Papers, it is clear that the representatives of the Palestinian people were ready to destroy any hope of the refugees going home.

It will be – and is – an outrage for the Palestinians to learn how their representatives have turned their backs on them. There is no way in which, in the light of the Palestine Papers, these people can believe in their own rights.

They have seen on film and on paper that they will not go back. But across the Arab world – and this does not mean the Muslim world – there is now an understanding of truth that there has not been before.

It is not possible any more, for the people of the Arab world to lie to each other. The lies are finished. The words of their leaders – which are, unfortunately, our own words – have finished. It is we who have led them into this demise. It is we who have told them these lies. And we cannot recreate them any more.

In Egypt, we British loved democracy. We encouraged democracy in Egypt – until the Egyptians decided that they wanted an end to the monarchy. Then we put them in prison. Then we wanted more democracy. It was the same old story. Just as we wanted Palestinians to enjoy democracy, providing they voted for the right people, we wanted the Egyptians to love our democratic life. Now, in Lebanon, it appears that Lebanese “democracy” must take its place. And we don’t like it.

We want the Lebanese, of course, to support the people who we love, the Sunni Muslim supporters of Rafiq Hariri, whose assassination – we rightly believe – was orchestrated by the Syrians. And now we have, on the streets of Beirut, the burning of cars and the violence against government.

And so where are we going? Could it be, perhaps, that the Arab world is going to choose its own leaders? Could it be that we are going to see a new Arab world which is not controlled by the West? When Tunisia announced that it was free, Mrs Hillary Clinton was silent. It was the crackpot President of Iran who said that he was happy to see a free country. Why was this?

In Egypt, the future of Hosni Mubarak looks ever more distressing. His son, may well be his chosen successor. But there is only one Caliphate in the Muslim world, and that is Syria. Hosni’s son is not the man who Egyptians want. He is a lightweight businessman who may – or may not – be able to rescue Egypt from its own corruption.

Hosni Mubarak’s security commander, a certain Mr Suleiman who is very ill, may not be the man. And all the while, across the Middle East, we are waiting to see the downfall of America’s friends. In Egypt, Mr Mubarak must be wondering where he flies to. In Lebanon, America’s friends are collapsing. This is the end of the Democrats’ world in the Arab Middle East. We do not know what comes next. Perhaps only history can answer this question.