Global Islamic finance assets reached $1.3 trillion in 2011 – report

Global Islamic finance assets reached $1.3 trillion in 2011 – report

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A new report from The CityUK’s UK Islamic Finance Secretariat (UKIFS) indicates that Islamic finance assets worldwide continued a long run of growth to reach an estimated $1.3 trillion in 2011, 150 per cent up over the previous five years. Despite political unrest in some countries the industry has continued to expand, not only in its core markets of the Middle East but also in South East Asia and offshore jurisdictions such as Bermuda.

Islamic funds, for example, reached a new high of $58 billion in 2010, with the available pool about ten times larger at over $500 billion. Even so, competition is fierce, with average management fees worldwide down from 1.5 per cent in 2006 to 1.0 per cent in 2011.

Keith Phillips, Executive Director, UKIFS, comments, “Our report once again shows that the UK continues to maintain its position as the leading Western provider of Islamic finance with assets of $19 billion.
“The UK also benefited from a globally buoyant sukuk market in 2011, with issuance up 60 per cent to $84 billionn. This was reflected in ten new sukuk listings on the London Stock Exchange’s markets in 2011 and two in early 2012. There are now 37 sukuk with a combined value of $20 billion listed on the London Stock Exchange’s markets. Additionally, seven exchange traded funds and two exchange traded products are also listed on these markets.”

In the UK, banks, sukuk issuance and exchange traded products are buttressed by the strong infrastructure of professional support for Islamic finance deals and transactions. This includes over 25 major law firms and the largest four professional services’ firms, and this has yet to be seriously rivalled by any other European financial centre.

The UK is also making an increasing contribution to the development of Islamic finance education and skills with four professional institutions and 10 universities and business schools offering qualifications. These include the Chartered Institute of Management Accountants, CassBusinessSchool, the University of East London and DurhamUniversity. With shari’ah-compliant finance utilised for the redevelopment of Chelsea Barracks and the construction of the Shard of Glass in London, Islamic finance also has a crucial role to play in infrastructure development in the UK.

Considerable potential exists for expansion of the industry worldwide, although appropriate legal and regulatory structures are crucial for its development in individual countries. The work that is now being undertaken through UKIFS with its six practitioner-led workstreams covering topics from wholesale banking to skills is looking to address these issues by creating more efficient structures and processes and applying greater innovation to drive market development.


Dubai Desert, with my good friends from South Africa and Singapore

Morocco eyes first Islamic bank launch in 2013

Morocco eyes first Islamic bank launch in 2013

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Foreign Islamic banks will be allowed to take up to 49 percent of Morocco’s first fully-fledged Islamic bank in 2013, as the country aims to become a regional financial hub, a government minister said on Monday.

The government will submit to parliament a draft bill with a set of regulations for the introduction of Islamic finance products in the country within the next few weeks, General Affairs and Governance minister, Najib Boulif, told Reuters.

“We expect parliament to approve the bill before the end of this year.

The current plan is to allow a gradual introduction of Islamic banks to preserve the competitiveness of existing (conventional) banks,” said Boulif.

The draft bill will be added as a chapter to the country’s Banking Law, providing a set of regulations on all Islamic finance products which specialised lenders will be able to offer from Morocco, Boulif said.
It is the first time that the Moroccan government, led since December by the moderate Islamist Justice and Development Party (PJD) has detailed how it intends to develop Islamic finance in the country of 34 million.

Morocco does not allow fully-fledged Islamic institutions but started in 2010 allowing conventional banks to offer a limited set of Islamic financial services products although customers complain they are subject to higher fees than conventional banking products.
So far only AttijariWafa, the country’s biggest bank which is indirectly controlled by a holding company owned by Morocco’s ruling monarchy, offers four such services based on Murabaha financing but only for personal finance.

Immediately after parliament approves the law, Moroccan authorities will allow local banks and foreign Islamic banks to set up the first Morocco-based Islamic lender, Boulif said.
“Local banks will be allowed to take at least 51 percent of its capital and as much as 49 percent will go to foreign Islamic lenders.

There is a very strong demand from abroad for such a project,” said Boulif, himself a member of the PJD.

Traders in Casablanca cite Qatar’s International Islamic Bank as one of the likeliest foreign Islamic banks to want a foothold in Morocco.
“We thought it is best to start with one Islamic finance institution as we wish to assess closely the experience to ensure its success.

If it proves to be a success within six months, then nothing should stop us from authorising more Islamic lenders,” added Boulif.

In allowing fully-fledged Islamic finance institutions to operate in Morocco, Rabat aims to overcome what has become a chronic shortage of liquidity, speed up economic growth and help its ambitions to develop a regional finance hub in Casablanca.
“Our economy is in desperate need for a push to help it jump to an economic growth pattern above the (annual) 4 percent we have had in recent years,” said Boulif.

When in opposition PJD legislators had said the development of a fully-fledged Islamic finance system in Morocco would add 2 percentage points to annual GDP growth.

“Morocco is struggling with liquidity shortage that forces the central bank to inject between 30 and 35 billion dirhams each week (into the banking system).

This shortage hurts the financing of investment and impacts lending growth,” Boulif said.
Morocco is also working on a developing a regional financial hub known as the Casablanca Finance City with a view to winning business with other countries in the north and west of Africa.

“We are keen to capitalise on the stability we enjoy here to turn Morocco into a regional Islamic finance platform,” Boulif said, adding however that Tunisia and Libya may also harbour similar ambitions.


University of Wales, Lamperter

Islamophobia: Myth or Reality

Islamophobia: Myth or Reality

I would like to share my recent presentation on the issue of Islamophobia at Pusat Islam, Kuala Lumpur to staff of Islamic Religious Council of Federal Territories and representatives of the non-governmental organizations. It is important to note that the OIC has already initiated the establishment of the OIC Islamophobia Observatory Report to specifically monitor, promote and create awareness on the issue of Islamophobia. The First Annual Report on Islamophobia by the OIC Observatory was issued in May 2007 to May 2008 followed by the Second Annual Report in June 2008 to April 2009, the Third Annual Report in May 2009 to April 2010 and the Fourth Annual Report in June 2008 to April 2009 May 2010 to April 2011.

For further reading, click here: Islamophobia: Myth or Reality

Islamophobia as a world view involving an unfounded dread or hatred of Islam and the subsequent fear and dislike of all Muslims. It also refers to the phenomenon as practice of discriminating against Muslims by excluding them from social, political and economic life.(The Runnymede Trust)

The effects of Islamophobia can be several and it impinges on micro, meso and macro levels of the society. Consequently, these effects inflict economical as well as social difficulties against people and nations. Foremost, The Runnymede Trust accentuate a systemi disadvantage where this could stand in relation to everyday attacks on Muslims as they can be spat on, mental and physically harassed, molested, abused and so forth based on a Islamophobic motives


With Yvonne Ridley, a British journalist and human right activist, former Taliban captive and finally reverted to Islam.

What Can We Learn From Islamic Finance?

What Can We Learn From Islamic Finance?

Otaviano Canuto Vice President, Poverty Reduction, World Bank
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In over 70 countries, from financial centers in Malaysia to the Middle East, Islamic finance has been growing rapidly around the world. In fact, Shariah-compliant financial assets have increased from about US$5 billion in the late 1980s to about US$1 trillion in 2010. Even more impressive is that this class of financial instruments appears to have avoided many of the worst effects of the recent crisis, making it an increasingly attractive investment vehicle.

Given its rapid growth and relative stability, are there lessons we can garner from Islamic finance? Three years after the onset of the global financial crisis as regulators are still grappling with how to deal with predatory lending practices, opaque derivatives, and overly leveraged financial institutions can Shariah-compliant finance challenge our notion of conventional banking?

Perhaps it can. By and large, Islamic finance relies on the core principles of Islam concerning property rights, social and economic justice, wealth distribution, and governance. Two of its main tenants are the prohibition of interest on debt in any form and the removal of ambiguous contracts to enhance disclosure and proscribe deception. Among its other key precepts is a commitment to back all financial contracts by assets and activities in the real economy, as well as an emphasis on the principles of morality and ethics in conducting business.

According to the most recent Economic Premise, authored by World Bank Managing Director Mahmoud Mohieldin, these underpinnings have generally helped Islamic banks escape some of the worst effects of the 2008 financial crisis. To be sure, Mohieldin notes that “The recent financial crisis affected the asset quality of conventional banks adversely. In contrast, as shown in recent research, Islamic banks had higher asset quality, were better capitalized, and more likely to continue their financial intermediation role during crises than their conventional counterparts.” As they were not exposed to subprime and toxic assets and had instead maintained a close connection to the real sector, only when the real economy contracted and real estate prices dropped did Islamic financial institutions begin to feel the second round effects of the crisis.

Yet as Islamic finance continues to grow, some challenges still need to be met. For example, the Economic Premise notes that many aspects of Islamic finance suffer from emulation and reengineering of conventional instruments, which result in inefficiencies and higher transaction costs. In addition, challenges associated with Basel III core capital requirements — which place Islamic financial institutions at a disadvantage need to be addressed. By dealing with these and other issues, Islamic finance could increasingly meet the preferences of local cultures, augment financial inclusion and intermediation, and contribute to financial stability and development in the years ahead.


Sultan Qaboos Mosque, Muscat, Oman

Arab Spring leaves fertile ground for growth of Islamic finance

Arab Spring leaves fertile ground for growth of Islamic finance

By Charlotte Kan Available at:

In the countries swept by the Arab Spring, recent elections were dominated by Islamist parties. This will further encourage the development of the Islamic finance market, experts believe.

“The recent free elections in a number of the affected countries have shown a desire by the people to organise their financial affairs in a manner that reflects their religious beliefs,” notes Tariq Hameed, managing associate at Simmons & Simmons in Dubai.

In a report entitled “Blue Print for Islamic Finance Following the Arab Spring” published in February 2012, Hameed notes that the parties winning the most seats in the recent elections in Tunisia, Morocco, Egypt and Libya have all stated their support for Islamic finance.

“The countries affected by the Arab Spring will be expected to deliver economic solutions that directly affect the people that recently voted for them,” he argues.

Apart from the desire of the population to move towards a more religious society, there are several reasons why Islamic finance should proliferate in the countries that witnessed the protests of the Arab Spring.

First: the current lack of banking facilities.

A 2010 study by Dr Dhafer Saidane for the United Nations notes the proportion of people with access to banking services in some North African countries is extremely low – approximately 25% in Morocco and 33% in Tunisia.

Hameed notes only 10% of Egyptians have access to a bank. “There was a lack of offerings,” he says. “Many didn’t engage with the conventional banking system.”

For the new governments ready to introduce their people into the financial system, Islamic banking therefore represents an attractive alternative to the ‘conventional’, distrusted Western banking system.

“Introducing Shariah-compliant current and savings accounts would therefore be important to draw people into the financial system,” Hameed says.

In Tunisia, the country where the Arab Spring movement allegedly started in December 2010 in the wake of Mohamed Bouazizi’s self-immolation in protest of police corruption and ill treatment, steps have already been taken to develop Islamic banking and finance.

In its Finance Act 2012, Nahda, the Islamist party which has claimed victory in Tunisia’s October 2011 elections, has incorporated several changes to facilitate the spread of Islamic finance practices, including a special taxation framework for Islamic banking and the introduction of a regulatory framework for Islamic bonds.

The Tunisian government not only supports the development of Islamic finance, but also sees it as a tool to turn the country into a finance hub in North Africa.

In reality, the industry in the region is up for grabs. Islamic finance has so far failed to take off in North Africa, which currently has less than a 1% share of global Islamic banking assets, according to a report by consultancy McKinsey.

“There are three factors that account for the relative underdevelopment of Islamic banking in North Africa; first the limited development of retail banking generally; second the lack of knowledge of Islamic banking amongst potential clients; and third the absence of (the former) government support,” said the African Development Bank in a report on Islamic Banking and Finance in North Africa published late last year.

So with governments across North Africa now openly supporting Islamic Finance, this is likely to change.

Away from retail and commercial banking, one opportunity could come from the development in Islamic microfinance offerings, Hameed notes, as institutions will have to serve demand from rural communities and micro-enterprises.

“The same institution could also provide the community with Islamic micro-insurance (micro-Takaful) to help low-income families to protect against health risks and micro enterprises to protect against property risks,” Hameed adds.

Islamic finance could also provide an answer to the need for infrastructure projects, with successful Islamic financing of infrastructure projects already in existence in Bahrain, Saudi Arabia and Bangladesh, Hameed notes.

“Islamic finance can play a prime role in financing big projects in North Africa that require large investments and significant borrowing volumes,” said Tunisia’s former finance minister, Jalloul Ayed, during a July 2011 summit on Islamic finance opportunities in North Africa.

Tunisia itself has financing needs of around USD 40 billion over the next five years, Ayed said, and could soon create a sovereign fund called “Fund for the Generations”.

There is a substantial need for project finance in North Africa given the poor state of much of the region’s infrastructure. Existing Islamic project financing covering 24 schemes in North Africa worth over USD 2.4 billion has already been approved, according to the African Bank for Development.

The newly elected governments of Arab Spring countries know too well that investing in infrastructure and real estate – in particular, affordable housing, of which there is a severe shortage in North Africa, thus fueling growth and creating jobs – is the only to stabilize the region politically and enhance social cohesion.

Many experts believe Egypt will pave the way for the industry’s expansion in the region.

“Egypt will be a great force in steering Islamic finance in a different direction. We will see the development of new products as the market which Islamic finance will serve is a different clientele, and will be needed to solve different problems. Al Azhar University in Cairo should play a role in developing Islamic finance in the country,” argues Sahar Ata, a senior lecturer in Islamic finance at the London School of Business and Finance.

Egypt, the most populous state in the region, already has the highest proportion of Shariah-compliant assets in relation to total bank assets (around 5%). The country is “where Islamic finance has the greatest potential”, the African Development Bank said.

However, despite promising prospects, there remain challenges for the Islamic finance industry before the potential of these markets can be reaped, Hameed believes. Strengthening of consumer protection laws, clarifying governance, and establishing central Shariah boards for finance will have to be addressed, he argues.


Trafalgar Square, London

Secularism and Relation between Religion and the State from the Perspective of the Nahdha’s Party

Secularism and Relation between Religion and the State from the Perspective of the Nahdha’s Party

By Rached Ganouchi

In the name of God, prayers and peace be upon His Messenger, his household, companions, and supporters.

Ladies and gentlemen, brothers and sisters may God’s peace and blessings be upon you.

I thank the Centre for the Study of Islam and Democracy for giving me the opportunity this evening to speak to this distinguished elite of Tunisian men and women and those coming from abroad. I am not here to teach you anything, since the subject we are here to discuss has no set instructions to be delivered but rather only points of view to be deepened and efforts to reach a common ground that would enable our elite to reach a consensus or at least a quasi-consensus.

Our topic is quite problematic in the sense that it deals with the Islam’s relationship to secularism. Is this relationship one of conflict and disaccord or one of harmony and overlap? Related to this question are issues such as Islam’s relationship to governance, the relation between Islam and Law, which are all contentious matters.

It seems that when we speak of secularism and Islam, as if we are talking about evident and clear concepts. However, a non-negligible amount of ambiguity and multiplicity of understandings surround these concepts, in that we are not talking about ‘a’ secularism but rather a multitude of secularisms as is the case with Islam, by virtue of what is proposed in the arena, we are faced with various understandings of what it means.

Although secularism seems as if it was a philosophy and the fruit of philosophical reflections and meditations which came to fight idealist and religious outlooks, it is not so. Secularism appeared, evolved, and crystallized in the West as procedural solutions, and not as a philosophy or theory of existence, to problems that had been posed in the European context. Most of these problems emerged following the Protestant split in the West, which tore apart the consensus that had been dominant in the Catholic Church, and imposed the religious wars in the 16th and 17th century. It was thus that Secularism and/or secularization began.

This leads us to ask the following question: are we in need of secularism in its procedural aspect? Perhaps the most important idea in the ensemble of these procedures is the idea of the state’s neutrality i.e. towards religions and its abstention from interfering with people’s consciences. Whereas, the state’s scope or jurisdiction is limited to the ‘Public Domain’, religion’s scope extends to the ‘Private’. In the United States religious interference in the public domain is evident, despite the differentiation that exists there remains a significant religious influence. Their leaders’ speeches are laden with religious content and references, and religion is debated in all electoral campaigns where it manifests itself in issues such as prayer in schools and abortion. This in reality is due to the fact that America was founded by evangelical pilgrims fleeing with their religion from the Catholic Church’s persecution in Europe. It is for this reason that the U.S. is looked at as the Promised Land, the land of dreams mentioned in the Torah and Gospels.

As the Franco-American thinker Tocqueville once remarked that the Church is the most powerful party in the United States. This is by virtue of the huge influence that it enjoys, though this is not the case in Europe. Whereas the number of those who can lead prayer in the US exceeds 50%, in Europe it does not reach 5%.

In the European context, also, there are differences in the state’s relationship with religion between the French heritage and Anglo-Saxon one, whereby in the UK the Queen combines the temporal and the religious powers. The complete separation is the one that is associated with the French experience, which resulted from the clashes that took place in French history between the revolutionaries’ state and the Catholic Church. Even in Europe, therefore, we are not dealing with one experience in secularism, perhaps for our purposes, since our elite is influenced by the particular French perspective (particular even for Europeans) where religion is totally excluded from the public sphere and the state considers itself as the sole guardian of national identity. This exclusion of the religious and its symbols from the public domain is what lead France to be the only country that refused the covering of heads for Muslim women, while we don’t see such a crisis in any other European country over the issue of headscarves. This is exclusively due to the particular nature of the relationship between state and religion in France which was the result of a particular historical experience.

We in turn are not faced with one understanding; perhaps the most important procedure invented by the secular worldview on this level is the state’s neutrality. In other words, the state is the guarantor of all freedoms be them religious, political or otherwise. And the state should not interfere in favor of this or that party. We pose the following question now: Is Islam in need of such a procedure? i.e. the state’s neutrality towards the various religions.

Islam, since its inception, has always combined religion with politics, religion and state. The Prophet (peace be upon him) was the founder of the religion as well as the state. The first pledge of allegiance made by the group of Madina who came to Mecca was a religious pledge to believe in Allah and his Messenger. But the second pledge was to protect the Muslims, even by sword, should al-Madina be attacked. Al-Madina, and this expression is of the utmost importance, used to be called Yathrib before becoming Al-Madina (The City) which implies that Islam is not merely a religion but also carries a civilizational meaning. It is a transferring of people from Bedouin life to urban/civilizational life. This is why ‘Bedouinization’ was considered a great sin once urbanization had been achieved. No wonder then that wherever Islam went it established cities and our country hosts the oldest city built by Arabs in North Africa. Therefore, The City founded by the Prophet (pbuh) is a clear indication that Islam is a religion of civilization, whereby it shifted those warring tribes from a Bedouin level to a civilized one and united them around a state.

The Prophet (pbuh) was a an imam in the religious sense as he lead prayers in mosques, and at the same time a political imam that arbitrated people’s disputes, lead armies, and signed various accords and treaties. Of relevance to us is the fact that upon his arrival to Medina he established a mosque and put in place a constitution that was called Al-Sahifah. You have precedents here Mustapha! [In reference to Mr Mustapha Ben Ja’afar, President of the Constituent Assembly, who was present in the audience]. This Sahifah, which is one of the oldest constitutions in the world, contained a bundle of covenants regulating the relations between Meccan immigrants and their hosts (these were considered as one nation) and the Jewish tribes of Madina (also considered a nation). Al-Sahifa considered these two religious nations as comprising one political nation and entity that is distinct from others. The most important concept offered by such scholars as Muhammad Salim Al ‘Awwa and Muhammad ‘Umar is the distinction between the religious and the political as corresponding to the separation between state and religion.

The distinction between that which is political and that which is religious is clear in the Sahifah in that Muslims are a religious nation (ummah) and the Jews another, but the combination of the two plus other polytheists made up a nation in the political sense. This distinction can be witnessed in the Prophet’s dealings even if the boundaries were not always clear. Whereas the religious is the sphere of observance and obligation, the political is the sphere of reason and Ijtihad. At times when the ambiguity confused the companions, they would ask the Prophet (pbuh) whether this is divine revelation (wahy) or a mere opinion. In the case of the former they would obey, and when it is the latter they may differ and offer alternatives. On more than one occasion did the companions differ with the Prophet (pbuh) in his capacity as the head of state, and Sheikh Tahar Ben Ashour has dealt in detail with the topic of what he called ‘Prophetic Statuses’.

One day the Prophet (pbuh) passed by a group in Medina cross-pollinating palm trees and said: ‘I do not see the benefit of doing so.’ The Medinan people thought that that was divine revelation and stopped treating their trees which made their harvest of that year of a lesser quality. They asked him why he ordered them to do so, and he replied: you are best placed to know what is beneficial for you in your worldly affaires. Therefore, it is not the duty of religion to teach us agricultural, industrial or even governing techniques, because reason is qualified to reach these truths through the accumulation of experiences. The role of religion, however, is to answer the big question for us, those relating to our existence, origins, destiny, and the purpose for which we were created, and to provide us with a system of values and principles that would guide our thinking, behaviour, and the regulations of the state to which we aspire.

So, Islam since its inception and throughout its history has not known this separation between state and religion in the sense of excluding religion from public life. And Muslims, to this day, have been influenced by Islam and inspired by its teachings and guidance in their civic life, with the distinction remaining clear. This distinction between the religious and the political is also clear in the thought of Islamic scholars/jurists. They have distinguished between the system of transactions/dealings (Mu’amalat) and that of worship (‘Ibadat). Whereas the latter is the domain of constancy and observance i.e. reason cannot reach the truth, the former is the domain of searching for the general interest, for Islam came to realize people’s interests as confirmed by such great jurists as Al-Shatibi and Ibn ‘Ashour. These scholars have agreed that the highest objective of all divine messages is to establish justice and realize people’s interests, and this is done through the use of reason in light of the guidelines, objectives, values, and principles provided by religion. Thus, there is a domain of transactions/dealings which is constantly evolving and represents the sphere of variables, and there is the domain of creed, values, and virtues which represents the sphere of constants.

Throughout Islamic history, the state has always been influenced by Islam in one way or another in its practices, and its laws were legislated for in light of the Islamic values as understood at that particular time and place. Despite this, states remained Islamic not in the sense that their laws and procedures were divinely revealed, but that they were human endeavours open to challenge and criticism. States have also practiced a degree of neutrality, and when they tried to interfere and impose one understanding on Muslims, as happened in the Abbasids state, it sparked revolution. It is mentioned that al-Mansour had become concerned with the multitude of religious views and interpretations emanating from the same religion and feared their divisive effect on the state. So he sent for Imam Malik and asked him to amalgamate all these in one to unify people’s outlooks. Imam Malik produced his famous book al-Muwatta’, with which al-Mansour was greatly pleased and wanted it to become a law that binds all Muslims. This horrified Imam Malik and asked for it not to be made so, because the Prophet’s companions have travelled to different lands and took with them much knowledge, so allow people to choose what they see fit. This is why we see that one school of thought is dominant in the Maghreb, while another is so in the Levant, and yet another in Egypt…etc

It is due to the absence of a church in Islam that what remains is the freedom of thought and interpretation. This will naturally lead to a diversity in interpretation, and there is no harm in that except when we need to legislate, at which time we are in need of a mechanism, and the best mechanism that mankind has come up with is the electoral and democratic one which produces representatives of the nation and makes these interpretations a collective as opposed to an individual effort. Again, in the absence of a church representing the sacred on earth and a spokesperson of the Qur’an, the nation is the only manifestation of divine will through its interactions and not any particular scholar, party, or state.

When al-Ma’moun (Abbassid Caliph) wanted to impose one interpretation of the Quran and one particular understanding of Islamic creed (that of the Mu’tazili school), Imam Ahmed Ibn Hanbal revolted and refused the state’s attempt to dominate religion. This lead to him being persecuted and tortured, but in the end he managed to turn public opinion against the state and force al-Ma’moun to cede.

While the problematique in the west revolved around ways of liberating the state from religion and lead to destructive wars, in our context the problem is one of liberating religion from the state and preventing it from dominating religion, and keeping the latter in the societal realm, open to all Muslims to read the Qur’an and understand it in the manner that they deem appropriate, and that there is no harm in the plurality that is combined with tolerance. But should Muslims be in need of laws, the democratic mechanism is the best embodiment of the Shura (consultation) value in Islam.

It is of the utmost importance that our heritage is devoid of a church. Maybe only our Shi’ah brothers hold the belief in a religious institution, but in the Sunni world there is no such a thing save for a council of scholars which are usually in disagreement and hold different views. For this reason, we are in need of scholars and intellectuals to debate and study our issues in a climate of freedom and accept that the legislative institution is the ultimate authority by virtue of being elected.

There is a debate that is currently ongoing in our country between secular currents which may be described as extremist and Islamist ones which may be described in like manner. One would like to impose their understanding of Islam from above using state tools and apparatuses and the other aspires to strip the state, educational curricula, and national culture of all Islamic influences. At a time when the whole world, including the Islamic world, is witnessing a religious awakening, and having seen the role played by the Catholic Church in the development of Eastern Europe, starting with the efforts of Pope John Paul II, and also the role of the Russian Orthodox Church in the success of Putin’s presidential campaign. At such a junction in time, it is unreasonable to object to religious influence on the state’s cultural and educational policies. In fact, we do not need do impose Islam because it is the people’s religion and not the elite’s, and Islam has not endured for so long because of states’ influence but rather due to the large acceptance it enjoys among its adherents, in fact the state has often been a burden on religion.

As I said, many of those who belong to the Islamist current and others fear the religion’s emancipation from the state to be left as a societal matter. Why does the state train Imams? Why does it control mosques?

The issue of the state’s neutrality involves a great deal of risk and adventure. If what is meant by the separation between religion and state is that the state is a human product and religion a divine revelation as the distinction was made clear in the context of the early Muslims between the realm of revelation (wahy) and what was the realm of the political, then it is ok. But if what is mean is the separation in the French sense or in accordance with the Marxist experience then we may engage in a dangerous adventure that may harm both religion and state. The total stripping of the state from religion would turn the state into a mafia, and the world economic system into an exercise in plundering, and politics into deception and hypocrisy. And this is exactly what happened in the Western experience, despite there being some positive aspects. International politics became the preserve of a few financial brokers owning the biggest share of capital and by extension the media, through which they ultimately control politicians.

In this context, people are deeply in need of religion and its spiritual and moral guidance which would enable them to distinguish between right and wrong (halal and haram). And in the absence of a Church that monopolises the definition of what is halal and haram, this task is left to be debated by the elite of thinkers, the people and the media.

Should religion be entirely emancipated from the state and politics, this would also carry some risks whereby things would get out of control and social harmony would be endangered. The way to do it, therefore, is to find a balance that would guarantee people’s freedom and rights, because religion is here to do exactly that. To achieve this balance, we need to go back to the issue of distinguishing between religion and politics and adjust the parameters of what is constant in religion and that which is variable. We need our legislators to be well acquainted, educated and versed in religious values, so that when they are legislating they do not require the tutelage of religious scholars and authorities, and the same goes for politicians. There is no value to any religious observance that is motivated through coercion. It is of no use to turn those who are disobedient to God into hypocrites through the state’s coercive tools. People are created free and while it is possible to have control over their external aspects, it is impossible to do so over their inner selves and convictions.

This is exactly why we saw two models in dealing with issue of the headscarf/veil, the first is a veil that is dictated and imposed by the state and the second is a veil forbidden by it. Once I was in a Muslim country’s (in reference to Saudi Arabia?) airport where all women were covered, but as soon as the plane took off the veils flew away with it. This is a clear failure of that country’s educational system, which was unable to guarantee people’s religiosity except through coercive tools. In Ben Ali’s Tunisia, women were forbidden from wearing the veil and express themselves in whatever appearance they saw fit, also through the state’s coercive means. This was also a failure.

The primary orbit for religion is not the state’s apparatuses, but rather personal/individual convictions. The state’s duty, however, is to provide services to people before anything else, to create job opportunities, and to provide good health and education not to control people’s hearts and minds. For this reason, I have opposed the coercion of people in all its forms and manifestation and have dealt with such controversial topics such as al-Riddah (apostasy) and have defended the freedom of people to either adhere to or defect from a religious creed, based on the Qur’anic verse that says: ‘there is no compulsion in religion’.

There is no meaning in forcing people to become Muslims, the Muslim nation has in no need for hypocrites who manifest belief and conceal disbelief. Freedom is the primary value through which a person adheres to Islam, so he who announces his shahadatayn (‘I declare that there is no God but Allah, and Muhammad is his final Messenger’) does so on the basis of free choice underpinned by awareness and conviction. In this manner, the state is Islamic insofar that it assures its actions are in accordance with Islam’s values without being subjected to the tutelage of any religious institution for there is no such a thing in Islam. Rather there is a people and a nation who are the decision makers through their institutions.

When the Meccan people objected to Muhammad’s religion, he asked them not to interfere with his preaching activities and to allow him the freedom to communicate his message to the people. Had the Meccans accorded the Prophet (pbuh) the freedom of expression, he would not have immigrated and left his homeland. But because his message was so powerful, they could not offer an alternative to counteract it. This is why Muslims consider Islam’s proof to be so powerful that there is no need to coerce people, and when the voice of Islam proclaims ‘Produce your proof if ye are truthful’ this challenge is being proposed at the heart of the political and intellectual conflict.

Thus, the greater part of the debate taking place nowadays in our country is a misunderstanding of such concept as secularism and Islam. We demonstrated that secularism is not an atheist philosophy but merely a set of procedural arrangements designed to safeguard the freedom of belief and thought as Abd al-Wahhab al-Masiri distinguished, in his writings, between partial and total secularisms. An example of the latter would be the Jacobin model in French history. In their war on priesthood, the Jacobins’ raised the following slogan: “strangle the last king with the entrails of the last priest.” This is a French specificity and not the absolute definition of secularism. There is also an ambiguity regarding Islam, for there are those who believe that Islam can only be victorious by confiscating people’s freedom and imposing prayers, fasting, and the veil through force. This would be far from being a success, for Allah Almighty had considered hypocrisy to be the greatest crime, and the hellfire to be the eternal abode of Hypocrites.

The fact that our revolution has succeeded in toppling a dictator, we ought to accept the principle of citizenship, and that this country does not belong to one party or another but rather to all of its citizens regardless of their religion, sex, or any other consideration. Islam has bestowed on them the right to be citizens enjoying equal rights, and to believe in whatever they desire within the framework of mutual respect, and observance of the law which is legislated for by their representatives in parliament.

This is my understanding of things, and my view with regards to Islam’s relation to secularism. I hope that I have touched on the main issues, and I thank you profusely for your attention.

Transcripted and translated by: Brahim Rouabah/CSID


University of Glasgow, Scotland

Islamic Finance in Post-Revolution Tunisia and Egypt

Tunisia sets up Islamic finance working group

Available at:
By Bernardo Vizcaino

(Reuters) – The Tunisian government has set up a working group that will study how to develop Islamic finance in the country, a finance ministry official said.

The group, which includes representatives from the central bank, stock exchange and private sector institutions including Bahrain-based Al Baraka Banking Group, will look at the country’s legal framework, said Karima Rezk, a director at the ministry.

Before last year’s uprisings, authoritarian governments in Tunisia and other North African countries restricted or refused to promote Islamic finance for ideological reasons. A moderate Islamist party dominates the government which took power through last October’s elections.

Islamic finance, which operates according to religious principles such as a ban on paying interest, is seen as “an important initiative that is accepted by all major political parties”, Rezk told Reuters in a telephone interview this week.

She added that the government did not intend to inhibit conventional banking in the country, but merely wanted to “make the market more dynamic and add choice to consumers”.

The working group aims to meet weekly and come up with proposals for action within a few months, Rezk said. It is under the purview of the finance ministry’s director-general Chaker Soltani, whose responsibilities include debt management and financial cooperation.

The group has been studying the Islamic banking experience of countries where the industry is well-developed, including Malaysia and Bahrain, as well as Jordan and Oman, which are more recent entrants into the industry.

“We need more details,” Rezk said, on both the structures of Islamic financial products and how to regulate them.

Soltani told Reuters earlier that the Tunisian government hoped eventually to issue sukuk (Islamic bonds), but did not expect to make an issue this year since the legal framework to support it was not yet in place.

“Before issuing Islamic bonds, or sukuk, we must put a law in place,” he said.

Egypt lays sukuk foundations

By Farah Halime Available at:

Egypt is solidifying rules and regulations that will allow companies to issue Islamic bonds, or sukuk, in an early sign it is positioning itself to tap into a boom in Islamic finance.

What rules and regulations does Egypt have for issuing sukuk, or Islamic bonds? Egypt has not sold sovereign or corporate bonds that comply with Islam’s ban on interest, although companies have sold conventional bonds. The executive regulation governing sukuk issuance in the country’s capital-market law is being redefined to make it easier for companies to push forward with sukuk issues. Ashraf Sharkawi, the head of the Egyptian Financial Supervisory Authority, said this would be enforced by June, but until now companies have opted to steer clear of any issuance because of the lack of clarity in the law.

What will Egypt gain, considering it will compete with Islamic finance hubs such as nearby Bahrain? Analysts say demand for Sharia-compliant products alongside conventional banking products is on the increase, and with Egypt’s strategic position in North Africa and near the Middle East, it should tap into an ever-growing market. It is also a timely development because it fits in with the ideologies of what will be an Islamist-led government. The Freedom and Justice Party, the political arm of the Muslim Brotherhood, has been advocating Islamic banking alongside its conventional counterpart and has seen an opportunity to promote sukuk in a country where the population regards many conventional banks with caution.

Outside of the Middle East and North Africa, what is the appetite for sukuk? Although Malaysia remains a dominant force in the sukuk market, new entrants are emerging from the Asia-Pacific region including South Korea, Hong Kong and Japan, and some African countries such as Senegal and Nigeria.

The North African nation will “by the end of June” finalise the executive regulations to allow companies to issue Islamic corporate bonds, or bonds that comply with the Islamic ban on interest, said Ashraf Sharkawi, the head of the Egyptian Financial Supervisory Authority.

Alongside a sovereign sukuk worth US$2 billion (Dh7.34bn) announced by the Egyptian ministry of finance last month, analysts say the regulator’s move is ahead of the formation of an Islamist-dominated government expected to take office this year and an attempt to get a slice of the global sukuk market estimated to be valued at about $85bn.

Mr Sharkawi said the sukuk rules and regulations, which are still subject to approval from the prime minister, Kamal El Ganzouri, will help to boost liquidity on the Egyptian Exchange. The benchmark EGX 30 has gained almost 45 per cent in the year to date, making it the world’s best-performing stock market after a tumultuous performance last year.

A law that better regulates sukuk issuance has been mooted for several years, but analysts say the move to enforce a clear law has become a priority after the revolution, considering an economic climate likely to be shaped by Islamic political parties.

The Freedom and Justice Party has been outspoken about its ambitions to promote Islamic banking alongside conventional banking, and in May last year, Ashraf Badr El Din, the head of the party’s economic committee, first proposed the idea of selling Islamic bonds to plug the country’s budget deficit.

At the time, Mr Badr El Din said that a high percentage of Egyptians had reservations about the charging of interest and that such a financing tool would encourage them to invest. “The Muslim Brotherhood are eager to expedite the emergence of Islamic products such as sukuk law issuance to attract Arab investors and close the country’s deficit,” said Shahinaz Rashad, the general manager and director of global Islamic finance at Metropolitan Consulting. “There is a growing trend towards the revival of Islamic finance in light of the prominence of Islamic parties.”

Tapping into strong regional appetite for sukuk issuance, especially from the Gulf, is also a big driver for Egypt, said Mohammed Omran, the chairman of the Egyptian Exchange.

“We’re finding a new category of investment that meets some investors’ appetite or some investors’ beliefs like Sharia compliance or ethical investing,” Mr Omran said. “It’s going to attract a lot of Gulf investors to Egypt boosting liquidity all round.” A record volume of Sharia-compliant debt was sold globally last year, according to Zawya data. Sukuk totalling $84.4bn were sold in the period, an increase of 62 per cent from 2010. From that, $19bn, nearly 23 per cent of the total, was sold in the Gulf.

However, Egypt’s Islamic finance sector is still in its infancy, with just three listed Sharia-compliant banks – Al Baraka Egypt bank, Faisal Islamic Bank of Egypt and National Bank for Development. Combined with the absence of enforced laws and regulations governing some Islamic financial instruments such as sukuk, analysts say it will be difficult for the country to forge a hub comparable to Bahrain and Malaysia, two of the world’s most successful Islamic banking centres.

“Egypt could become one of the largest Islamic banking markets, but I’m not so sure if it will become a hub,” said Abdul Kadir Hussain, the chief executive of Mashreq Capital, the investment and brokerage arm of Mashreq in Dubai. “In order to successfully become a hub you need infrastructure like tried and tested laws, settlement mechanisms and service providers, and Egypt has a long way to go before that,” Mr Hussain said, although he added the country was likely to play a “major role as a user and provider of Islamic capital” in the coming years.

A skeleton sukuk law has kept investors and companies that have considered issuing the bond at bay, but early investor appetite suggests Egypt could be well on its way by the end of the year.

Adnan Ahmed Yousif, the president and chief executive of Al Baraka banking group, Bahrain’s biggest publicly traded Islamic lender, which has a subsidiary in Egypt, said Egypt had potential for a vibrant sukuk market.

“We are trying to strengthen our relationship in the Egyptian market specially in Islamic products,” he said, adding the government would do well to use the sukuk market for future borrowing needs.

He said the bank’s Egyptian unit may sell dollar-denominated Islamic bonds, in the region of $200 million, in the fourth quarter of this year.

“If things go smoothly after June [when a president is expected to be elected], yes we will think about something in the fourth quarter,” Mr Yousif said.


Brussel, Belgium