Sharing Economy of Islam beyond Islamic Finance:
Re-constructing Collaborative and Disruptive Economy from Islamic Moral Economy Perspective
SASE Conference on ‘What's Next? Disruptive/Collaborative Economy or Business as Usual?’
Universite Claude Bernard, Lyon 1, France
29th June – 1st July 2017
Call for Papers:
There has been quite some media echo (see e.g.: https://www.bloomberg.com/news/articles/2016-12-05/gold-standard-approve... ) on the AAOIFI Sharia Standard on Gold.
The standard was established in cooperation between the Accounting and Auditing Organisation of Islamic financial institutions (AAOIFI) and the World Gold Council, which defines itself as "the market development organisation for the gold industry."
Interestingly, the media reports are very enthusiastic in terms of creating lots of additional demand previously prevented to participate and invest in the Gold market.
Well, this is the point I like to challenge:
The standardization may increase efficiency, but will NOT create a new buyer segment, which has not existed before in my opinion – as already the first consultation draft just outlined the old classical Islamic legal positions regarding buying and selling of Gold.
There used to be a physical backed Gold Sukuk at DIFC once, which was dissolved and another attempt for years now to re-establish one. There are offers with a Fatwa in the market; quite doable just a matter of market demand.
For some time I did private research on crowdfunding and fintech for the social good. Only recently I found the long existing platform givology.org - it allows to donate specifically for education to individual pupils in poorer countries and getting in touch with them! Personally this one of the causes important to me, because it ensures that the funds are being spent on education, and therewith building a future.
My questions to you are the following:
1. Would you donate for education via an internet platform, then you can conveniently check a profile from Somaliland just here:
2. If you are *not* interested to donate now, could you share what exactly, if anything, would make you donate? This would be exetremely helpful and I will share the information with givology.org to find a way to do just that.
3. If you any other ideas please feel free to share them. You can also directly suggest to volunteer: http://www.givology.org/get-involved/
In case you wish to receive further updates on Givology please register your email here: https://www.givology.org/register/
Bahrain-based Venture Capital Bank seeks investment in the health, education and food sectors in Turkey, according to the bank's chief executive officer. "We trust the growth potential of the Turkish economy. We want to make new investments in health, education and food sectors in Turkey in 2017," Mohammed Janahi explained this week. Further he said Turkey had always been on the agenda of the bank since the day it was established. Janahi also explained the bank's first move was to buy the majority of the shares of a Turkish company in 2012 that produces concentrated fruit, which he said amounted to around $300 million.
"The company's profits have tripled since that day. We intend to expand our capacity with additional acquisitions," he said. According to Janahi, they focused on the food, education and health sectors as they are least affected sectors by everyday events in the country. "From the beginning, we need to explain that our main goal is to establish a strategic partnership and enlarge the business," he added.
With the growing demand for Islamic finance, the need for specially-educated professionals in the field becomes crucial. Ahmed Alkholifey, chairman of Saudi Arabian Monetary Authority (SAMA) elaborated this idea in his keynote speech on the second day of the 23rd World Islamic Banking Conference. As an attempt to tackle the lack of human capital in Islamic banking industry, the Bahrain Institute of Banking and Finance (BIBF) attempts to train individuals on the field providing degrees that combine theory and practice. Ahmed A. Hameed Al-Shaikh, deputy director of BIBF, said one of the most popular courses was Advanced Diploma in Islamic Finance (ADIF), which gives a general yet intensive overview of Islamic finance. Education provided at BIBF is tailored to cater to each group of students as needed.
Mohammed Al-Quwaiz, vice chairman of the #Saudi Capital Market Authority (CMA), underscored the importance of Sukuk and debt instruments for investors. He made the remarks during the opening of Sukuk Conference with the theme of "Sukuk Market: Challenges and opportunities" in Riyadh. The two-day event was organized by CMA in collaboration with the World Bank. Al-Quwaiz noted that Sukuk and debt markets represent important options to provide funding for various projects and facilities. The conference covers the elements of Sukuk markets, the dynamics of Sukuk markets, ways to create an effective environment for Sukuk market, regulatory issues and corporate governance in Sukuk market, and the role of debt markets in economic growth. The conference is discussing the challenges in Saudi Arabia in particular and in the GCC states in general.
Global Islamic finance players should develop data analytics ability in the Waqf, high-net worth individuals, stocks and infrastructure sectors. Data anlaytics would help them to capture the additional US$1 trillion market which will be available over the next 12 to 18 months. The survey entitled 'Banking in Emerging Market, Gulf Cooperation Council FinTech Play 2017' was launched at the three-day World Islamic Bank Conference (WIBC) 2016. The study found that between 60 and 70% of the participants believed fintech innovations offer end customers a noticeably better value proposition in terms of ease of use, cost, speed of service and integration with social media. Ernst and Young's Global Islamic Banking Sector Partner, Ashar M. Nazim said proper adoption of fintech technology by the global Islamic finance players would potentially increase the industry’s customer base to 250 million by 2020 from 100 million at present.
In #Turkey the insured participation funds at the Bank Asya are being paid to the rights holders through the state-owned Vakif Participation Bank. On May 29, 2015, the Banking Supervisory and Regulatory Authority (BDDK) ruled for a complete takeover by the Savings Deposit Insurance Fund (TMSF) of all Bank Asya shares. According to yesterday's announcement, up to TL 100,000 ($28,247) of the total of insured participation funds at the Asya Participation Bank have been paid to the right holders in Turkish liras. The banks operating permit has been abolished. It was put on sale by the Fund Board, but did not receive any offers despite the extension of the bidding period.
The Islamic Development Bank (IsDB) had agreed to provide USD 500 million loan to part-finance the USD 15 billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline project.
IsDB has expressed interest in financing the project not just on Turkmenistan's territory, but in Afghanistan and Pakistan, too. The TAPI pipeline will have a capacity to carry 90 million standard cubic metres a day gas for 30 years. The project had been planned to become operational in 2018, but it is unlikely to see the light of day before 2022. The four nations to the project in April this year had signed an investment agreement in Ashgabad. The technical study of the TAPI project, done by Penspen, has estimated that it will take over six years to complete from the start of the FEED process.
Al Baraka Banking Group is targeting the sale of capital-boosting sukuk worth $300 million in the first quarter of 2017. The announcement was made on the sidelines of an Islamic banking conference by the group's CEO Adnan Ahmed Yousef. He also added that the issue would enhance the bank's core Tier 1 capital. Al Baraka had a total capital adequacy ratio of 15.15 percent as of June 30, according to a regulatory disclosure on its website.
The sukuk market is struggling to recover from last year’s dip in issuance and it could take years for supply to return. According to a recent Thomson Reuters report, issuance of sukuk is down 18% for the first nine months this year compared with the same period last year, while the year-end figure could exceed $50 billion. Issuance is estimated to gradually recover over the next few years to $54 billion in 2017 and $59 billion in 2018, but this is well below the record $134 billion seen in 2012. This is largely due to the lasting effects of Malaysia’s central bank decision to stop issuing short-term sukuk in 2015. The survey found that Sukuk still lack active secondary markets while governments have yet to incorporate them into their debt management strategies, steps which could increase their appeal.
According to the Thomson Reuters Islamic Finance Development Report 2016, Bahrain leads the GCC’s Islamic finance development for the fourth consecutive year. The report is jointly produced by Thomson Reuters and the Islamic Corporation for the Development of the Private Sector (ICD). Bahrain ranks first globally in terms of Governance due to its well established regulatory environment and governance mechanisms. The regulations cover Islamic financial institutions including Islamic asset management and Sukuk. Bahrain is among the top ten countries for the other indicators as well. For the Knowledge indicator, its Islamic finance ecosystem is supported by 17 providers offering Islamic finance related education including universities and institutions. Meanwhile, its Islamic financial institutions continue to contribute socially, with US$ 18.5 million charity, zakat and Qardh al Hasan funds disbursed in 2015.
The Moroccan government granted state-owned Crédit Agricole of Morocco (CAM) approval to open a subsidiary of the Islamic Development Bank (IDB). In addition to IDB, three foreign banks are looking to launch subsidiaries with domestic partners after Moroccan officials encouraged partnerships rather than fully owned subsidiaries. Morocco could see additional Islamic products introduced into the domestic market if new regulations are passed. Morocco will also see the introduction of mobile-to-mobile payments next year, which is expected to extend banking coverage, as well as reduce the number of cash transactions. New regulations will allow non-bank entities and individuals to open accounts to expand e-payments to transactions such as retail, utility and mobile phone payments.
Thomson Reuters has released the findings of its fifth consecutive Sukuk Perceptions and Forecast study. Despite a bleak 2015, market players remained hopeful for a robust year ahead. Core markets have adapted to ongoing low oil prices, while apprehension over expected global interest hikes has begun to subside. However, the decision from Bank Negara Malaysia (BNM) to cut short-term Sukuk issuances continues to dampen Sukuk supply. Total Sukuk issued in the first 9 months of 2016 dropped further by 18.46% to $39.8 billion from $48.8 billion for the same period in 2015. According to Thomson Reuters' Managing Director, Nadim Najjar, the global Sukuk market continued to drop in terms of volume and value during 2016. The report found that both potential demand and supply of Sukuk are expected to grow, with demand substantially exceeding supply until 2021.
#Malaysian fintech HelloGold is the first online gold platform to be endorsed as Shariah compliant by the Shariah Supervisory Board of Amanie Advisors. CEO Robin Lee showcased the savings platform at the global launch of the Shariah Standard on Gold at the World Islamic Banking Conference. According to Lee, with this platform everyone can buy gold and users are able to buy investment grade gold easily through their smartphones. He added that gold is a particularly good safe haven investment against foreign exchange risk and market shocks. Over the last 12 months, gold has risen by 17% against the Malaysian ringgit, 10% against the Thai baht, 9% against the Indonesian rupiah, 17% against the Philippine peso and 12% against the Singapore dollar. The HelloGold app is now available for use in Malaysia and is currently available on Google Play.
In #Kenya the Sharia-compliant lender First Community Bank (FCB) has laid off a third of its workforce as effects of the recent capping of interest rates continue to shake the banking industry. The lender’s staff costs stood at Sh241.4 million as at June 2016 which rose to Sh365.2 million at the end of September, prompting action by the bank’s management. The bank, which received a regulatory approval in May 2007 to start Sharia-compliant banking, last week reported a 16.2% jump in quarter-three net profit to Sh74.4 million. FCB is one of four banks that recently announced staff cuts as a reaction to the biting interest regulations on loans and deposits. The other three banks are Sidian Bank, Family Bank and Ecobank.
GFH Financial Group (GFH) has signed a final Sukuk restructuring agreement with Gulf Holding Company (GHC) and Al Rajhi Bank. The agreement allows for the rescheduling of the Villamar project’s finances and officially marks the re-launch of the project located in the Bahrain Financial Harbour. Villamar @ The Harbour is one of the flagship projects of GHC and is valued at $700 million, being a residential complex spread over 35,900 square meters. As per the agreement, GFH will participate in financing completion of the project with an amount up to $50 million. The restructuring will have a positive impact on GFH’s shareholding in Gulf Holding Company.
The Islamic Development Bank (IsDB) has successfully priced a $1.25 billion, five-year Sukuk under its $25 billion Trust Certificate Issuance Programme. The Sukuk was priced at par at 2.263%, to be payable on semi-annual basis. This issuance marked the Bank’s second benchmark issuance in 2016. In terms of the final allocation, the distribution was well diversified with 72% allocated to the Middle East and North Africa (MENA) region, 25% to Asia and 3% to Europe. Central banks and official agencies were allocated 90% followed by 10% to banks. IsDB’s CFO Ahmet Tiktik thanked the member countries and expressed his hope that this funding will continue to support their developmental needs.
Djibouti expects to see new entrants in its Islamic finance sector and the government plans to work on a framework to allow the use of Sukuk, or Islamic bonds, to fund infrastructure projects, its central bank governor said.
Djibouti, a country of less than a million people located on the Horn of Africa, is a relative newcomer to Islamic finance, having introduced sector-specific legislation in 2011, but authorities hope it can increase banking penetration in rural areas while also attracting foreign investment.
The government has established a national Sharia board to help oversee the sector, appointing five members to the independent body last week, central bank governor Ahmed Osman said in an interview.
The move could help Islamic finance by improving consumer perception of the industry and providing greater clarity on contracts which follow religious principles such as bans on interest and gambling. The government is in discussions with the Saudi-based Islamic Development Bank to secure a technical mission to help establish a framework to issue sukuk.
Islamic banks are gradually embracing socially responsible finance, from renewable energy to microfinance efforts, helping unlock new funding sources for environmentally-friendly projects, an industry survey shows. The two sectors have developed separately from each other, but green projects could benefit from tapping Islamic banks in countries like the United Arab Emirates and Malaysia, where they now hold a quarter of total banking assets.
Around two-thirds of financing in Saudi Arabia follows Islamic principles, which forbid investing in gambling, tobacco and alcohol. This resembles the screening methodology used by ethical funds in Western markets. Green finance is increasingly important for Islamic banks seeking to differentiate themselves from their conventional peers, the Bahrain-based General Council for Islamic Banks and Financial Institutions (CIBAFI) said in a report.