IslamicFinance.de

Nearly 5% of the UAE'S population is struggling with depression and it is expats that are hit the hardest. One of the most common side effects of stress incurred by debt was headaches. A study by The Priory Group found that young adults were suffering significantly from aches and pains caused by debt. The cost of buying or renting property, divorce, commuting and holiday costs, childcare, school fees and the rising cost of living generally can easily overwhelm, leaving people stressed out about money. According to psychologist Tanya Dharamshi, debt can arise from impulse control problems that can result in excessive behaviours, such as shopping, especially when it's online. Because there are creditors involved, money issues can exacerbate the symptoms of depression or anxiety. This may lead to alcohol or drug misuse and further abuse of the impulse control problem. Breaking that vicious circle is a major challenge in recovery.

In this interview Momodou Musa Joof, CEO Jaiz Takaful Insurance, shares his experiences managing firms and enterprises offering Islamic insurance. Joof believes that Takaful establishment in Nigeria benefits the economy tremendously by creating employment, settling genuine claims and insuring insurable risks. When there is surplus or profit, Takaful insurance, especially Jaiz Takaful Insurance distributes it back to the participants who have not suffered losses. This way, it forms part of poverty alleviation and has nothing to do with Islamising Nigeria, as some people believe. Jaiz Takaful Insurance operates with two distinctive accounts: Participants’ Account and Management’s Account. 70% of contribution goes to the Participants’ Account while 30% goes to the Management’s Account. Takaful is expected to pay genuine claims faster since claims are paid from the Participants’ Account the surplus of which goes for distribution at the end of business year. Out of the amount which goes for distribution, a prescribed ratio is always paid to the needy (Zakat).

The Takaful industry is expected to see rapid growth thanks to consolidation and regulatory improvement. The December 2017 acquisition of Al Hilal Takaful by Takaful Emarat in the UAE has attracted international attention to the market potential of the sector and to the obvious necessity for consolidation. Takaful Emarat managing director Mohammad al-Hawari said that after the merger a combined digital platform would provide more efficient and cost-effective services. In the UAE there are 34 domestic and 27 foreign conventional and Islamic insurance companies. Like in the UAE, Saudi Arabia’s insurance market remains largely fragmented, with 33 listed Takaful operators competing against each other. Saudi Arabia, the UAE, Bahrain, Oman and Qatar have already introduced new regulations specific to the Takaful industry, while Kuwait has a new insurance law draft. The future potential of Takaful in the GCC is driven by the reduction of state benefits.

UK-based Al-Rayan Bank has issued a £250 million ($347 million) sukuk using a residential mortgage-backed securitisation (RMBS). The financial institution predicts this could be the start of a raft of other Islamic banks entering the RMBS market. Al-Rayan Bank has appointed Standard Chartered to arrange investor meetings ahead of the issue. The sukuk has generated investor interest from asset managers and fund managers all over the world. Early indications put pricing in the area of 80 basis points over the 3 month London interbank offered rate. The issuance is backed by a portfolio of home purchase plans from clients in England and Wales, with loans set to mature in 2052. A special purpose vehicle will issue sukuk certificates backed by these loans.

In this interview HE Younis Haji Al Khoori, Undersecretary of the UAE Ministry of Finance (MoF), talks about the country's innovation strategy and fintech environment. Through this strategy, MoF aspires to showcase its innovation projects like the Mohammed bin Rashid Innovation Fund, which grants access to affordable financing solutions. In addition, MoF offers its employees comprehensive skills-building and training programmes. 2017 has seen fintech enter the popular consciousness. The rise of Bitcoin, developments in mobile payment technology and the introduction of Blockchain have pushed the sector’s growth. The UAE can consolidate its leading position in the fintech sector by developing cutting edge business infrastructure and providing accessible funding through funds and incubators.

The Hashoo Group announced the issuance of rated, secured, long-term, privately placed Sukuk of Rs 7 billion by Pakistan Services Limited (PSL). PSL will utilize the Sukuk funds for construction and capital expenditure of new hotels and mixed-use developments in the cities of Multan, Faisalabad, Mirpur Azad Jammu Kashmir, Hayatabad Peshawar, Malam Jaba, Skardu and Gwadar. These properties are expected to open in 2018 and 2019. Present at the signing ceremony event was Murtaza Hashwani, Group Deputy Chairman & CEO, along with senior representatives of Hashoo Group, Yousaf Hussain, President & CEO of Faysal Bank, Fawaz Valiaani, CEO of Elixir Securities Pakistan and Basir Shamsie, Deputy CEO of JS Bank. Murtaza Hashwani said that the focus of Hashoo Group has always been growth of the hospitality industry, inbound tourism and the business events & conferences market in Pakistan. He further added that he was very positive about the future of Pakistan and of the of Hashoo Group.

The Islamic Development Bank (IDB) and the World Bank will engage in public-private partnerships (PPP) for infrastructure development projects. Representatives of both institutions met recently and discussed issues included in IDB’s report "Mobilising Islamic Finance for Infrastructure-Public Private Partnership". IDB spokesperson Dr. Abdul-Hakim Elwaer said these partnerships fall in line with the new development orientations of IDB member countries including Saudi Arabia, whose ambitious 2030 plan is targeting to increase the private sector’s contribution to the GDP from 40-60%. Elwaer added that Saudi Arabia is hoping to achieve these goals by seeking out PPPs and promoting the privatization of government entities.

Emirates airline has mandated eight banks to manage its latest sukuk sale. Among these banks are HSBC, Standard Chartered, Citigroup, BNP Paribas, Emirates NBD, Dubai Islamic Bank, Abu Dhabi Islamic Bank and Noor Bank. The issue will raise about $1 billion in the next few weeks. Emirates will be seeking funding from international bond markets as the US interest rates are expected to increase and with them borrowing costs as well. Emirates usually raises funding each year from diverse sources: commercial loans, operating leases and export credit agency backed facilities. In 2015, the Dubai-based firm sold a bond when it raised $913 million from a 10-year sukuk, guaranteed by the UK’s export-finance agency, to help pay for four Airbus A380-800s.

L’arrivée de la troisième banque tunisienne sur le segment de la finance islamique pourrait encourager d’autres grandes banques à se lancer sur ce marché. Ahmed Karam, président du directoire du groupe, a indiqué que Amen Bank a déposé une requête à la Banque centrale tunisienne pour ouvrir une filiale spécialisée dans les produits financiers islamiques. La Tunisie compte déjà deux établissements bancaires à vocation islamique: al-Baraka Bank Tunisia et banque Zitouna. Amen Bank possède 154 agences, contre 76 agences pour Banque Zitouna et une vingtaine pour al-Baraka Bank. Amen Bank est la propriété du groupe familial Ben Yedder, qui rassemble une cinquantaine de sociétés présentes notamment dans les banques, l’assurance, l’agroalimentaire, l’hôtellerie et la santé.

The Islamic Development Bank (IDB) has decided to sell its 21% share in Zitouna Bank’s capital. The origin of this decision is supposedly a disagreement of specifications. The withdrawal could benefit Triki Group, which could disburse 80-90 million Tunisian dinars for this acquisition. IDB entered in Zitouna Bank’s capital in 2014, with TND37.5 million. Since its inception in 2009, Zitouna Bank has become a leading Islamic financial instituion in the local market.

Indonesian President Joko Widodo (Jokowi) sees great potential in Islamic finance, considering that the country has the largest Muslim population in the world. According to the President, sharia banking assets continued to increase in 2017 and amounted to Rp435 trillion (about US$32.2 billion) or about 5.8% of the total assets of Indonesian banks. In addition, the sharia capital market in Indonesia also continues to improve with sukuk reaching a 19% market share. The government also noted that non-bank Islamic finance industry assets have doubled since 2013. Jokowi explained that the potential of sharia industry and trade can be immediately developed in the Muslim fashion industry, halal food industry, pharmaceutical industry and tourism industry. He urged all people to become the driving force of the sharia economy.

CIMB Group Holdings expects sovereigns to issue 'green' Islamic bonds for the first time this year. CEO Rafe Haneef said about 3 to 5 sovereign sukuk issues are exptected to come to market this year and some of them will be green issuances. Corporates are also eyeing green sukuk issuances. Green bonds are a growing category of fixed-income securities, raising capital for projects with environmental benefits. Rafe says more and more investors are allocating funds for socially responsible investments (SRI) and Islamic bond issuers could benefit from that. He expects the total number of Islamic bond issuances this year to be slightly higher than last year, driven mainly by infrastructure bonds in Southeast Asia. He expects some new issuers to enter the sukuk market, saying state-owned enterprises from the United Arab Emirates and Qatar were possibilities.

Dubai's Ilyas & Mustafa Galadari Group (IMG) is in talks with banks to restructure a 1.2 billion-dirham ($326.7 million) syndicated loan. The group is now looking to upsize its existing loan facility due to cost overruns. The loan taken in 2014 was used for corporate debt and to build the Worlds of Adventure theme park. IMG opened it in August 2016, with a total area in excess of 1.5 million square feet and the capacity to accommodate more than 20,000 visitors every day. According to IMG, the upsizing of the facility was linked to a cost overrun on the pre-opening of the theme park and not due to visitor numbers. However, bankers said one reason for the talks was low footfalls. The company is close to reaching an agreement with creditors and extending the loan maturity. In return, additional covenants would be put in place to allow banks to monitor the company’s financial situation better.

On the 4th of February, Rabat will be the host city for a workshop introducing a multimillion-dollar fund from the Islamic Development Bank called Transform to Morocco. The fund is intended to stimulate growth in science, technology and innovation and its first undertaking is an online platform called Engage. This venture will help match businesses with innovators and will fund scientific initiatives. The February workshop will be presented by Dr Hayat Sindi, who will meet with chief Ministers and Government Agencies during her tour in Morocco. She will meet spokespeople from the Ministry of High Education, Ministry of Economy and Finance and the Ministry of Industry, Investment, Trade and Digital Economy.

Nine years since the birth of Bitcoin, central banks around the world are increasingly recognising the potential upsides and downsize of digital currencies. The American Federal Reserve’s investigation into cryptocurrencies is in its early days. Chairman Jerome Powell said in 2017 that technical issues with the technology remain and governance and risk management would be critical. He added that there were meaningful challenges to a central-bank cryptocurrency and privacy issues could be a problem. The UAE Central Bank has warned about the risks of using digital currencies as a medium of exchange for now, amid mounting risks like massive volatility, speculation and money laundering. The European Central Bank (ECB) has repeatedly warned about the dangers of investing in digital currencies. According to Bank of England (BoE) Governor Mark Carney, technology based on blockchain shows great promise in enabling central banks to strengthen their defences against cyber-attacks and overhaul the way payments are made.

The government of Uganda has approved regulations covering Islamic banking. Governor Emmanuel Tumusiime-Mutebile said that once the regulations are gazetted, the central bank would be open for applications from financial institutions to offer sharia-compliant products. Uganda joins several African countries that have sought to develop interest-free banking in recent years, including Nigeria, Morocco and Senegal. Despite small populations of Muslims, countries such as Uganda, Kenya and Ethiopia are also developing the sector to expand financial access and inclusion. In December, the central bank of Uganda became an associate member of the Islamic Financial Services Board (IFSB), one of the industry’s main standard-setting bodies.

2017 was in many ways a dichotomous year for the global economy. The US, Western Europe and industrial Asia had all seen strong growth. While developed countries have had a good year, the Muslim world, by both economic and political measures, appeared to have had a fairly miserable 2017. With a few exceptions like, Malaysia, Indonesia, and Turkey, the traditional powerhouses, Saudi Arabia and the Gulf Cooperation Council (GCC) countries have had quite a dismal year. Looking ahead to 2018, the geopolitical problems of 2017 will not simply disappear this year, the many underlying causes of the last global recession remain unresolved. The hope for the restructuring of the financial sector never really happened. The tough regulatory initiatives then proposed, have also been pushed back. For its own rejuvenation and to truly contribute to the Muslim world, Islamic finance needs to move away from merely replicating debt contracts to risk-sharing contracts.

Gatehouse Bank says it is targeting significant growth in the Shariah-compliant home finance market with a new customer service centre in Milton Keynes. The Bank says its new strategy will focus more on home finance plans in addition to its current buy-to-let products and development/build-to-rent division. Charles Haresnape, CEO of Gatehouse Bank, says the bank plans to grow all areas of the business but Shariah-compliant home finance will be a particular focus. Haresnape believes this is a hugely untapped market and one that, being fundamentally ethical, will resonate with Muslims and non-Muslims alike.

Dear Readers,

Following up on my previous posts on Bitcoin, this one is an attempt to gather and link up with the increasing discussion on the subject matter from an Islamic perspective.

My latest post was:
http://www.islamicfinance.de/?q=node/10303

My personal view is critical on bitcoin, as I do not see any other use than payments, hence no intrinsic value. Value does not come from costs creating something but in my understanding from utility, rather than price and appreciation - but may be this point is more my thinking than a Shariah argument...

Further light on Fiqhi points are given in this paper:

http://darulfiqh.com/wp-content/uploads/2017/08/Research-Paper-on-Bitcoi...

Please check the following sources and my initial attempt for some comment, well taking in account that any summary will be deficient due to time constraints:

Diyanet, the Turkish religiouos authority has spoken out against bitcoin. See

http://www.euronews.com/2017/11/28/bitcoin-is-not-compatible-with-islam-...

Saudi Arabia is watching the cryptocurrency market closely. According to Mohammed ElKuwaiz, chairman of Saudi Arabia's Capital Markets Authority, the authority is still evaluating the appropriate response and some regulations might be coming soon. However, the regulator comments indicate we should not expect any ban on cryptocurrencies. This is because the local Bitcoin craze has not reached the proportions seen in China or South Korea. There are several cryptocurrency-oriented companies that provide services in the kingdom. Before imposing any regulations, Saudi Arabia would like to see how the new markets behave, so it has left the door open for pilot projects from startups that operate with emerging technologies. Local regulators have initiated a sandbox program to facilitate such activities.