IslamicFinance.de

Nigeria is gradually opening up to Islamic finance, a move that could develop one of Africa's fastest-growing consumer and corporate banking sectors and establish the country as the African hub for Islamic finance. In recent months, a string of regulatory initiatives have set the groundwork for products such as Islamic bonds (sukuk), insurance (takaful) and interbank lending products, although there is still only a small number of local market participants. Islamic banking is currently offered by the Islamic window of Stanbic IBTC, a unit of South Africa's Standard Bank, and Jaiz Bank, a full-fledged Islamic lender which has operated since 2012. Sterling Bank has been granted approval in principle for an Islamic window, while two more lenders have expressed interest in obtaining licences to operate Islamic Windows.

The Federal Government of Nigeria has sought the support of the Islamic Development Bank for the provision of about $450m to expand the power transmission system to wheel up to 20,000 megawatts of electricity. According to Vice-President Namadi Sambo, more funds need to be injected in the transmission component. Sambo also called on the bank to consider the construction of a road linking Lagos to Abidjan, the capital of Côte d’Ivoire. Moreover, he requested the IDB to extend its support to the Nigerian private sector in the areas of education, aviation and agriculture. IDB has already approved the construction of four new science secondary schools in Kaduna State worth $17,9m; construction of a 300-bed specialist hospital in Kaduna State at $43.15m; and the Zaria water supply project worth $81.0m. Furthermore, the$32.40m Jigawa State rural development project and the bilingual education programme for Borno, Gombe and Niger states worth $30.53m are under consideration.

In cooperation with Chambers of Commerce in Abha and Eastern Region, the National Commercial Bank ( NCB ) has recently celebrated the graduates of "How to Start Your Small Business" Course. A number of 94 entrepreneurs from Jeddah, Abha and Eastern Region enrolled in the course. The course has covered a great number of entrepreneurs projects in different areas including industrial, commercial and other projects. It included theory training for 10 days, followed by 6 sessions within 3 months for practical training, which included a program for follow-up and consultancy. The course comes in line with NCB CSR programs, through which the bank trains entrepreneurs from men and women to start their enterprises, encourages investment culture and creates a competitive environment in the local market.

Bank Sohar's Islamic banking arm, Sohar Islamic, has launched a Shari'ah-compliant home finance programme, as part of its plan to expand the products and services portfolio. The new product features flexible terms, which offer financing for up to 80% of the property value, with a repayment period of up to 25 years.

The Islamic Development Bank (IDB) has agreed to extend a loan facility of 750 million euros to Pakistan. The first tranche of the loan will be released before mid of the current month. The IDB will also provide a trade facility of $150 million for import of fertiliser and petroleum products. Besides, the IDB president informed the finance minister that Islamic Development Bank was keen to work with Pakistan for the eradication of polio in the country. The President of Islamic Development Bank, Dr Ahmed Mohammad Ali, assured the finance minster Mohammad Ishaq Dar, of the full cooperation and support of IDB for Pakistan.

After the Securities and Exchange Board of India (SEBI) cancelled Ahmedabad-based Parsoli Corporation's registration as a stock broker, the CEO of the firm, Zafar Sareshwala, claimed that his company had exited the stock-broking business voluntarily in 2010 and described the SEBI's move as a classic case of harassment. He claimed that SEBI had targeted his company because it was a Muslim firm and had proposed to bring in Islamic financing. SEBI had cancelled the certificates granted to Parsoli Corporation as a stock broker on both the National Stock Exchange and Bombay Stock Exchange due to observations that Parsoli was not fit and proper and was repeatedly found guilty of violating securities laws on more than one occasion.

Cash Waqf is a voluntary endowment of money, deposited to the banks perpetually. Profit paid on this deposit is spent in different people's welfare purposes according to instructions of the account holders. These include education, health, food, utility and rehabilitation services as per instruction of the donors. The product is still at primary stage of its flourishing in Bangladesh. When a considerable amount of investment will be injected into the scheme, it might significantly contribute to a stable and sustainable economy. Banking insiders attributed the rising popularity of the scheme mainly to the opportunity to donate cash-money during the present time of land scarcity, and to the flexibility of distributing cash-benefits anywhere. Anybody can open this account by depositing total money of declared Waqf amount once or by installments.

The US-based World Council of Credit Unions has launched a manual discussing how to establish and operate sharia-compliant credit unions in developing countries, which could help to broaden the Islamic finance industry's retail customer base. The council hopes the manual will help to develop Islamic credit unions across a wide range of markets. The guide is considered complete but the council also recognises that this is an ongoing project as Islamic finance spreads to other credit union systems. The council used its nine-year experience establishing cooperatives in Afghanistan to create a manual that follows Islamic principles. According to the council, there are now 30 sharia-compliant credit unions in Afghanistan, comprising the world's youngest credit union movement and the only one to claim full compliance with Islamic law.

Standardisation of the regulations governing Islamic finance is a must to ensure the globalisation of Islamic finance, according to Hussain AlQemzi, GCEO of Noor Investment Group and CEO of Noor Islamic Bank. Although regional standardisation bodies exist, adherence to their standards varies from country to country and region to region. AlQemzi called for practical measures to be implemented that progressively address impediments to the growth of Islamic finance. He further said that an enabling environment for cross border connectivity through Islamic finance needs to be created. This will require measures to develop domestic capital markets and national market reforms. Domestic markets should also be strengthened by widening the issuer and investor bases, with more issuances in currencies other than the domestic currency, to attract investors from across the globe. And there should be greater collaboration and cooperation among, and between, national economies in which Islamic finance participates, AlQemzi added.

Cheraman Financial Services Ltd, jointly promoted by the Kerala government and non-resident Keralites, is to fund hundreds of cash-strapped student startups coming up in Kerala state, India. The Islamic financial institution has set aside Rs150mn for companies in the Startup Village, Kerala’s answer to Silicon Valley, from its Rs2.5bn Alternative Investment Fund that primarily targets the Shariah-compliant service and manufacturing sectors. There are more than 900 firms with innovative products started by students waiting to set up their units. At least one company of students with innovative ideas is being set up each day at the Startup Village. The Village aims to host 3,000 startups by 2020. Coming up on the same campus in this port city is the Kerala Technology Innovation Centre, another zone exclusively for bio-technology.

Saudi firm Wataniya Insurance Company announced the commissioning of Shariyah Review Bureau (SRB) as their Sharia advisor. Shariyah Review Bureau will oversee and supervise the company's Shari'a Compliance needs from Product structuring to Certification, and from Investments to periodical Shari'a reviews. According to Mr. Yasser Dahlawi, CEO at Shariyah Review Bureau, outsourcing Shari'a Supervisory functions is changing the landscape of the whole Islamic financial industry. It has been accelerated with greater demand from Institutional clients seeking cost-effective measures and a dynamic environment in having there queries and products quickly reviewed and verified, he added. Shariyah Review Bureau is currently serving 22% of the listed Cooperative Insurance companies in Saudi Arabia.

Ahmad Hamad Algosaibi & Brothers plans to make a new offer on US$7.2 billion of debt to creditors as it seeks to bounce back from the Middle East's biggest corporate default. The Saudi Arabian company, which runs a bottling plant for PepsiCo Inc. (PEP) products in the kingdom and has interests ranging from finance to shipping, will propose the new deal in the coming months, according to its Chief Executive Officer Simon Charlton. Creditors rejected a proposal from Algosaibi four years ago. The new debt proposal will include some upfront payments and those spread over a longer time. However, terms of the revised deal are likely to be less favorable than the initial offer. Charlton said Algosaibi plans to borrow from local and international banks once the restructuring is resolved.

The UAE Central Bank had ordered banks and financial companies to adhere to its Notice Number 237/2013 dated July 18, 2013, with regard to issuance and marketing of mutual funds. The Central Bank has asked all banks and investment companies to complete a sheet in respect of mutual funds issued or marketed by the bank/company in the UAE since inception up to February 24, 2009, in order to provide information to Securities and Commodities Authority (SCA). According to Article 2 of the Regulations, mutual funds established in a free zone within the UAE are treated as foreign funds. The regulations define a mutual or investment fund as essentially a financial vehicle for the purpose of investment against the issue of investment units of equal value and rights. As per the law, no local mutual fund may be established and no foreign mutual fund may be promoted within the UAE, prior to obtaining a licence for establishment or approval of the promotion of the mutual fund from the SCA.

Islamic banking is yet to get a foothold in the country with RBI not extending the permission, but the Indian subsidiary of a Kuwait company is setting up a global support centre providing Islamic core banking solutions at Infopark, Cherthala, on Friday. Path Solutions India is a wholly owned subsidiary of Path Solutions K.S.C.C, Ku­w­ait. According to Mohammed Kateeb, group chairman and CEO of Path Solutions, the company plans to have over 30 professionals working from its global support and development centre by the end of second quarter. Path Solutions wants to utilize the local skilled resources to deliver value-added software solutions and services to its clients. The centre will be opened by Aroor MLA A.M. Arif at 5 pm. IT principal secretary P.H. Kurien and Infopark CEO Hrishikesh Nair will attend the function among others.

Wissam Shawkat, an Iraqi calligrapher who moved to Dubai at the end of 2002, splits his time between fine art calligraphy and designing logos for some of the largest companies in the UAE. As well as logos for regional companies trying to emphasise their roots, he also translates international brand names into Arabic typography for their Middle East operations. Calligraphy is an obvious choice for companies targeting Arab consumers as it creates more emotional reference to them. International companies that open operations in the Gulf often use calligraphy as a stamp of authenticity. Calligraphy might be considered an odd choice for those international companies that employ and cater to non-Arabic speakers, but the designs are rarely judged on their legibility alone. It's about creating an icon.

HH Sheikh Hamdan Bin Mohammed bin Rashid Al Maktoum has launched the Dubai Center for Islamic Banking and Finance as a new step in support of the efforts towards establishing Dubai as the world's capital for Islamic economy. The centre is a collaboration between the Hamdan Bin Mohammed e-University and the emirate's initiative: 'Dubai: Capital of Islamic Economy'. The new centre will provide support to the initiative through three academic programs on human resources development, scientific research and community service. In the area of Human Capital Development, the Centre offers programs and courses. On the research front, The Centre conducts and facilitates research to advance the professional and theoretical foundation for Islamic Banking and Finance.The Center will also play a role in widening access to Islamic banking and finance education to the wider community.

Bahrain-based Banader Hotels Co, has signed a BD 18 million (US $47 mn) project finance deal with Kuwait Finance House, Bahrain to raise funds to complete construction of the Banader Rotana Hotel in Manama. Work on the 28-storey hotel and furnished apartments has already begun, with the finished property to comprise of 251 rooms including private suites. According to Banader Hotel Co. Chairman Abdulla Buhindi, the financial crisis affected many real estate projects in the region, where some of them ceased production due to the lack of funding. The KFH Bahrain funding will provide the finance to resume work on the Banader Rotana Hotel. The Banader Rotana Hotel will be located in close proximity to Bab Al Bahrain, Bahrain Financial Harbour and commercial markets.

Investment Dar Co. will reduce borrowings after creditors holding 30 percent of its debt signed up to a new loan deal backed by assets including luxury carmaker Aston Martin. The lenders to the Kuwaiti company agreed to a cash payment totaling 5.7 percent of their debt and a portion of a new Islamic loan equal to about 44 percent. While the new deal represents a writedown of 50 percent it gives creditors more security over the assets. Nine assets will back the new facility, with Investment Dar’s 34 percent stake in Aston Martin the most significant. Creditors not taking the offer retain their claims under the approved restructuring plan. Lenders who have taken the settlement will become 15 percent shareholders in the company holding the assets, while the new $437 million Islamic loan will be repaid through unscheduled asset sales and has a tenor of up to seven years.

Representatives from Azzad Asset Management met with His Excellency Ebrahim Rasool, Ambassador of the Republic of South Africa to the United States, to discuss potential investment in South Africa as part of the portfolio held by the Azzad Wise Capital Fund. The Azzad Wise Capital Fund is America's first halal fixed-income mutual fund and invests in Sukuk as well as deposits and notes from Islamic banks that comply with specific socially responsible and halal financial guidelines. In recent years, South Africa has made strides in Islamic finance although the Muslim community represents only 3% of the population. Ambassador Rasool noted that South Africa's regulatory and legislative structures, strict risk management frameworks, as well as governance and compliance structures make it a possible springboard for companies into the rest of the continent.

Household debt poses a growing risk to the financial sector in the United Arab Emirates (UAE). As of June 2012, household debt totalled over US$114 billion, which translates to over US$95,000 in debt per household. 48% of UAE citizens have monthly loan repayment obligations that exceed their financial means. The UAE represents roughly 67% of the consumer debt in the GCC. One reason for the disparity is the difference in lending regulations. The positive news is that the banking sector in the UAE and GCC in general retains a high degree of liquidity. In conclusion, household debt remains an issue of concern in the UAE, and government policy should be directed towards the causes rather than the symptoms. Issuing debt relief must be coupled with stricter regulations on household lending, so that excessive lending and defaults can be prevented.