IslamicFinance.de

Funding Africa’s huge development needs has long represented a big challenge. This has spawned all kinds of innovative financing mechanisms in the past and could spell an opportunity for Islamic finance, notably haria-compliant bonds, or Sukuk. Still in an embryonic state in Africa – but growing nonetheless – these instruments could play a potential role in delivering large infrastructure projects, from building new airports to constructing power plants and building roads. While it is early days for Africa, on a global scale Islamic finance is not a new concept.
A longstanding feature of the financial markets of Malaysia – a world leader in the field – and across the Middle Eastern Gulf, its spread now encompasses non Muslim-centric territories worldwide. This is a pattern that is catching on, albeit slowly, in Africa. While northern Africa has provided a natural entry point for Islamic products, current activity now focuses on sub-Saharan markets, notably in West Africa.

The participants discussed the outcomes of a workshop held on 8 December outlining the strategic goals and future objectives for Islamic economy and also examined steps forward for the Centre and its partners in developing initiatives and programme implementation mechanisms.
His Excellency Sultan bin Saeed Al Mansoori emphasised that in order to realise the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to position Dubai as the capital of Islamic economy, DIEDC needs to continually adapt its Islamic economy strategy to reflect emerging trends across the sector’s dynamic pillars.

The Emirates Islamic Bank recently organised an ‘Innovation Day’ where various internal teams shared and showcased their innovations with working prototypes, to the bank’s management.
Emirates Islamic staff across business units participated in the event, designed to ideate and showcase innovative solutions in banking and financial technology. Emirates Islamic’s Innovation Day was aligned with the National Innovation Strategy launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai as a primary tool to achieve UAE Vision 2021 in the finance and banking sector.
Commenting on the bank’s push toward innovation, Jamal Bin Ghalaita, CEO of Emirates Islamic said: “Banking today demands an innovative and fresh approach to keep pace with the evolving needs of our customers. Tapping into our internal talent pool for ideas allows us benefit from their varied skills and experience to create products that match customers’ expectations and needs.

The Islamic Corporation for the Development of the Private Sector (ICD), a development finance institution of the Saudi Arabia-based Islamic Development Bank (IDB), and Dragon Capital Partners, the venture capital and private equity arm of Ukraine-based Dragon Capital Group, recently announced the intention to develop the Silk-way Growth Fund, a Sharia-compliant investment fund benefitting “high growth” small and medium-sized enterprises (SMEs) involved in manufacturing in Kazakhstan. The fund is slated to address the “financing gap created due to difficulty of accessing capital at sustainable market rates and the banking sub-sector’s lack of confidence in SME entrepreneurs.” According to ICD, SMEs make up 96 percent of all businesses in Kazakhstan and 25 percent of the country’s GDP.
ICD will act as fund advisor to Silk-way as part of its SME Platform, an initiative aimed at building Sharia-compliant investment management capacities in ICD’s 52 member countries, and it will consider investing capital in the fund as plans for the fund are finalized.

The Central Bank of Bahrain (CBB) has announced plans to close down Future Bank, a joint venture between two Iranian lenders – Bank Saderat and Bank Melli – and Bahrain’s Ahli United Bank, said a report. The CBB said it intends to submit a petition to the competent court for compulsory liquidation of the Bahrain-based retail bank, reported the Gulf Daily News, our sister publication.

In January 2012, the Central Bank of Nigeria granted Jaiz Bank an approval in principle to operate as a regional interest-free bank in northern Nigeria. As a result of that, Jaiz bank became the first and the only full-fledged Islamic banking in Nigeria. Islamic banking is based on the principles of profit and loss sharing.

According to Mr. Muhammed Nurul Islam, a manager at Jaiz bank, the bank offers what is called a mudaraba (profit- and loss-sharing deposit). And Jaiz bank does not finance any customer without a purpose; he explain further that the primary means of Islamic finance are based on trading, and the bank trading activities are Sharia-compliant investments with the money deposited by customers. The customers and Jaiz bank share the risks and profits between them.

Middle Eastern syndicate and real estate asset management platforms are emerging as major and increasing sources of outbound capital from the region with new figures showing an increase in volumes.
“Typically, they exist to pool equity from multiple private and medium-size institutional investors to real estate assets on a deal-by-deal basis,” said Fadi Moussalli head of JLL’s International Capital Group, MENA. “In the first three quarters of 2016 the volume has already reached $5.1bn and we expect the end-year figure to reach around 7bn.”

Saudi Arabia has met with banks to discuss the potential sale of Sharia-compliant bonds in the first quarter to help plug its budget deficit, according to five people familiar with the matter. The country is considering selling sukuk, or Islamic bonds, with different maturities to the five-, 10- and 30-year debt it sold in October, one of the people said, asking not to be identified as the information is private. This could include tenors of seven and 16 years, the person said. No final decisions on the size or timing have been made.

Kuwait's central bank has issued new governance rules for Islamic banks, including requirements for external sharia audits, as regulators seek more transparency and accountability in the sector. Regulatory scrutiny over Islamic banks has been building as they now hold around a quarter of total banking assets in the Gulf, while in Kuwait that figure stands at around 40 %. Kuwait's central bank said the rules published this week aim to increase customer confidence in Islamic banking by strengthening both internal and external oversight. This follows similar steps by Bahrain which proposed new requirements in September for its Islamic banks, including external sharia audits. The central bank directive, which must be fully implemented by January 2018, provides guidance covering independence of sharia boards as well as fit and proper criteria for scholars.

ICS Financial Systems Limited (ICSFS), the global software and services provider for banks and financial institutions, today announced a successful implementation of its awards winning software; ICS BANKS® ISLAMIC System, in Noor Al-Iraq Islamic Bank, an Iraqi based bank which was formerly known as Sama Baghdad Islamic Bank.
Noor Al-Iraq Islamic Bank has officially announced the successful go-live of ICS BANKS ISLAMIC System, in its Head Quarter and branches all over Iraq. The bank experienced a smooth implementation with a record breaking time of two months, where it adopted ICS BANKS ISLAMIC Core Banking, Credit Facilities & Risk Groups, Remittances, Murabaha, Musharaka, Istisna’a, Investment Accounts & Profit Distribution, Time Deposit, Trade Finance and part of ICS BANKS Delivery Channels (DC); ICS BANKS Internet Banking.

A Chartered Accountant and Tax Administrator, Mr. Bicci Alli has said that the federal government as well as states cannot shun Islamic financial instruments whose market is valued at over $2.6 trillion, because it has the capability to bridge the infrastructure deficit in the country.
The federal government is presently looking for financial and legal advisers and trustee firms to organise its first Islamic bond in the domestic market, the Debt Management Office (DMO) said on Monday. Nigeria is working on a debut sovereign sukuk but has yet to determine the size of a potential deal. Issuance of a sovereign sukuk is part of a plan by Nigeria’s debt office to develop alternative sources of funding and to establish a benchmark curve.

The International Institute of Islamic Banking and Finance (IIIBF), Bayero University Kano, has said the Sovereign Sukuk bond to be issued by the federal government in 2017 could be the solution out of recession. Prof. Binta Tijjani, the director of the institute stated this yesterday when she led the management team of the institute on a courtesy call to Media Trust Limited in Abuja.
Recall that initially, the Debt Management Office (DMO) on behalf of the federal government was to issue a Sovereign Sukuk bond this year but shifted it to 2017. The Sukuk Islamic bond is structured in such a way as to generate returns to investors without infringing Islamic law that prohibits riba (interest).

Financial technology widely referred to as FinTech has grown primarily in the last decade due to growing Internet access worldwide and the emergence of smartphones and apps. According to the Ericsson Mobility Report published last year, 70 %bof the world’s population is expected to be using smartphones by 2020.
As smart devices are increasingly becoming part of everyday life for most people in the digital age, it is essential for the banking sector to become more innovative to enhance its productivity. “We’re transitioning toward a situation where growth for companies and economies will have to depend more on productivity than before,” said Jarmo Kotilaine, chief economist at the Bahrain Economic Development Board (EDB).
“To achieve that, you will need better management, better innovations, new distribution channels and new capital.” Increasing the efficiency of digital banking will particularly serve customers in Saudi Arabia, where banks’ working hours overlap with those of most employees.

The Christian Association of Nigeria (CAN) on Thursday condemned the appointment of the governor of Nigeria’s central bank as leader of the International Islamic Liquidity Management Corporation (IILMC). In a statement by CAN’s president, Samson Ayokunle, the association described the appointment of Godwin Emefiele as the IILMC chairman, as unconstitutional and totally unacceptable.
According to CAN, the government’s decision to accept the appointment amounted to denouncing Nigeria as a secular state, in negation of section 10 of the 1999 constitution. “There have been reports that the IILMC recently appointed the Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele as its Chairman during its 17th Governing Board meeting in Jakarta, Indonesia. “Section 10 states that The Government of the Federation or a State shall not adopt any religion as State Religion. This action by Nigeria’s government is in clear negation of the constitution, especially this section,” the statement said. The association re-emphasised its earlier allegation that the Nigerian government plans to make the country an Islamic state.

The girl called Jeevti was just 14 when she taken from her family in the night to be married off to a man who says her family owed him $1,000. Her mother, Ameri Kashi Kohli, is sure that her daughter paid the price for a never-ending debt. Ameri says she and her husband borrowed roughly $500 when they first began to work on the land, but she throws up her hands and says the debt was repaid.
It's a familiar story here in southern Pakistan: Small loans balloon into impossible debts, bills multiply, payments are never deducted. In this world, women like Ameri and her young daughter are treated as property: taken as payment for a debt, to settle disputes, or as revenge if a landowner wants to punish his worker. Sometimes parents, burdened by an unforgiving debt, even offer their daughters as payment. The women are like trophies to the men. They choose the prettiest, the young and pliable. Sometimes they take them as second wives to look after their homes. Sometimes they use them as prostitutes to earn money. Sometimes they take them simply because they can.

#Malaysia Building Society Bhd (MBSB) has received Bank Negara’s approval for talks on a proposed merger with Asian Finance Bank (AFB). MBSB will soon start negotiations with the existing Middle Eastern shareholders of AFB, namely Qatar Islamic Bank (66.67%), RUSB Investment Bank (16.67%), Tadhamon International Islamic Bank (10%) and Financial Assets Bahrain (6.67%), for the merger. The negotiations are to be completed within the next six months. For the nine months ended Sept 30, 2016, AFB reported a net profit of RM4.54 million, an 18.8% drop compared with RM5.58 million in the same period last year. MBSB has a goal to become an Islamic financial institution by 2020 through merger with an Islamic lender. It centres his business efforts on six areas, namely, business focus, right pricing, asset quality, cost cutting, retail collection and information technology initiatives.

La déclaration récente faite par le ministre de l’Economie et des Finances annonce que le premier sukuk émis au Maroc sera souverain. La structure juridique d’accueil de ce premier sukuk sera un fonds de placement commun de titrisation (FPCT) qui servira de levée de fonds auprès des investisseurs pour le compte de l’Etat. Cette entité spécifique (appelée aussi SPV «Special Purpose Vehicle») pourra être constituée sous forme de fonds de titrisation (FT) avec ou sans personnalité morale, ou de société de titrisation (ST). En optant pour un premier sukuk souverain, le Maroc n’échappe pas aux pratiques internationales en la matière. Les dernières émissions en Afrique vont également dans le même sens (Sénégal, Afrique du Sud, Côte d’Ivoire et Niger).

Emirates NBD has launched the new edutainment mobile simulation game Banki in its efforts to promote financial literacy in the #UAE. Banki will target the country’s youth to become economically aware at a young age and consider careers in the banking and financial services sector. Banki allows users to play five engaging games that help them understand the concept of savings, trading, simple financial transactions and digital banking. They can learn about the basics of banking products, financial services, stock markets, economics and additional topics aligned to the Ministry of Education’s curriculum. Husam Al Sayed, Chief Human Resource Officer at Emirates NBD said the launch of Banki aims to communicate the benefits of being financially literate to the next generation of customers. Available on both the Google Play and Apple stores, the edutainment game can be downloaded for free and can be used by registering with an email ID.

Winner of the 2016 Islamic Development Bank (IsDB) Prize in Islamic Banking Prof. M. Kabir Hassan has said that Islamic finance could play a bigger role on the global stage especially towards achieving the Sustainable Development Goals (SDGs). This can be achieved through profit-and-risk sharing entrepreneurship, home financing and Islamic social finance instruments of Zakat, Awqaf, and Sadaqah. According to Prof. Hassan, research has proven that the Islamic financial system operates more efficiently and with greater stability. However, he added that for Islamic finance to play its role successfully there is the need to maintain its original binding principles. Prof. Hassan urged regulators to monitor Islamic financial products to ensure that they meet the criteria of maintaining justice. He also urged the IsDB to make available comprehensive and credible Islamic finance data for the use of all industry stakeholders.

The #Nigerian government’s move for sukuk has reached an advanced stage. As work continues on the process of the planned sovereign sukuk, the size of the possible deal has not been determined. The Debt Management Office (DMO) had opened its door for expression of interests from entities, including banks and issuing houses, needed in the process, with deadline for bids submission slated for January 9, 2017. This came a few days after the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, was elected Chairman of the International Islamic Liquidity Management Corporation (IILM). His mandates include the facilitation of effective cross-border liquidity management instruments. Meanwhile, the African Development Bank Group (AfDB) has approved the $250 million loan for the Federal Government for the development of a youth-oriented initiative called ENABLE Youth Nigeria. According to the bank, the scheme would contribute to job creation, food security and nutrition, rural income generation and improved livelihoods for youths.