IslamicFinance.de

Attijariwafa Bank, one of the biggest banks in North Africa, will boost its Islamic subsidiary as soon as the Islamic finance bill passes parliament. Morocco's parliament has started to discuss a bill regulating Islamic banks and sukuk issues after months of delays, after the Islamist-led government adopted it last month. Parliament's approval will be the last step before fully-fledged Islamic banks can be established in Morocco. However, a revolution in the Moroccan banking sector is not expected since the market is very competitive, and Moroccans are too sensitive to product prices. Islamic finance banks are called participative banks under the Moroccan legislation.

A significant number of family offices (FOs) of wealthy Middle Eastern patriarchs are looking for suitable investment opportunities while fund managers are seeking to raise capital from this potentially lucrative market. A number of FOs (both Muslim and non-Muslim) have been instructed by their clients to allocate money to investment funds which generally bode well within the context of Shariah principles. Middle Eastern FOs or other direct investors also increasingly demand quality and timely service provision. Therefore, many FOs are interested in Guernsey as a place to allocate investments. On the other hand, the attraction of Guernsey for the fund managers is that it can provide a European platform which is not actually in the EU and therefore can offer flexibility and proportionality.

The theme for this 2014 Summit is New Markets and Frontiers for Islamic Finance: Innovation and the Regulatory Perimeter.

Please refer to http://www.ifsb.org/preess_full.php?id=240&submit=more for the announcement of the 11th IFSB Summit.

For any queries regarding the Summit, please contact the secretariat:

- Participants' registration

Ms. Yazmin Aziz at yazmin@ifsb.org

Mrs. Ida Shafinaz Ab. Malek at ida.shafinaz@ifsb.org

- Sponsorship and Media

Ms. Rosmawatie Abdul Halim at rosmawatie@ifsb.org

INVITATION TO A RESEARCH INQUIRY
Anti-Terrorism Legislation and Impact in Cross Border Giving

The World Congress of Muslim Philanthropy’s Academy of Philanthropy is leading a research inquiry in collaboration with Cass Business School’s Centre for Charity Effectiveness. After London and Doha, the last of the three dialogues will take place in New York.

This concerns the barriers to giving for international development and relief that affect donors and recipients alike, in the light of continuing international agreements and practices enshrined in legislation. Our work is seeking to identify ways forward for international dialogues to best support and enhance accountable giving and its efficient flow between nations. The findings of the research will be reported to the WCMP’s biennial Global Donor’s Forum, to be held in Washington, DC from April 14-16, 2014.

Donors, nonprofit and development sector representatives, and financial institution executives are welcomed to participate in the dialogue and share their experiences and offer suggestions.

Tuesday, March 4, 2014 - 10.00 am to 4.00 pm
Organization of Islamic Cooperation (OIC) Observer Mission to the UN

While 40% of its population has been classified as at food risk by World Food Bank for two consecutive years (2012-2013), Yemen is also home to many billionaires’ businessmen, a reality which had many activists ponder over the principles of social responsibility and social ethic. Hayel Saeed Anam multi-national corporation, for example, is by far one of Yemen’s most visible local benefactors with a series of working social, educational and sports programs. Moreover, Hamid al-Ahmar, a billionaire entrepreneur with significant political influence, runs charitable programs, mainly directed to orphans and the most vulnerable (distribution of food, medicine and other necessities). While it would be wrong to deny that Yemen’ super-rich have indeed given back to the lesser fortunate, one could hope that its billionaires would somehow step in where the central government has failed.

Islamic banking assets in Egypt are expected to reach around EGP 128 billion (USD 18.4 billion) in 2014, realizing an average growth of 10% to 12%. Islamic banking assets were valued at EGP 114 billion in 2013, up 11% from the previous year. Islamic financing extended by banks rose 6% to EGP 76.4 billion in 2013 while deposits grew by 13% to EGP 103 billion in the same period. The Islamic banking sector accounts for 7% of total banking assets in Egypt. Meanwhile, investors from Saudi Arabia are reportedly evaluating various investment opportunities in Egypt, including in the industrial and agricultural sectors, but are waiting for the political and security situation to stabilize before making a move.

Islamic finance could develop in North Africa, according to a report titled "Islamic Finance Could Make Inroads Into North Africa" published by Standard & Poor's Ratings Services. Large current account deficits and declining conventional financing sources have prompted governments from Arab spring countries to look at opportunities offered by Islamic finance. Moreover, public awareness is increasing. Egypt, Tunisia, and Morocco have recently taken steps to implement policies to support the development of Islamic finance. Nevertheless, Islamic finance in this region has yet to demonstrate its economic added value, through creating access to a new class of investors or by offering Sharia-compliant products at costs comparable with their conventional counterparts.

Al Baraka Bank Syria and Arabia Engineering & Contracting (AEC) have signed an agreement for the construction of the bank’s headquarters in Damascus. The agreement was signed by Al Baraka Bank Syria CEO Mr Mohammed Halabi , and Nizar Obaid, CEO of AEC. The bank said the nine floor-building will be the first of its kind in Syria; built on eco-friendly’ principles. Al Baraka Bank Syria’s latest results show assets rising by more than 68 per cent in Q3 2013 to a record SYP 71.219 billion with profits of SYP 3.683 billion.

According to Grant Felgenhauer, a portfolio manager at Euphrates Iraq Fund, the opportunities offered by Iraqi equities overshadow anything else in the world today. Felgenhauer returned 28 percent last year with bets on Iraqi shares such as Bank of Baghdad, compared with a 9.5 percent decline for Iraq’s ISX General Index. That helped make New York-based Euphrates the fourth-best performing emerging-market fund managing more than $50 million in 2013. Iraq is drawing investors from specialized hedge funds to global banks including Citigroup and Standard Chartered as the oil-rich nation rebuilds 11 years after the U.S.-led invasion. The economy will expand 6.3 percent this year and crude production is estimated to rise to 9 million barrels a day by 2020.

For many years we see in the media experts believing in inflation and even hyper inflation. However, in the same time we face proponents warning against deflation. So far we all noticed.

Only a about a week ago I read an article by Myret Zaki clarifying that unfortunately inflation and deflation co-exists.

Myret Zaki's thesis is that we face inflation on financial markets, and deflation in the real economy (in French):

http://www.bilan.ch/myret-zaki/redaction-bilan/inflation-et-deflation-co...

In my view there is a general major shift in the price matrix and I still try to figure the magnitude and implications thereof. It is a bit irritating as at University we learned about neutrality of money:

http://en.wikipedia.org/wiki/Neutrality_of_money

This means any extra supply will increase prices equally, 5 % more money, all prices going up 5 %. Pretty plausible at first hand. However, it seems it does not work in reality any more (or never did).

A recent Gallup survey reported that Islamic banking remains unpopular in Egypt, with only 3% of adults using Islamic banking services and only 49% who have heard of Islamic banking in the country. The poll also found that 45% of all respondents preferred a more expensive loan from an Islamic bank to a cheaper loan from a conventional bank. Identifying the reasons for this lack of demand will require extensive research. However, there is no reason why Islamic banking could not increase in the future if its demand increased, given that the only barrier to its use is the lack of its popularity. The survey was conducted in 2012 through face-to-face interviews with 1,000 adults aged above 15 years in Egypt, Tunisia, Algeria, Morocco, and Yemen.

In four North African countries -- Algeria, Egypt, Morocco, and Tunisia -- as well as in Yemen, no more than 3 per cent of adults say they currently use a Sharia-compliant banking service. These results come from a Gallup World Poll survey conducted in 2012 on the awareness, use, and preference for Islamic financial products. Across the five countries surveyed, about half (48 per cent) of adults report having heard of Islamic banks in their country. Moroccans are the most likely to choose the Sharia-compliant loan. Within each country, choices vary little among the poor and more affluent respondents. The data suggest that in the Middle East and North Africa, there is likely to be demand for both conventional and Islamic banking services.

There are big opportunities to promote Islamic finance in Tunisia which can be the global hub of Islamic finance for French speaking countries, said Muhammad Zubair Mughal, Chief Executive Officer, AlHuda Centre of Islamic Banking and Economics (CIBE) in an international conference on “Finance and Enterprise” in Tunisia. Mughal said international financial crisis can be addressed in a better way through Islamic finance. Tunisia has a good recognition in Islamic financial industry having 2 full-fledged Islamic banks, takaful companies, universities with Islamic finance program, sukuk laws and some other similar institutions which indicate the best future of Islamic finance in Tunisia. However, Islamic microfinance is a missing component of Islamic finance in Tunisia.

Islamic International Rating Agency ( IIRA ) has reaffirmed its Shari'a Quality Rating of AA (SQR) assigned to Jordan Islamic Bank ( JIB ). This rating indicates JIB 's conformance to very high standards of Shari'a compliance in all aspects of Shari'a quality analysis. The bank has traditionally been supervised by an eminent Shari'a Supervisory Board. Moreover, the bank's Board of Directors has an adequate representation of independent directors, while recommended Board committees are also in place. Transparency of financial reporting by the bank with regards to investment accounts and corporate governance disclosures are generally in line with the recommended best practices by IFSB. However, diversification of Islamic financing structures in the portfolio is recommended by Shari'a scholars.

In the two Jordan camps for Syrian refugees, the Norwegian Refugee Council (NRC) is running an education programme with the help of Unicef and supported by Jordan’s education ministry. The camp schools have a Jordanian curriculum. The teachers are both Jordanian and Syrian, drawing on qualified camp residents to teach in the classrooms. NRC also runs a Youth Training Centre. It provides students life skills and leadership training to ensure they acquire traits that can be useful, both in the camp and upon their return to Syria. As winter sets in, relief agencies are concerned with stepping up a winterisation programme. Heaters and blankets are needed while old tents are being replaced with new trailers. Also needed are food, non-food items and medical care.

There are big opportunities to promote Islamic finance in Tunisia which can be the global hub of Islamic finance for French speaking countries, said Muhammad Zubair Mughal, Chief Executive Officer, AlHuda Centre of Islamic Banking and Economics (CIBE) in an international conference on “Finance and Enterprise” in Tunisia. He also said no Islamic financial institution was effected by the global financial crisis. He added that Tunisia has a good recognition in Islamic financial industry having 2 full-fledged Islamic banks, takaful companies, universities with Islamic finance program, sukuk laws and some other similar institutions which indicate the best future of Islamic finance in Tunisia. Realizing the need of Islamic microfinance, he further said that Islamic microfinance is missing component of Islamic finance in Tunisia while socioeconomic development and poverty reduction can be done in better way through Islamic microfinance.

The decline in education for Syrian children has been the sharpest and most rapid in the history of the region, according to the paper “Education Interrupted” published today. Since 2011 nearly 3 million children from Syria have been forced to quit their education as fighting has destroyed classrooms, left children too terrified to go to school, or seen families flee the country. Progress achieved over decades has been reversed in under three years. At best, children are getting sporadic education. At worst, they drop out of schools and are forced to work to support their families. The paper details some of the factors that have contributed to the rapid emptying of classrooms.

Lately, for the Middle East & North Africa region, a long list of big-name institutions and investors have been recommending that investing in MENA's technology sector may be the way to address their unemployment and infrastructural problems -- even the political unrest. Meanwhile, a variety of NGOs are establishing themselves in the MENA region, or regrouping, to better fix the infrastructural problems they see -- and maybe the unemployment. Technology and philanthropy may operate better within a social enterprise model that rewards talent -- achieving "social good" together. On Thursday, November 7, Al-Mubadarah (The Arab Empowerment Initiative) will host the first summit on philanthropy and technology in Washington, D.C.: MENA + SocialGood.

Dear Reader,

IslamicFinance.de is still edited by myself, Michael Saleh Gassner. In the same time the website became part of the family's publishing house, Al Kitab.

Myself I moved to Geneva for professional reasons, working as Islamic private banker. IslamicFinance.de remains to be a private passion.

Best regards,

Michael Gassner

Dear Readers,

Venture Capital has often been regarded as the ideal tool for Islamic finance, particpating in profits and losses of innnovative companies.

Now a major assessment has been done by Cambridge Associates in terms of performance, comparing it to the wider stock market. Result: No outperformance. Considering the lack of liqudity it seems to be much less attractive to professional investors than thought.

See: http://www.cambridgeassociates.com/pdf/Venture%20Capital%20Index.pdf

The lack of success also is induced by lack of transparency and fee models taking away the eventual outperformance. This is for the US market of course. Experiences in less advanced markets could be better or even much worse.

It still has other benefits, as diversifying risk, promoting overall growth and eventuall fostering social benefits.

In order to protect the investor, proper disclosures must be integrated to grow this industry in a healty manner. Further the focus on impact investing will ensure that value is created and risk better managed. What impact investing means could be read here:

See: http://www.thegiin.org/cgi-bin/iowa/home/index.html