IslamicFinance.de

As part of World Economic Forum’s journey through the Middle East, ‘The Silk Road: Past, Present, Future’ team spoke to six of the region’s most influential businesswomen for their tips on getting to the top. Dr Raja Easa al Gurg is the Managing Director of Easa Saleh Al Gurg Group. She says obstacles are always a stepping stone to success. Shaikha Al-Bahar is the Deputy Group CEO of the National Bank of Kuwait. Dedication and professionalism, passion, hard working 24/7 and innovation are key in climbing the ladder to the top, according to her. Maha al Ghunaim, Vice Chair and Group CEO of Global Investment House, says we need to remove that phobia about women getting involved with numbers, which comes from education.

S&P dropped a bombshell on Thursday, downgrading the sovereign credit rating for Saudi Arabia by two notches. The ratings agency also slashed credit rating for Brazil, Kazakhstan, Bahrain and Oman as the pain from low oil prices continues to undermine the economic and financial foundations of commodity exporters around the world. The decision to cut Saudi Arabia’s rating was the most striking decision though. As the world’s largest oil-producer, sitting on some of the largest reserves in the world, Saudi Arabia has been a bastion of financial stability for a long time. But it is also has a highly undiversified economy, dependent on oil for nearly all of its export earnings and budget revenues. Last October, S&P cut Saudi Arabia’s rating one level.

The European Court of Justice ruled on Thursday that the assets of Iran's Bank Mellat should not have been frozen from 2010, dismissing an appeal brought by the European Council. The Council, the grouping of the EU's 28 member states, froze the funds of a number of Iranian financial entities from 2010 to combat Iranian activities that could have led to it developing nuclear weapons. In Bank Mellat's case, the Council said that it engaged in conduct which supported and facilitated Iran's nuclear and ballistic missile programmes. The court ruled that the reasoning set out did not enable Bank Mellat to establish which banking services it provided to which entities, particularly as the persons whose accounts it managed were not identified.

The Cameroonian subsidiary of the Pan African banking group Ecobank now offers to its clients the "Mudaraba saving account", which follows the rules of Islamic finance. Ecobank Cameroun thus joins on this segment Afriland First Bank, a credit institution with Cameroonian majority shareholding, which went into Islamic finance some years ago, with the Islamic current account (compte de dépôt islamique - CDI). On 20 February 2015, this Cameroonian bank officially opened a branch focused on Islamic finance, with the support of the International Company for the Development of the Private Sector. During the first year of operation of this specialised branch, Afriland First Bank was planning to collect around FCfa 3 billion, based on the 20% of the Cameroonian population of Muslim faith.

Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz is likely to leave when her term expires in April. Zeti said she had not received any request to stay on amid the current market volatility, a scenario which had fuelled speculation that her contract may be extended. She stressed that it was "very unlikely" for her term to be extended again, as the succession process is already underway. Zeti, who has served as governor for 16 years, was however tight-lipped on who her successor would be, saying she is not at liberty to discuss the matter. She, however, said the central bank will remain independent even with the appointment of a new governor. Zeti stressed that a politician should not be appointed as governor of the central bank.

Businessmen, policy makers and top government officials met at the 2016 East African Islamic Finance Summit in the Kenyan capital of Nairobi to discuss how to build a regulatory infrastructure that could enable the financial system to deliver in east Africa. There is a need for legislative changes in order to promote Islamic finance in the east African region, Mona Doshi, an expert in Islamic finance who works with the Kenyan law firm Anjarwalla and Khanna, said. She said the current legal framework that applied to Islamic banks was based on conventional banking systems, though adjustments have been made for the special nature of Islamic banks. She furthermore urged the Kenyan government to change the legal framework to take advantage of the opportunities that Islamic finance could bring to Kenya.

The US$2 trillion Islamic finance industry has grown rapidly over the past decade fueled in part by a robust sukuk market and a growing Islamic asset management industry. Going forward, Islamic finance is expected to grow in response to expanding economies in countries with a growing Muslim population and amid increasing demand for Shariah-compliant investments. On Thursday February 18, the Islamic Finance Summit took place in the city of Jakarta. The summit discussed highlights of the past year as well as offered glimpses of what’s ahead. Participants of the summit also heard Indonesia’s plans for developing Islamic finance.

Jordan's Minister of Planning and International Cooperation Imad Fakhoury and President of the Islamic Development Bank Ahmad Mohammad Ali have singed a $200,000 grant agreement under which the bank will finance capacity building project for societies. The agreement aims to improve the quality of life in rural areas to curb poverty, increase economic growth and integrate the poor in the local community. The total cost of the project stands at $350,000, $200,000 of which will be covered by the Islamic Development Bank while the German Agency for International Cooperation (GIZ) will contribute $100,000 and the Jordanian Hashemite Fund for Human Development $50,000. Fakhoury stressed the need to support the plan to enable Jordan to deal with the issue of hosting Syrian refugees.

Fintech, or financial technology with its potential to disrupt traditional structures in the financial industry, is seen as an important factor to change the perception and dissemination of Islamic finance in the Muslim, as well as in the non-Muslim world. New ventures combine Shariah-compliant financing principles with new technologies, such as web-based Islamic crowdfunding and peer-to-peer lending, as well as other forms of IT-based alternative financing including special variants such as Bitcoin-based, Shariah-complaint micro-lending. The latest conferences on Islamic finance as well as the upcoming Islamic Banking & Investment Asia/Middle East Congress 2016 to be held in Singapore in early April all are focusing on new financial technologies featuring “out-of-the-box, forward-looking visionaries” from beyond the traditional confines of the Islamic finance industry.

"The Age of Stagnation", the latest book by former banker and author Satyajit Das is now available. The book says that the world is entering a period of stagnation, the new mediocre. The end of growth and fragile, volatile economic conditions are now the sometimes silent background to all social and political debates. For individuals, this is about the destruction of human hopes and dreams. Authorities have been increasingly forced to resort to untested policies including QE forever and negative interest rates. It was an attempt to buy time, to let economies achieve a self-sustaining recovery, as they had done before. Unfortunately the policies have not succeeded.

Saudi Arabia is reportedly easing rules on bank lending to stimulate growth in the largest Arab economy. Banks were told they can lend the equivalent of 90 percent of their deposits, up from an earlier limit of 85 percent, by the Saudi Arabian Monetary Agency on Sunday. The move followed a request from the country’s committee of treasurers to ease liquidity constraints. Saudi Arabia is seeking to revive its economy and stimulate credit as the slump in oil and government spending strain the banking system. The three-month Saudi Arabia Interbank rate rose to 1.73 percent on Feb. 3, its highest in about seven years. Bets for a devaluation of the riyal reached their highest in about two decades in January, even after the country pledged to keep its currency peg.

Minister of Islamic Affairs Saleh Al-Asheikh inaugurated Sunday the 3rd Endowment Forum in Riyadh. On the first day of the two-day event, sessions were held on endowment management systems and on endowments and their application. On Monday, sessions covered topics such as the reality of endowment in Saudi Arabia, international experiences in endowment, as well as the institutional structure of endowment. In addition to the discussion sessions, other activities included an exhibition and consultation service on endowments along with workshops on establishing endowments, modern trends in using endowment revenues, factors of successful investment, and the reality of charitable association endowments in the Kingdom.

David Loundy, Chairman and CEO of Devon Bank in the US, scored the highest mark on the Certified Islamic Finance Executive (CIFE) examination to win Ethica's "Weekend in Dubai" competition. Among the prizes are an internship at an Islamic bank, airfare to Dubai, accommodation, and meetings with Islamic finance scholars and bankers. David commented that Ethica's CIFE program has allowed him to put together a "proto-Islamic bank" upon completing the program that commenced formal operations January 1, 2016 as Abraham's River, a liquidity source and investment company for non-interest based finance. Ethica and Devon Bank are now working together to help make Abraham's River an interest-free vehicle for the entire US. Ethica's prize also included a free internship at an Islamic bank which David donated to the second-highest scorer.

Fiscal pressures exerted by low oil price are expected to increase the role of private sector and capital markets in the financing of hundreds of billions worth of project financing in the GCC countries. Standard & Poor’s estimate that $604 billion (Dh2.2 trillion) worth of project contracts need funding through 2019. Assuming there are no further cancellations, reprioritisations, or deferrals of projects through 2019, the rating agency expects $140 billion-$160 billion in contract awards per year. The countries awarding the most projects will be Saudi Arabia, the UAE, Kuwait and Qatar. Out of the projects planned and under way in 2016 of $140 billion, about 48 per cent involve real estate; oil and gas, 17 per cent; and infrastructure, 17 per cent.

Australia has begun to see a steady stream of property deals using Islamic financing as the attraction of low-risk tenants and a weak Australian dollar offset concerns about the lack of a welcoming tax environment for such transactions. While the emergence of such deals represents a breakthrough for Gulf and Southeast Asian investors, questions remain over how much momentum will develop as Australia has yet to follow the lead of other jurisdictions like Britain and Hong Kong in passing tax law amendments to facilitate Islamic finance. Interest is strong, and structures have now been developed that can suit commercial investment deals as well as development financing.

Iran remains essentially off limits to US banks, despite the lifting of some US sanctions. The Obama administration in mid-January eased several restrictions on doing business with Iran, including former “secondary” sanctions that had threatened to penalize companies outside the US for their business with Iran, as well as some restrictions on Americans seeking to make inroads in the oil-rich country. Nevertheless, most “primary” sanctions tied to accusations that Tehran supports terrorism remain in effect, blocking US businesses from joining a rush by non-US companies to cash in on Iran’s potential revival. It means that US banks have little access to the oil-rich country compared to their rivals in other countries.

Since reaching the nuclear agreement that lifted economic sanctions on Iran, President Barack Obama has pledged to continue to punish foreign companies that do business with the regime’s powerful Islamic Revolutionary Guards Corps. In theory, this will chill European investment in Iran because the IRGC, along with its front businesses, controls major portions of Iran’s economy in vital sectors such as oil, construction and banking. But despite recent reports of billions of dollars worth of new European investment in Iran, the US Treasury Department has seen no evidence that European companies are conducting transactions with the IRGC. Many sanctions experts question whether this is really possible.

UBL Fund Managers Limited (UBL Funds) announced the launch of the Al-Ameen Islamic Active Allocation Plan–IV, under the Al-Ameen Islamic Financial Planning Fund. This Plan is now open for subscription. The plan actively allocates investments between Islamic equity and Islamic income/money market classes with an aim to achieve potentially high returns. It has a term of two years and is ideal for investors who wish to benefit from the equity market and desire active management of their investment portfolios. Mir Muhammad Ali, Chief Executive UBL Funds, said that the Al-Ameen Islamic Active Allocation Plan series has been well received by investors with initial investments of Al-Ameen Islamic Active Allocation Plans I, II and III totaling more than Rs. 6.3bn.

IFC, a member of the World Bank Group, has released a study that finds overwhelming demand for Islamic finance among smaller business in the Kyrgyz Republic. The report revealed that 80 percent of micro, small, and medium enterprises (MSMEs) are interested in Shariah-compliant financing, a market that could be worth up to $456 million for lenders. Despite that potential, the study "Islamic Banking and Finance: Opportunities across MSMEs in the Kyrgyz Republic" found that Islamic finance was not widely available because of a lack of awareness and the high cost of structuring transactions. Yet Kyrgyz officials are working to overcome these challenges.

The Deputy Director of the Middle East and Central Asia Department (MCD) at the International Monetary Fund (IMF) Adnan Mazarei said that it is necessary to establish a minimum level of security in Syria before the IMF and international institutions can evaluate its economic needs. In an interview, Mazarei said that the Fund estimates the urgent humanitarian needs and costs, the costs of reconstruction and contributes to the reconstruction of the institutions that were destroyed. He also said that the removal of sanctions on Iran will have a positive effect by allowing the country to produce and export more oil, it has also regained access to its international reserves which will also allow greater investment, and all of these things will encourage growth.