UKIFC launch 'Pioneers of Islamic Finance' series on International Women's Day
UKIFC recently launched our brand new 'Pioneers of Islamic Finance' series on International Women's Day, highlighting Stella Cox's contribution to the UK's Islamic finance industry.
Stella sat down with Omar Shaikh of the UKIFC to discuss her experiences as one of the UK’s pioneers in Islamic finance. Stella speaks about her early days at Kleinwort Benson, her friendship with Shariah scholars, her journey founding DDCAP, one of the leading intermediaries in Islamic finance, and what the future holds for Islamic finance in the UK and beyond.
Islamic finance has a long history, and is gathering momentum as a new generation embrace the power of digital technology. UKIFC has uniquely curated a Pioneers of Islamic Finance series with two key objectives:
- Use the wisdom and learning of the pioneers inform the next generation of business models, entrepeneurs and leaders in Islamic finance
- Preserve and document the journey of the pioneers and celebrate their contribution to the field
This fascinating series exlores the personal highs and lows and the professional successes and struggles they experienced. We ask what they would have done differently if they could turn back time and what advice they have for the next generation. Find out more at ukifc.com/pioneers
Forthcoming Interviews
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Amjid Ali -
Shabbir Randeree -
M. Iqbal Asaria -
Sultan Choudhury
The series of interviews is ongoing; contact us at info@ukifc.com if you would like to suggest a Pioneer whose story should be told.
UKIFC is proud to support the Path to COP26 campaign
UKIFC is proud to be a signatory of the Path to COP26 campaign from the Global Ethical Finance Initiative. We are supporting the Faith in the SDGs stream of the campaign, which seeks to bring together, diverse global faith groups to drive change in finance through ethical leadership and stewardship of their endowments, bringing faith to finance, and finance to faith at the crucial Glasgow summit in 2021
Alongside UKIFC, signatories include major financial institutions such as NatWest Group, Baillie Gifford and Aberdeen Standard Investments, professional bodies such as Chartered Banker and CISI, and campaign groups and NGOs including Make My Money Matter and NatureScot.
UKIFC experts explain why UK and UAE fintechs could be taking on the world together - Arabian Business
This article originally appeared at https://www.arabianbusiness.com/banking-finance/457790-why-uk-uae-fintechs-could-be-taking-on-the-world-together.
The UK and the UAE fintech markets will see major regional cross-collaboration in the coming years, according to experts.
Fintech – including Islamic fintech - is a growing industry globally. Britain is now home to 27 Islamic fintechs, followed by Malaysia with 19, the UAE with 15, Indonesia with 13, and Saudi Arabia and the US with nine, according to IFN FinTech.
Global investments in Islamic economy-relevant companies totalled $11.8 billion in 2019/20, according to the State of Islamic Economy 2019/2020 report by Dinar Standard.
Islamic fintech attracted 41.8 percent of the investments. This figure reflects corporate-led mergers and acquisitions, venture capital investments in tech start-ups, and private equity investments, the report said.
British fintech boom
The UK’s fintech start-up scene has seen an injection of Islamic-focused firms in recent months, which abide by interest-free Sharia laws and avoid ‘unethical’ investments, such as alcohol and gambling.
My Ahmed, a sharia-compliant e-money platform, was accepted into the Financial Conduct Authority’s regulatory sandbox in July. In the same month, Islamic peer-to-peer lending platform Qardus launched UK services, along with trading platform Minted and sharia-compliant ethical banking alternative, Kestrl.
This year, Islamic banking app Niyah and sharia-complaint digital bank Rizq also launched in the UK.
My Ahmed is a sharia-compliant e-money platform
The UK’s large Muslim population has played a major role in helping to establish London as the focal point of Islamic financial services in the west. About 4.5 percent of the British population is Muslim, according to the 2011 census. More than a million of the UK’s 2.8 million Muslims live in London.
What’s more, Britain’s Muslim population is growing - and getting wealthier. The average monthly income of those born locally, with at least one parent born in Britain, is £1,219, compared with £815 for those who arrived aged six or older, according to the Economist Intelligence Unit.
UK-UAE crossover
Former Lord Mayor Peter Estlin, the global ambassador for the UK’s financial and professional services industry, visited the Gulf in January 2020 to help strengthen fintech trade and investment ties.
Discussing emerging opportunities for collaboration between the region and the UK, he said: “British business and innovation across financial and professional services has much to offer partners in the region, whether it be in currency trading and asset management, or growing areas like fintech and green finance."
Former Lord Mayor Peter Estlin, the global ambassador for the UK’s financial and professional services industry
According to Umer Suleman, board member, UK Islamic Finance Council (IFC), the UK finance market is mature with a strong regulatory landscape and a legacy of innovation. These British strengths offer partnership benefits for the UAE, Suleman said.
“The UK has launched many products and we know how to utilise financial technology,” the UK IFC board member told Arabian Business. “We know finance can go wrong - however, we’ve seen the resolution and evolution of products and services over time.”
“The Gulf has a great appetite for new innovative ideas. UK experts can offer their experience in terms of implementation and help build the region’s products and ecosystems,” said Suleman, adding that the Middle East’s high mobile phone penetration, legacy-free systems and flowing capital are boons for fintech growth.
“The Middle East is very open to using Islamic fintech but the [domestic] innovation isn’t fully there yet as it takes a while for research facilities to grow,” he added.
Gaurav Dhar, a global fintech investor and founder of Dubai-based digital payments firm Marshal, said London has a “huge history” of creating financial products and exporting them globally.
“This experience has flowed through into the digital age,” Dhar told Arabian Business.
Stella Cox CBE, Islamic finance government lobbyist and managing director at financial market intermediary DDCAP Group
Strong fintech dialogue
The Marshal founder said that a strong fintech dialogue has already begun between the UK and Gulf governments.
“It’s important that this conversation continues. There is a lot of opportunity for the exchange of technology, ideas and learning.
"While the UK has more to offer at this stage in terms of technology, the cross-regional fintech relationship is still in the early stages and will continue to grow organically.”
Stella Cox CBE, Islamic finance government lobbyist and managing director at financial market intermediary DDCAP Group, said there is major scope for cross-collaboration in the fintech space as the Gulf states continue to develop their cryptocurrency and digital payments ecosystems.
“The UK Islamic fintech community are creating its own ecosystem at the moment which is quite exciting. There is a lot of opportunities to share intellectual capital [between the UK and the Gulf] and I’m sure we’re eagerly looking at each other’s regulatory sandboxes at the moment,” she told Arabian Business earlier this month.
The potential for crossover and authorisation in one market attracts the attention of other proximate markets, Cox added.
“I see this dynamic extending beyond the Middle East into South East Asia as the Islamic fintechs create their own dynamic.
Muslim students still waiting for government funding plan - BBC News
UKIFC co-founder Omar Shaikh appeared on a BBC News video explaining some of the challenges that Muslim students are facing in accessing Shariah-compliant student finance - watch now.
The application of Maqaasid As-Shariah in achieving the UN SDGs
In simplistic terms, Maqaasid As-Sharia is defined as the “Goals of Shariah”. These encompass the 5 necessities of human existence. The preservation of: faith, life, intellect, lineage and wealth. These objectives have a great resemblance to the UN SDGs (United Nations Sustainable Development Goals). The SDGs are defined as “the world we want. They apply to all nations and mean, quite simply, to ensure that no one is left behind.”
Maqaasid As-Shariah involves realising the human well-being by enhancing welfare or benefit (maslaha) of the people on one hand, and preventing harm (mafsadah) on the other. The satisfaction of these needs is a basic human right and has been addressed under the generic term “Maqaasid As-Shariah”.
Although the SDGs have not been developed on a religious basis, most goals are nonetheless aligned with the spirit of Islamic law! Muslims are duty-bound by their religion to ensure the sustenance of the 5 necessities of Maqaasid As-Shariah. This means that the Islamic development is endogenously sustainable since preservation of life is an explicit objective of the Islamic law.
The dimensions of SDGs (the 5Ps) can also be found in Maqaasid As-Sharia as follows: People (Intellect), Planet (lineage), Prosperity (wealth), Partnership (faith) and Peace (life). When we talk about Maqaasid As-Shariah we are really talking about a guiding framework, a value system, the objectives of which are explained from the holy Qur’an. Some of these are referenced below:
- No Poverty, Zero Hunger, Decent work and economic growth (SDG1, 2 & 8)
[Chapter 16 v 97: “Whoever works righteousness, whether male or female, while he (or she) is a true believer verily, to him We will give a good life (in this world with respect, contentment and lawful provision)…”]
- Good health and well-being (SDG 3), Quality Education (SDG 4), Clean water and Sanitation (SDG 6)
[Chapter 7 V 160: “…Eat of the good things with which we have provided you…”]
- Gender equality (SDG 5)
[Chapter 49 v 13: “We have created you from a male and a female….Verily the most honourable of you with Allah is that (believer) who has at taqwa (piety)…”]
- Affordable & Clean Energy (SDG 7), Climate Action (SDG 13)
[Chapter 7; V85: ““…and do not mischief the earth after it has been set in order…”]
- Industry, Innovation & Infrastructure (SDG 9)
[Chapter 13 v 11: “…Verily, Allah will not change the good condition of a people as long as they do not change their state of goodness themselves …”]
- Reducing inequality & Peace, Justice & Strong Institutions (SDG 10, 16)
[Chapter 4 v 135: “Stand out firmly for justice…”]
- Responsible consumption & Production (SDG 12)
[Chapter 7 v 31: “…eat and drink but waste not in extravagance…”]
[Prophetic advice: “The food of one person is sufficient for two, the food of two people suffices for four people and the food of four people suffices for eight”]
- Sustainable cities & Communities (SDG 11)
[Chapter 8 v 46: “…do not dispute (with one another)…”]
- Life below Water (SDG 14), Life on Land (SDG 15)
[Chapter 30 v 41: “…Evil has appeared on land and sea because of what the hands of men have earned (by oppression and evil deeds)…”]
- Partnerships for the goals (SDG 17)
[Chapter 5 v2: “…help you one another in virtue, righteousness and piety (common good) but do not help one another in sin and transgression…”]
The UN SDGs are primarily intended for the well-being of human beings. As sustainable development strives for a balanced economy, society and environment, Islam too drives a balance between the 3 to maintain efficient and effective resource usage. If spirituality becomes a way of life upholding timeless moral, ethical and human values, sustainability is certainly assured and Maqaasid As-Shariah to serve as governance framework, guidelines and values.
The adaptability of Islamic Finance (IF) post Covid-19 - AAOIFI
During the recent AAOIFI webinar that took place on the 14th December 2020, much of the discussion was around the adaptability of Islamic Finance (IF) post Covid-19. The COVID-19 pandemic is an event which has provoked unprecedented reflections and shifts within the sector.
Many countries fell into economic depression despite government and central bank support, with supply chains, currencies and SMEs all affected. However, the pandemic also accelerated the set-up of the digitalisation trend - from the creation of blockchain technology platforms where users could mobilise funds in a transparent manner, to online banking, online schools, virtual meetings and more.
A study conducted by some of the participating banks in Turkey revealed that the pandemic presented some strengths where clients were giving priority to Murabaha debt to continue financing their business operations and there were no dealings in any derivatives instruments. It was also an opportunity for widening the distribution channels and increasing the number of customers. On the more challenging side, the contraction in economic activities caused a cash shortage in companies and where participating banks were not able to lend a helping hand. Participating banks had limited number of instruments for consumer credits.
In an Islamic Economic system, the gap between the real and financial sectors is non-existent. While the financial sector can move independently from the real sector (which is what happened during the financial meltdown of 2008, when profits were being made while the real economy shrank). It is evident that reform in IF is needed, and there is a huge opportunity for the industry to re-inject returns into the real economy towards the creation of employment and promoting real businesses. On the other hand, financial innovation relating to the environment such as green financing and sustainable financing is encouraged by the Maqasid Al-Shariah.
In this current climate the role of regulators is more imminent than ever in providing guidance & the necessary educational tools to Islamic Banks (IB) and the industry, especially where many Central Banks have failed to abide by Standards that are pillars to the economy. IFSB for example are working in line with Regulators in an attempt to bring together uniformity and good guidelines in the IB sector. The pandemic is placing enormous strains on corporate cash flows as business operations have temporarily ceased.
Banerjee et al (2020) estimate that 50% of firms in 26 advanced countries do not have enough cash to cover total debt servicing costs over the coming years. Some guidance for governance during the pandemic included:
- Board & executive directors are recommended to implement crisis management plans. Such crisis management plans should cover reporting practices and governance issues.
- Boards are recommended to emphasise stakeholders’ needs and ensure transparent reporting of transactions arising due to the pandemic (moratorium payments).
- Boards are recommended to emphasise ethical considerations while developing strategies to handle the pandemic.
- Sharia boards are advised to develop pro-active measures to ensure sharia compliance.
Some opportunities for IFIs included:
- Social safety net – IFIs need to develop fiscal plans for a sustainable future.
- Islamic Social Finance tools – e.g. Qard Hassan, Sukuk, Waqf, Zakaat are available for IFIs
- Fintech (Mobile banking, Sharia compliant crowdfunding, Islamic micro finance & smart contracts).
Omar Shaikh delivers virtual lecture to World Muslim Communities Council
UKIFC Managing Director Omar Shaikh delivered a virtual lecture with the World Muslim Communities Council, on Saturday 5th December 2020. Entitled "Moral Economy and Green Recovery After Covid-19: Islamic Awqaf and Finance", the lecture affirmed that Islamic finance is moral financing and a means to carry out community activities and achieve human happiness.
He added: “Islamic finance is a financing product that has a clear structure and focuses on alignment and avoids usury, because it is a green economy that achieves recovery with returns, social benefits and blessings in money, as well as it provides solutions to global challenges.”
He explained that in the face of the outbreak of the epidemic, we must seize opportunities for Islamic finance and endowments, as there are several challenges facing financing operations and traditional bank shares such as supply chains. He is stressing that the demand for products for the benefit of societies has led to an increase in profits and reduced costs for banks.
He called for a focus on ethical economics and sustainable banking through investment in markets and Sharia governance, as well as on sustainability goals by contributing to the eradication of poverty and achieving gender equality, by harmonizing Islamic finance. He is calling for rebuilding a new system of Islamic finance based on human welfare and serving the society.
During the lecture, Omar pointed out the experience of the countries of Scotland and the United Arab Emirates in being among the first countries that cared about the happiness of the individual to achieve emotional intelligence.
The World Muslim Communities Council is an international non-governmental organization, headquartered in the UAE capital Abu Dhabi.
Second Islamic Finance & SDG Taskforce meeting takes place
The second Islamic Finance and the UN Sustainable Development Goals (SDGs) Taskforce meeting has taken place virtually bringing together over 50 global Islamic finance leaders. At the meeting, convened by the State Bank of Pakistan (SBP) in partnership with the UK Islamic Finance Council (UKIFC), the SBP announced the launch of a country level working group bringing the leading banks across Pakistan to focus on green finance and the SDGs. Two further working groups, to be driven by Taskforce members, focused on Disclosure and Reporting and Education and Awareness were also announced.
The Taskforce is playing a leading role to encourage the adoption of the SDGs, highlight the green finance opportunity and promote the UN Principles of Responsible Banking within the global Islamic finance sector. This represents a $2.5 trillion global investment opportunity as part of the post-Covid-19 economic recovery. The Islamic Development Bank suggest that between $700m and $1trillion of this is within its member countries presenting an immediate opportunity for Islamic finance institutions.
State Bank of Pakistan Governor, His Excellency Dr. Reza Baqir, announced the launch of a Pakistan country working group that will:
“Explore the inherent strength of Islamic finance to develop a responsible business framework by engaging academia, policy makers and practitioners towards achieving SDGs.”
Leading the Awareness group UKIFC Advisory Board Member and meeting chair, Richard de Belder commented:
“Having identified a knowledge gap this working group will focus on activities that increase awareness, promote understanding and encourage adoption of the SDGs amongst the global Islamic financial and their related primary stakeholders.”
Leading the Disclosure and Reporting working group Gatehouse Bank CEO Charles Haresnape added:
“This working group is a unique opportunity to bring the Islamic banks signed up to the UN Principles of Responsible Banking together to share experiences with a view to developing a more consistent approach to disclosure and report.”
Despite a natural alignment few Islamic financial institutions are engaged with the SDGs. As we enter the decade of delivery the Taskforce has become an important platform to raise awareness of the Global Goals and catalyse practical action amongst Islamic financial institutions.
The meeting, also heard from Dr Hayat Sindi, Senior Advisor to the President, Islamic Development Bank, who spoke about how Islamic financial institutions are demonstrating resilience as world events continue to reshape the landscape of global financial services; how IFI’s can prepare themselves for the opportunities and challenges posed by such a changing economy; and especially with regards to investing in science and innovation so poorer countries can provide an adequate response to the Fourth Industrial Revolution.
NOTES FOR EDITORS
About The Taskforce:
With assets expected to reach US $3.8 trillion in 2022, Islamic finance is one of the fastest growing sectors in the global financial industry. Achieving the 17 Sustainable Development Goals (SDGs) agreed in the UN’s 2030 Agenda for Sustainable Development will take over US$5 trillion per year investment with the current financing gap standing at around $2.5 trillion per year.
The purpose of the taskforce is to explore the role the Islamic finance industry can play in addressing this funding gap and to better understand the commercial opportunities the SDGs present for the sector.
The UN’s SDGs are the blueprint to achieving a better and more sustainable future for all, addressing issues such as climate change, education and equality. Achieving the SDGs requires a coordinated global effort with Governments and private sector, including the financial services sector as a whole. Analysis indicates there is limited engagement by the global Islamic finance sector and this focused taskforce has been established by the UKIFC.
Why Islamic finance in the UK is not realising its $3trn potential (Arabian Business)
Britain has failed to deliver on a government commitment to boost the sector, says UKIFC founder & managing director Omar Shaikh in an interview for Arabian Business.
The British Islamic finance market is facing a slew of challenges and is being held back by weak consumer awareness, according to one of the country’s top experts.
The $19 billion market is also suffering from a lapsed government commitment and a lack of regulation, said Omar Shaikh, an advisory board member for the Islamic Finance Council UK (UKIFC) in London.
“There is a need for the government to realise its previous legislative commitments – former UK prime minister David Cameron said every government needs to consider Islamic finance loans,” Shaikh told Arabian Business.
“The Bank of England still needs to deliver on its pledge to create a liquidity tool for Islamic finance so it can operate on a level playing field.”
In October 2013, the then UK PM Cameron announced that London would assume a position of significance in the Islamic finance market. The leader said he wanted “London to stand alongside Dubai as one of the great capitals of Islamic finance anywhere in the world”.
The UK capital now has more than 20 international banks operating in Islamic finance – five of which are fully Sharia-compliant. London is also home to more than 20 law firms that are supplying legal services relating to Islamic finance for global and domestic markets.
Islamic finance mechanisms have been used to finance a range of iconic London projects, like The Shard, the Olympic Village, and the redevelopment of the Chelsea Barracks and the Battersea Power Station sites.Today the number of institutions in the UK offering Islamic finance is double that of similar institutions located in the US, but there is still much more to be done, according to Shaikh (pictured below).
“The UK government has previously mooted an Islamic finance start-up loans facility – a SME working capital fund – but this hasn’t been executed yet,” he said.
The UKIFC expert added that Brexit could offer opportunities for unlocking Islamic finance regulation.
“We were previously locked in around EU laws,” he said. “Islamic finance couldn’t issue unsecured lending – this is a consumer credit issue that can now be resolved. The government’s commitment to Islamic finance liquidity tools needs to be realised.”
Second sukuk
However, Shaikh welcomed the news that the UK is inviting banks to join a syndicate for the country’s second sale of sovereign sukuk or Islamic bond later this year.
Britain became the first Western country to issue an Islamic bond in 2014, raising £200 million ($260 million) from a five-year deal that was 10 times oversubscribed.
“There is a potential massive $3 trillion UK market to be realised for the Islamic finance industry but UK sovereign sukuk is not yet in sufficient supply,” Shaikh said. “With a deeper sukuk market, we can be a key developer and enabler for ISAs, pensions and so on. If you don’t have enough sovereign debt, how can you create a balanced pension scheme? We need to get on with the commitments already made and the next steps.”
Growing Muslim population
The UK’s large Muslim population has played a role in helping to establish London as the focal point of Islamic financial services in the West. About 4.5 percent of the British population is Muslim, according to the 2011 census. More than a million of the UK’s 2.8 million Muslims live in London.
According to Mohammed Khan, UK Islamic Finance leader at management consultants PwC, there is a demand for ethical Islamic finance products where people can "save, invest, buy a house, and have some kind of protection".
“The Sharia structure itself doesn’t prevent the creation of these products, nor does it make them necessarily more expensive,” Khan told Arabian Business. “Generally Islamic retail products have yet to be created on a mass-market scale with equivalent competitiveness and accessibility [to mainstream finance].
Shaikh said the national Islamic finance product portfolio could be expanded to act as a fillip for the market.
“We are still at a very nascent stage, we need to develop these products – it’s a supply-driven market,” said Shaikh. “There’s no car finance, no travel insurance, no asset finance for businesses, no personal loans and no home insurance,” he said.
“Islamic finance has been a great source of FDI for the Shard and the Chelsea Barracks, for example, but there remains an opportunity to up the game beyond iconic buildings as we come out of Brexit.”
Although a host of Islamic lending or savings accounts have been launched in the UK market, only 54 percent of Muslim consumers have tried any of them, according to the 2019 Islamic Finance Consumer Report from Britain’s Gatehouse Bank.
Shaikh said the best way to raise awarenss of Islamic finance in the UK is for the industry to bring out more products.
“The awareness has to be coupled with new products. We need to catalyse the convergence of Islamic finance with ethical finance, there is an opportunity to align with the strong momentum in that space,” he said.
“You have to have good service, availability and value for money – just being Muslim-friendly finance is not good enough.”
5 Things We Learned:
- The $19 billion market UK Islamic finance market is being held back by lapsed government commitment, as well as a lack of regulation and weak consumer awareness.
- London has more than 20 international banks operating in Islamic finance – five of which are fully Sharia-compliant.
- Islamic finance mechanisms have been used to finance a range of iconic London projects, like The Shard, the Olympic Village, and the redevelopment of the Chelsea Barracks and the Battersea Power Station sites.
- The UK government is inviting banks to join a syndicate for the country’s second sale of sovereign sukuk or Islamic bond later this year.
- The national Islamic finance product portfolio needs to be expanded to act as a fillip for the market.
UKIFC supports Ethical Finance 2020
UKIFC was proud to be s upporter of Ethical Finance 2020. The annual summit, organised by the Global Ethical Finance Initiative, was held virtually for the first time in 2020 on the new EFx platform. The 4 days of the summit saw leaders from across finance participating in discussion on ethics, responsibility and sustainability in banking, investment, insurance, regulation and more.
Figures at the summit included H.E. Dr Bandar Hajjar, President of the IsDB, Eric Usher, Head of UNEP FI, economist & author John Kay, Rafe Haneef of CIMB, Richard Curtis, filmmaker & campaigner, Alison Rose, CEO of NatWest Group, Hasan Aljabri, CEO of SEDCO Holding Grouo, Samer Abu Aker, CEO of SEDCO Capital, Nigel Topping, the COP26 High-level Climate Action Champion, and Maunel Pulgar-Vidal, President of COP20.
Videos from all of the sessions are available now on YouTube.