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.
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.
UKIFC announces support of 'Faith In SDGs' and the Path to COP26 campaign
UKIFC is a signatory of the Global Ethical Finance Initiative's Path to COP26 campaign, and is collaborating on the #FaithInSDGs workstream, which forms a part of the campaign. Ahead of the crucial 2021 Glasgow climate summit, the two organisations are seeking to coordinate faith groups, who have the power to invest in transformative change through their holdings.
Islamic finance and the SDGs in the UK (Islamic Finance News)
This article originally appeared in Volume 17, Issue 29 of Islamic Finance News, and was authored by Omar Shaikh, co-founder and CEO of UKIFC and Chris Tait, Project Manager of UKIFC.
Islamic Finance and the SDGs – UK Update
With Covid-19 exposing the fragility of people and the planet the Sustainable Development Goals (SDGs) is a recognised global framework upon which we can, collectively, build our social, environmental and economic resilience. With its underlying Shari’ah principles, Islamic finance is naturally aligned to, not only support but, lead the financial services sector’s efforts towards achieving the Global Goals.
With a $2.5 trillion per year financing gap, the UKIFC has committed to a 24 month action oriented programme of activities to address barriers blocking Islamic Financial Institutions from embracing the SDGs.
A new high-level international taskforce to engage the Islamic finance industry with the SDGs was launched late last year. The taskforce, which is anchored in London and run by the UKIFC with the support of the UK Government, aims to promote understanding and encourage adoption of the SDGs amongst Islamic financial institutions.
Commenting on the launch Economic Secretary to the Treasury, John Glen MP, said: “This Taskforce will bring together the global Islamic finance community so it can help us meet our international, environmental and sustainability objectives – using UK expertise in sustainable finance to drive forward innovation around the world.”
The inaugural meeting was scheduled for March 2020, and recently took place virtually after a postponement, attended by leading Islamic finance institutions along with the Bank of England, John Glen MP and Islamic Development Bank President, HE Bandar Hajjar.
The UKIFC, in partnership with Malaysia based International Shari’ah Research Academy for Islamic Finance, recently launched the first report in a thought leadership series that aims to assist and encourage active engagement in support of the SGDs by the global Islamic finance sector. The report, Islamic Finance and the SDGs: Framing the Opportunity, provides an introduction to the SDGs within the context of Islamic finance, emphasising the opportunity the SDGs present to the Islamic finance sector. The report highlights:
- The limited participation from Islamic finance sector in leading UN initiatives such as Principles for Responsible Investment (PRI), Principles for Responsible Banking (PRB) and Principles for Sustainable Insurance.
- That to achieve SDG targets, Islamic Development Bank Member Countries need annual funding of between US$700 billion and US$1 trillion which represents around 40% of the total global SDG financing gap.
- An opportunity for Islamic finance to tap into emerging global liquidity pools seeking SDG-aligned products.
- Aligning with the SDGs supports the tayyib (pure, good) concept which contends that the focus of Islamic finance products and services should be on the evaluation of wider societal impact rather than an overly legalistic analysis of Shari’ah compliance.
In terms of practical action in 2016, DDCAP became one of the first Islamic financial sector signatories to the PRI thereby demonstrating a commitment to aligning responsible investment practices with the SDGs. The UK is also leading the way in relation to the Islamic finance sector’s engagement with the PRB. The principles offer the first SDG-aligned global framework that helps banks to integrate sustainability across their operations at the same time as enhancing their positive impact. In February 2019 the UKIFC became the first advisory body dedicated to Islamic finance to formally endorse the principles and Gatehouse Bank was the first fully Shariah compliant bank amongst the founding signatories when the principles are launched at the UN General Assembly in New York in September 2019.
Elsewhere UK-based Cogneum, in partnership with Bahrain Institute of Banking Finance and Innosoft Solutions, working to develop and launch the world’s first Shariah Governance software platform that links an Islamic bank’s activities to Maqasid al Shariah as well as the SDGs.
With assets expected to reach US $3.8 trillion in 2022, through its adeptness at innovative financial structuring, the global Islamic finance sector has the opportunity to take a leading role in driving capital towards the SDGs and UK organisations are well placed to contribute and support.
OTHER UK DEVELOPMENTS
All Party Parliamentary Group On Islamic Finance (APPGIF)
The APPGIF was re-constituted on 4th February 2020 with the continuing aim of promoting the understanding and development of Islamic finance both domestically in the UK and overseas as well as looking at the role Islamic finance can play in the wider ethical finance sector. It is an active body with 9 officer holders and a further 5 supporters from across the parties and from both sides of the house.
Sovereign sukuk
In 2014 the UK became the first country outside the Islamic world to issue sovereign Sukuk. The 5-year £200 million issuance received very strong demand, with orders totalling around £2.3 billion, and allocations made to a wide range of investors including sovereign wealth funds, central banks and domestic and international financial institutions. Following a “value for money assessment” in June 2019 former Chancellor Philip Hammond announced the UK will be issuing a second sovereign sukuk.
Other than the aforementioned the Debt Management Office announced in November 2019 that HSBC and Clifford Chance LLP were appointed on 4 November 2019 as structuring and legal advisors and, as yet, despite the procurement notice indicating that the contract would end on 3rd May 2020, there has been no announcement on the appointment of Structuring Bank(s). With the coronavirus pandemic causing great volatility in financial markets it remains to be seen whether the Sukuk will be issued this year.
By issuing a sovereign Sukuk the Government sought to pave the way for other public and private sector organisations to follow suit. However, Al Rayan Bank, which issued a public Sukuk for £250m in early 2018 to become the first bank ever to issue an Islamic bond in a non-Muslim country, has been the only other UK entity to enter the Sukuk market.
Shariah compliant student loans
As far back as 2013, when the UK hosted the ninth World Islamic Economic Forum, former Prime Minister David Cameron announced that “never again should a Muslim in Britain feel unable to go to University because they cannot get a student loan - simply because of their religion”. Despite the Government commitment a shariah compliant student loan product is still not available to prospective and existing UK students. Whilst progress has been made a wider review of student finance, as well as the coronavirus pandemic, have caused delays and the solution, which we believe to be based upon a Takaful model, has yet to be formally launched.
Shariah compliant real estate investment in Scotland
Pre-coronavirus as the real estate market in the Middle East stabilised, Gulf investors have sought to diversify their property portfolios and select the UK as a preferred investment destination. Whilst London continues to dominate the strong yield projections in other UK cities (including Manchester, Liverpool and Leeds) has driven the trend for Gulf real estate investment to flow northwards. There has been significant activity in Scotland where there is a separate and distinct legal basis for structuring shariah compliant deals. Over the last 2 years, supported by organisations such as BDO, Gatehhouse Bank, Ocorian and Shepherd + Wedderburn, over £250million of Shariah compliant real estate deals have been concluded for properties in Aberdeen, Edinburgh and Glasgow.
Islamic fintech
The UK Islamic FinTech Panel, an independent group of Islamic finance and fintech practitioners, continues to focus on connecting entrepreneurs with government, and building international connections with the inclusion of participants from Bahrain, Dubai and Pakistan. Fintech success stories in the UK include Yielders, an Islamic crowdfunding platform for UK property that allows investors to buy shares in houses that it buys and lets, Wahed Investment who have launched their US robo-advisory halal investments platform into the UK and Niyah, a mobile-only Islamic banking solution providing an interest-free banking experience. Kestrl, an ethical banking fintech, is set to launch in the UK later this year.
Inaugural Islamic Finance and the SDGs taskforce meeting takes place
The inaugural Islamic Finance and the UN Sustainable Development Goals (SDGs) Taskforce meeting took place virtually, in light of the Covid-19 pandemic, bringing together over 40 global Islamic finance leaders. The pioneering meeting, convened by the Islamic Finance Council UK (UKIFC) in partnership with the UK Government, explored the role Islamic finance can play in addressing the $2.5 trillion SDGs funding gap as part of the post-Covid-19 economic recovery.
Islamic Development Bank President Bandar Hajjar welcomed the initiative calling for greater cooperation between the public and private sectors and to use the SDGs to inspire financial innovation.
UKIFC and ISRA launch report on Islamic finance and the SDGs
The Islamic Finance Council UK (UKIFC), in partnership with Malaysia based International Shari’ah Research Academy for Islamic Finance (ISRA), has launched the first report in a thought leadership series that aims to assist and encourage active engagement in support of the UN Sustainable Development Goals (SDGs) by the global Islamic finance sector.
The report, Islamic Finance and the SDGs: Framing the Opportunity, provides an introduction to the SDGs within the context of Islamic finance, emphasising the opportunity the SDGs present to the Islamic finance sector.
The SDGs seek to address global economic, social, governance and environmental challenges by 2030 and have been adopted by 193 countries. They recognise that ending poverty and other deprivations complement strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our natural environment.
With a $2.5 trillion per year financing gap the UKIFC has committed to a 24 month action oriented programme of activities to address barriers blocking Islamic Financial Institutions from embracing the SDGs. The report follows the launch of a global Islamic Finance and SDG Taskforce that is supported by the UK Government and involves senior level participants from across the globe.
With Covid-19 exposing the fragility of people and the planet the SDGs is a recognised global framework upon which we can, collectively, build our social, environmental and economic resilience. With its underlying Shari’ah principles, Islamic finance is naturally aligned to, not only support but, lead the financial services sector’s efforts towards achieving the Global Goals.
TAKEAWAYS FROM THE REPORT INCLUDE:
- There has been limited participation from Islamic finance sector in leading UN initiatives (such as Principles for Responsible Investment, Principles for Responsible Banking and Principles for Sustainable Insurance) that support financial institutions to align with the SDGs.
- To achieve SDG targets, Islamic Development Bank Member Countries need annual funding of between US$700 billion and US$1 trillion which represents around 40% of the total global SDG financing gap.
- Opportunity for Islamic finance to tap into emerging global liquidity pools seeking SDG-aligned products.
- Alignment with the SDGs supports the tayyib (pure, good) concept which contends that the focus of Islamic finance products and services should be on the evaluation of wider societal impact rather than an overly legalistic analysis of Shari’ah compliance.
- With assets expected to reach US $3.8 trillion in 2022, through its adeptness at innovative financial structuring, Islamic finance is well placed to create instruments that drive capital towards the SDGs.
With a deep rooted commitment to social benefit Islamic finance should be at the front and centre of this new, sustainable economic paradigm. With the SDGs emerging as the shared blueprint for peace and prosperity for people and the planet, now and into the future, it is time for the global Islamic finance sector to step up and demonstrate its credentials for driving finance for positive change.
Executive Director of ISRA, Dr Akram Laldin, said:
“Islamic finance has a lot in common with impact investment and can play a major role in addressing the problems faced by society. It also has the potential to bring added value to the efforts to mobilize resources for the sake of realizing the SDGs.”
Richard de Belder, Advisory Board Member of the Islamic Finance Council UK, said:
“The UKIFC firmly believes that the Shari’ah principles which underpin Islamic finance make the sector well positioned to lead in promoting the SDGs to achieve global economic and social justice combined with sustainability and to drive home the point that we are all vice regents with temporary custody of the world’s finite resources and so need to act in a way that recognises this.”
Charles Haresnape, CEO, Gatehouse Bank, said:
“The environmental and social challenges facing the world impact everyone and equally we must all play our part in affecting change for the better. Islamic Finance institutions already champion fairness and ethics through Shariah principles and by working to align our business activities with the UN’s SDGs we can further solidify that commitment. As the first UK Shariah-compliant bank to become a signatory to the principles we have seen first-hand how oversight from the UN encourages us to scrutinise the impact of our activities and importantly, assess where we can improve. This is an important global scheme that we would encourage other Islamic finance providers to be part of to drive positive change.”
Stella Cox, CEO, DDCap Group, said:
“The 17 SDGs are an incredibly important resource as they provide a roadmap to address some of the world’s most pressing matters, from battling climate change to reducing social inequality and raising global living standards. Every institution, regardless of size, can and should seek to align its work with the objectives of the 17 goals. Furthermore, there is a natural alignment between the SDGs and the core values in our industry. UKIFC’s Islamic Finance and SDGs Thought Leadership Series provides us with the opportunity to call to action and inspire greater engagement of the global Islamic banking and wider financial industry in delivering against the targets set within the SDGs. We are proud to support the UKIFC’s valuable work during the publication of this important series of reports.”
Umer Suleman of UKIFC appears on BBC Radio 4's Beyond Belief
Umer Suleman of UKIFC appeared on BBC Radio 4’s Beyond Belief, to discuss Islamic finance, ethical finance and the Edinburgh Finance Declaration with presenter Ernie Rea.
“It is estimated that religious institutions own trillions of dollars’ worth of investments but some have acknowledged that their financial choices have not always reflected their principles. Can faith values help people to choose how to invest their money in ways that align with their ethics? Can new technologies like blockchain provide greater transparency and control, and where are the potential pitfalls for people looking to invest their money?
Joining Ernie Rea to discuss ethical investing are Rabbi Mark Goldsmith of the Edgware & Hendon Reform Synagogue and member of the International Interfaith Investment Group; Devie Mohan, an expert in the relationship between finance and technology; Martin Palmer President of Faith Invest and Umer Suleman a member of the UK Islamic Finance Council and a Sharia Finance Consultant.”
Listen now on BBC Sounds.