Islamic Finance: Does it include you?

Rushdi Siddiqui – Khaleej Times

There were three recent major Islamic finance conferences in Malaysia: Global Islamic Finance Forum (GIFF), Islamic Finance News (IFN), and Kuala Lumpur Islamic finance forum (KLIFF), and headline question was neither asked nor answered or raised?

Who represents the financial interests of the super-majority of 1.8 billion Muslims comprised of have nots, students and the youth? Are they ‘bankable in the wait’ for Islamic finance for sizing and seizing.

If they are categorised as tomorrow’s customers, then, today, where is the social justice, equitable treatment, and financial inclusion that scholars, academics, politicians and regulators talk about at conferences. Are the numbers misleading? The objective should be financial and social returns or impacting investing, correct?

Have nots

Some of the poorest countries are the Muslim majority, and, frankly, the Islam they know is not associated with Islamic finance, but the imam/mosque, ceremonial rituals, and the halal food industry. It’s the $640 billion halal industry that should be proud of touching, connecting and serving (some of) their needs over Islamic finance.

They are born without the silver-spoon, and all they are looking for is having their basic need of inclusion, dignity and opportunity addressed. To them, the Shariah structure on Islamic micro-finance/funds is less of interest than actually receiving the funds.

A deposit taking Islamic bank has a fiduciary duty to shareholders (maximize returns), sukuk holders (coupon profits and return of capital), depositors (safe keeping and returns), employees, and so on. But, what about the social returns beyond the deposit taking area?

It does have disburse-able funds via zakat, possible Sadaqa pass through, and purify impermissible income, i.e., charitable capital. As these funds are not part of the bank’s capital, there is no ‘return on or of capital’ pressures required by the bank.

Will the recent announcement by the Islamic Development Bank (IDB) and Bill & Malinda Gates Foundation spark greater interest in the have nots by Islamic financial institutions? IDB president, Dr Mohammad Ali, stated, ‘….our partnership with the Gates Foundation will also inject new resources and momentum into the fight against polio, malaria, food insecurity and other pressing development challenges …’


In meeting students over the years in Southeast Asia, GCC, Europe, Canada and the US, I am becoming concerned about the future human assets of our industry. Some points include:

  • Some want to be Shariah scholars because of the compensation and not research/scholarship
  • Some are not interested in working for Islamic financial institutions (IFIs) because their values are not aligned to the values of the entity. For example, they are indifferent to present award categories, and would like to see  ‘Best IFI to work for,’ or ‘Best IFI for Environment, Sustainability and Governance (ESG).’
  • They care about real (not rhetoric) financial inclusion, social justice, etc., for the non-bankable, but do not see Islamic microfinance or IFIs working with NGOs in any impactful manner.
  • As many are well connected to the social media, they want the IFIs to connect to them, as latter viewed as ‘black and white’ television in an age of ‘on demand programmes.’

Two often raised points are financing education and placement. Thus, one hears, ‘I have Islamic finance degrees/certificates, but I am conventionally leveraged and meaningful jobs (not entry level) are not available.’

Thus, Islamic finance practitioners who complain about lack of qualified people may need to rethink their words as a disconnect exists.


Closely associated to the students are the youth, the DNA for the ‘Arab (and other) Springs.’ This segment of society, population bulge in almost all OIC countries, will lead nations to either glory (knowledge based economies) or the ground (strife). They are the future generations that sovereign wealth funds are investing country’s natural resources. The youth in the Muslim world are just as ambitious, passionate and driven as their counter-parts who created Apple, Microsoft, Google, Facebook, and so on. However, they are lacking the risk financing, Musharaka and Mudarabha (venture financing), meaningful mentoring, etc., as today’s Islamic finance is ‘collateral based capital.’ Islamic finance, via equity capital, can show conventional finance and the developed world that ‘Salaam Street,’ a fusion between Silicon Valley and Wall Street, is possible.


Today, a challenge of disconnect exists between Islamic finance and have nots, halal industry, students and the youth. Can, say, Dubai lead the 57 Muslim countries on infusing these stakeholders with ‘opportunity capital’ that will defuse their desire for chaos, and build a ‘causeway of care’ and answer the headline question, does it include you?

The writer is Global Head of Islamic Finance & OIC Countries for Thomson Reuters. Views expressed by the author are his own and do not reflect the newspaper’s policy