Opinion: Muslims may eat a Halal burger, but remain unable to invest in one


imagesThe head of an angel investor fund from Egypt laughed when I asked her if there was any demand for Islamic loans. “No,” she replied firmly. “There is demand for money. They don’t care where from.”

In fact, ninety five per cent of the Muslim world does not have access to Islamic finance. And they don’t seem to mind. I’m not talking about Muslims living in non Islamic territories – out of the countries which boast a Muslim population of 98 per cent or more, the vast majority, including Afghanistan, Algeria, Azerbaijan, Comoros, Jordan, the Maldives, Morocco, Niger, Tajikistan, Tunisia, Somalia and Yemen either have no domestic Islamic finance industry, a pocket-sized or an embryonic one. Only Iran, Iraq and Turkey feature on the list and have an industry to speak of.

The world’s largest Muslim countries don’t fare much better. Indonesia, home to 12.7 per cent of the world’s Muslims, has a tiny domestic industry which pales in comparison to its neighbour Malaysia’s. Pakistan, the second largest, has been making progress but its conventional banks still dwarf the few Islamic institutions. India, the third largest Muslim country, has yet to open one Islamic institution.

It seems Islamic finance is not considered a necessity in the majority of the Muslim world, especially in countries where a sizeable number of the population does not have enough money to open a bank account. It is born out of business needs, rather than fundamental ones.

As one of my contributors, Rushdi Siddiqui, pointed out to me recently, this is the opposite of Islamic finance’s much larger cousin, the Halal industry. All must eat, and Muslims will only eat Halal.

With its surplus liquidity, it seems a good way for Islamic finance to make itself relevant to the wider Muslim world would be to invest in the capital-hungry Halal industry. As Siddiqui pointed out, with so little access to Islamic finance, many Halal businesses are reliant on conventional funding. Ironically, this means that Muslims may eat a Halal burger but may not be able to invest in a Halal burger chain.