Professor Ross Haniffa, Director of the Centre for Accounting and Accountability Research, believes Yorkshire should be taking the lead for Islamic finance in the UK.
In a statement posted on Hull University Business School’s website, Haniffa talks about the opportunities for Yorkshire businesses to get involved in Islamic finance.
“A significant proportion of the UK Muslim community lives and works in the Yorkshire region. Yet banks offering the Shari’ah-compliant services of Islamic finance are still few and far between,” he said.
He stated that over the last few years, there has been encouragement from the UK Government for the growth of Islamic finance in the UK through legislative adjustments and creating a supportive environment, but this has focused on promoting the financial centre of London.
“Since financial services account for a growing proportion of the Yorkshire economy, should we as a region not be taking a lead in this growing market?” he asked. “Not just in terms of banking, but the periphery organisations involved in promoting the more ethical financing and business terms – solicitors to prepare the Shari’ah-compliant financial contracts, business consultants to advice entrepreneurs on Shari’ah-compliant businesses as well as advisers for the public sector initiatives. Can’t we be a hub for Halal food and pharmaceutical products for Europe?”
He said that there is “undoubtedly” an air of scepticism around Islamic finance, perpetuated by a lack of knowledge and understanding. “For example, many believe that you have to be a Muslim to be involved in Islamic finance and its periphery organisations or that it is an archaic system unsuited to the modern era,” he said.
“This is a misconception which institutions should be trying hard to correct. Far from being an outdated model, Islamic finance offers a viable alternative to the current accepted norm. Islamic economy and finance is a system free of exploitation from Riba and focuses on socioeconomic upliftment of the community,” he added.
He opined that Islamic finance has a chance to prosper during the current financial crisis. For investors, it is a safe and ethical choice as due diligence is always carried out – all business are screened to ensure that the business is not involved with interest, alcohol, gambling or non-real economic projects.
He also pointed out that bankers’ bonuses are not an issue as Islamic finance forbids the paying of exorbitant bonuses as it is based on the concepts of stewardship, trust and risk sharing. Interest is seen as unjust. Instead there is a culture of transparency – profit is called profit and is clearly shown in the contracts prepared.
“It could be seen as more stable than conventional banking. Unlike our banks today, gold not paper is the fundamental basis for lending as Islamic financial organisations are required to have equivalent gold stock investments,” he said.
“Yes, the underlying principles of Islamic finance are based on the teachings of the Qur’an – there is no shying away from the link to religion. However, there is a strong history in Yorkshire between religion and business, the Quakers of Rowntree, York, or Congregationalist Sir Titus Salt of Bradford.
“We need to look at Islamic finance as an alternative system based on basic ethical principles rather than religion specific. It focuses on the good of society and justice –for example, organisations of any denomination wanting funding to provide homeless shelters, or businesses involved in the offshore wind projects, hospitals, could apply to Islamic financiers.
“One of the major challenges to the success of Islamic finance is the lack of experts in the field. Many of those currently involved in the field are conventional bankers who bring with them ethos and ideas that are not necessarily compatible. We do have a rapidly growing number of students interested in this area and perhaps this is another opportunity for Yorkshire, for its universities to help train the next generation of Islamic bankers, accountants and lawyers, giving them a grounding in ethics and justice for society.
“The Yorkshire region needs to realise that Islamic finance offers a huge opportunity for growth and investment, not just for Muslims but for everyone. All you need to have is a little faith and the strong ethical principles to underpin it,” he concluded.