THE resolve of Nigeria Osun State government to expand the scope of economy and create more job opportunities for the people informed the floating of its N1o billion Sukuk bond recently.
A new financial institution, Mouamalat Assahiha Bank, has been established in Mauritania to operate exclusively according to the Islamic finance code.
“The new bank, with a US$20 billion capital, was set by young and successful Mauritanian business people,’ according to a statement from the bank.
The bank will target both individuals and corporate organisations, and base its operations on the highest ethics and standards of the country’s financial industry.
Islamic banking abhors loans with interest and financial speculation, and recommends risk sharing.
Mauritania currently has 18 banks, five of which operate according to the Islamic finance code.
source : http://www.afriquejet.com
September 26, 2012
A Detailed Look at the Fast-Growing Islamic Banking and Finance Sector
The severity of the global financial crisis that followed the years 2008 and 2009 has been described as second only to the Great Depression. Yet, during those two years, the assets of the 500 top Islamic financial institutions grew — from $639 billion to $820 billion.
What sets apart the Islamic finance industry from the rest of the financial world? And how have its differences helped this sector thrive when the rest of the global financial market struggles to regain its balance?
Faleel Jamaldeen, author of Islamic Finance For Dummies, says: “I’m bullish on Islamic finance: I’m a firm believer in the market potential of this industry. I’m also a firm believer in the benefits of Westerners understanding the concepts that lie behind the Islamic financial products — knowing why a separate industry exists and why many conventional products don’t work for Muslims.”
“In the West, the general public and even many financial professionals know absolutely nothing about Islamic finance. Those who’ve at least heard of it may assume that they can’t understand or participate in it because they aren’t Muslim and don’t speak Arabic.) Western women may assume that they aren’t allowed to participate in the Islamic finance industry because of misconceptions about Islamic law. (Women can and do fully participate in Islamic finance — as professionals and as investors.)”
“Islamophobia is a prejudice against Islam or Muslims that has unfortunately become more commonplace and more intense in the West since the attacks on the United States on September 11, 2001. Some people simply don’t want anything to do with an industry that’s affiliated with Islam. Until now, searching for a book to help you navigate the subject of Islamic finance wasn’t very rewarding. That’s because Islamic finance has been the topic of textbooks but not many nonacademic titles.”
Jamaldeen goes on to say, “I wrote this book to bridge the gap between people who need and want to know about Islamic finance and an industry that needs and wants their participation. You’ll find that you don’t need to learn a new language, change your personal religious views, and that job prospects are strong for both men and women with conventional banking and finance skills who are open to learning about new products and a new way of conducting business.”
“I wrote this book assuming that you have a strong interest in the financial industry already. Maybe you’re a banker, a mutual fund manager, an investment consultant, or an insurance agent. Perhaps you have Muslim clients asking you to consider adding sharia-compliant products to your roster of offerings, or your boss mentioned in passing that Islamic finance has been growing like crazy and your company should find out how to tap into the market. Maybe you’re a college student focusing your studies in finance, and you’ve read that job prospects are good for people with specific knowledge about Islamic finance.”
Whatever the scenario, you’ll find clear and easy-to-understand information on how the Islamic finance industry works.
source : wiley.com
During the twelfth Bank of Uganda annual Eid party, held at the central bank on September 7, a group of Muslims under their umbrella Contact Group on Islamic Banking, managed to get a word on Islamic Banking in, with bank governor Emmanuel Tumusiime-Mutebile. He assured them that the central bank had already done its homework and submitted the proposed amendments to the Financial Institutions Act.
“We also had a word with Dr Anas Kaliisa, renowned Sharia expert who presided over the closing ceremonies. Dr Kaliisa appreciated the pioneering efforts of Contact Group on Islamic Banking and assured us of his full technical support,” Kalinge Nyago wrote on an Islamic social networking website, Uganda Muslim Brothers and Sisters.
The chief guest, Gen Moses Ali, also called for the introduction of Islamic banking in Uganda.
“The bank should exacerbate the introduction of other forms of banking systems that will entail justice and fairness. BoU should play a leading and encouraging role in the introduction of Islamic banking, which is a banking system that has been embraced by both Muslims and non – Muslims because of its unique characteristics,” said Moses Ali who was minister of Finance in 1976 at the age of 38.
source : observer.ug
Eric Enslin, head of client engagement at FNB Wealth, said the shariah customer base is not exclusively Muslim.
Enslin said shariah banking is consistent with the principles of Islamic rulings and their practical application through the development of Islamic economics. Shariah prohibits the payment or acceptance of interest charges (riba) for the lending and accepting of money, as well as trade and other activities that provide goods or services considered contrary to its principles.
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Islamic finance banking options are increasingly being seen as a viable alternative to traditional banking services in Africa and are growing to support not only the African Islamic community but all those looking for an interest-free banking alternative.
The Islamic Finance Africa Conference, due to take place on 21 – 24 FeBRuary 2012 in South Africa, is drawing together experts in the field from across the world. Key speakers from Nigeria, Malaysia and Saudi Arabia will join leading South African experts from ABSA, alBaraka Bank, KPMG and other financial institutions. They will be meeting to discuss the growth potential for Islamic finance products and services in Africa.
The event will explore the challenges of and opportunities for providing Islamic Finance offerings in Africa, the growth of the industry and what it means to the continent. Shariah law compliance is at the core of Islamic Finance services and products, for conventional financial institutions wanting to open an Islamic finance window this might pose a challenge and many institutions have faced difficulties. The Islamic Finance Africa Conferences will address these issues and others facing financial institutions in Africa.
source : kuwait observer
AN Islamic bank, Amana Bank Limited, that would be observing Sharia regulations, was on Thursday launched in Dar es Salaam.
The Islamic banking system does not charge or accrue interests.
Addressing journalists on Thursday in Dar es Salaam, the Board of Directors Chairman, Mr Haroon Pirmohamed, said the Bank is a result of a need for an alternative to conventional banking system that provides ethical and fair modes of banking for all.
He said the bank will offer products and services that meet the needs of not just the Muslim community but all citizens and corporate bodies in the country.
“Amana Bank is well aware of its responsibility and being the pioneer of dynamic Islamic banking system, we intend to have a stable and a dynamic bank that employs modern technologies,” he explained.
Shareholders of the Amana Bank include prominent Tanzanian business people who adhere to Sharia principles.
“The bank would not hoard interests as other banks do, we would split our surplus to our customers as stipulated in the Sharia,” he said adding that non Muslim customers are welcome to join the bank.
Director Pirmohamed added that customers would be informed about their transactions and contracts.
The Bank’s Managing Director, Mr Idris Rashidi, said the financial institution will provide services to customers by abiding to the country’s laws without any discrimination.
Among services that will be provided by the bank include personal saving accounts, term deposits, current accounts and Ihsan account (for houses of worship).
The Amana Bank Limited is located at Tandamti Street in Kariakoo, another branch will be opened soon along Nyerere road.
Amana Bank Limited is the first fully Sharia compliant bank in Tanzania. Its beginning can be traced back to October 2009 when a group of prominent Tanzanian business personalities met and set in motion the establishment of an Islamic bank.
source : Daily news. tz
An Islamic finance expert Hadiza Garba Laka has said the non-interest banking (Islamic-banking) has great potential for the Nigerian economy.
Hadiza Garba Laka of Lotus Capital Limited, who was delivering a paper recently at a public lecture organized by the Jama’atul Ta’awunil Muslimeen in Abuja, pointed out that Islamic banking has witnessed real time growth in UK, USA and Malaysia.
Also speaking at the lecture, Malam Mohammad Lawal Shaibu, an expert on Islamic banking and investment, said the interest-free banking is not a preserve of Muslims, explaining that the banking system is operated by Christians abroad since it is all about business.
Dr. Tawfeeq AbdulAzeez of University of Abuja, who was represented by Abu Mazeedatul Khayr said Islam prohibits usury because the religion is a complete way of life.
Malam Mosur Olaide, representing the Director General of the National Space and Research Development Agency, (NASRDA) Dr Saidu.O. Mohammad maintained that if conducted honestly and given a chance, Islamic banking will bring high moral ethos into the Nigerian market.
source : allafrica
Ahmed Bayusuf worked for nine years as a cab driver in Nairobi. After saving enough money, he invested in a coffee shop. Now, he’s the store manager at Books First.
Bayusuf has worked hard to manage his money well. He’s also a strict Muslim and, as such, doesn’t believe in making money if he hasn’t worked for it. For Bayusuf, that means an interest-earning bank account is off-limits, some interpretations of Muslim law state. That’s why he was thrilled when banks specializing in Muslim-approved accounts opened in Nairobi.
“Now, I don’t have to worry about accumulating riba,” Bayusuf said, using the word that, for Muslims, defines interest. “I also know that my money is being invested in compliance with the Islamic way.”
Islamic banking isn’t just appealing to Muslims, Bayusuf said. Even for people of other faiths, the system offers low-risk investments.
Conventional banking has for many years been the monopoly in the financial sector. Despite rapid technological advancements, options in banking have remained limited. That changed about five years ago, when Barclay’s Bank offered Nairobi’s first interest-free banking options, in accordance with Shariah, the law that governs Islam.
Since then, people in Kenya have shown a preference for Islamic banking, said Abubakr Athman, a business analyst with TalentRecruit Kenya Limited. The growth in the Islamic banking industry has been such that Athman says it could replace conventional banking in the future.
In 2007, Gulf African Bank and First Community Bank joined the scene with the first fully Shariah-compliant institutions in Kenya. Now, there are nine banks offering interest-free options. Other services that attract customers include free accounts with minimal opening fees, no ATM fees, no maintenance charges and flexible loan payments.
Fahd al-Guthmy, an official at Chase Bank’s city center branch attributes the success of Islamic banking to how easy it is for people to utilize the services. The industry has grown 15-20 percent each year over the past two decades, he said.
The Shariah-friendly banks offer special accounts for charity (a requirement of Shariah), and many offer sayyidah — “woman of honor” — accounts. The accounts are advertised as a means of empowering women through Shariah-compliant investment opportunities. Customers can also open special savings accounts for the hajj, the pilgrimage to Mecca, the Muslim holy city, that all able-bodied Muslims are expected to make at least once in their lifetimes.
Despite all the hype surrounding Muslim banking, the industry is still in its infancy. Misconceptions about the banking method abound. For example, bankers at Shariah-friendly branches must remind customers that there’s a difference between interest and profit. Islam forbids receiving a financial advantage without giving a counter value but it’s acceptable to have a financial gain as long as an effort is made.
Some Kenyans avoid the banks, assuming that they’re only for Muslims but the banks accept customers of any religion.
Muslim religious leaders have had disputes over details of how the banks operate.
Despite the challenges, analysts say the future of Islamic banking is bright.
“The industry has transformed the banking sector,” Athman said. “Many conventional banking customers have flocked into Islamic banking, clearly seeing the benefits on offer.”
Standard Bank plans to start sharia-compliant banking in Nigeria this year to benefit from the needs of Africa’s largest Muslim population. Stanbic IBTC Bank, a unit of Standard Bank, won a licence in principle last month and planned to offer Islamic services at its 160 branches in the fourth quarter, chief executive Sola David-Borha said on July 13.
Standard Chartered, the UK’s second-largest lender by market value, told the central bank it would like to provide the products, David Adepoju, the Lagos-based head of global markets at Standard Chartered Bank Nigeria, said last month.
The west African country, the continent’s biggest oil producer and home to about 78 million Muslims, is competing with Senegal, Egypt and South Africa in seeking to expand in the $1 trillion (R7.1 trillion) Islamic finance industry.
Central bank governor Lamido Sanusi said in June that Nigeria wanted to be a “hub” for sharia-compliant finance in the region and planned to sell its first sukuk, or Islamic bond, within 18 months.
“It is difficult to see how a country with such a large Muslim population will continue for much longer without offering its people an alternative to conventional banking, particularly given the interest in Nigeria shown by some international banks,” Abolade Kehinde, a Lagos-based senior tax manager at PwC Nigeria, said earlier this month.
The country, where about 70 percent have no access to regular banking services, aims to diversify the economy by developing financial services. Africa’s third-largest economy would expand about 7.8 percent this year, driven by the non-oil sector, Sanusi said last month.
Gross domestic product grew 8.4 percent in 2010, according to the International Monetary Fund.
Nigeria is trying to stabilise its banking industry after a debt crisis in 2009 almost led to its collapse. That year, the Central Bank of Nigeria fired the chief executives of eight lenders, pumped 620 billion naira (R28bn) into ailing banks and created a state-owned company to buy bad debt.
The Securities and Exchange Commission aimed to have a framework for Islamic financial products by the end of the year, Arunma Oteh, the regulator’s director-general, said on June 23 in London.
The central bank had granted a licence to the country’s first Islamic bank, Jaiz International Bank, the deputy governor Kingsley Moghalu said in South Africa last month.
Stanbic IBTC had a licence to begin operating Islamic banking branches within six months and if it failed to do so within that time, the lender would need to reapply for approval, he said.
Nigeria’s 155 million people are divided almost evenly between Muslims and Christians, according to the CIA World Factbook.
The central bank has faced criticism from Christian groups that the introduction of Islamic banking may fan religious tension. Saidu Dogo, the secretary of the Christian Association of Nigeria in 19 northern states, said it was unconstitutional for the regulator to define all non-interest banking as Islamic.
“If there is any system in Nigeria that can discriminate against anybody, then it is null and void,” he said on Thursday from Kaduna. “Our children will be discriminated against.”
More than 14 000 people died in ethnic and religious clashes in the country between 1999 and 2009, according to the Brussels-based International Crisis Group.
“This is a financial product,” Moghalu said last month in Pretoria. “It’s got nothing to do with religion.”
Global sales of Islamic bonds, which pay investors returns based on assets to comply with a ban on interest, more than doubled this year to $16.8 billion from the year-earlier period, data show.
The debt returned 6.5 percent in 2011. Bonds in developing markets rose 5.8 percent, JPMorgan Chase’s EMBI global composite index shows.
The Bloomberg Malaysian Sukuk Ex-MYR index, which measures foreign-currency Islamic debt sold by companies and governments in Malaysia, climbed 6.6 percent in the period.
Average yields on emerging market sukuk dropped by 8 basis points this month to 3.58 percent on Friday, according to the HSBC/Nasdaq Dubai US Dollar Sukuk index.
The rate on the Dubai government’s 6.396 percent sukuk maturing in November 2014 has jumped 17 basis points so far this month to 4.71 percent yesterday.
The extra yield investors demand to hold Dubai’s bonds over Malaysia’s 3.928 percent sukuk maturing June 2015 widened 29 basis points to 236, according to Bloomberg data.
Senegal planned to sell $200 million in local currency sukuk this year, Finance Minister Abdoulaye Diop said in June.
Egypt’s financial markets regulator in June agreed in principle on a law allowing companies to sell and trade sharia-compliant bonds.
Absa Group, the South African bank controlled by Barclays, might offer Islamic services in Nigeria if it got a licence, Louis von Zeuner, the deputy chief executive, said on August 2.
Absa opened a representative office in Nigeria in November last year and is eyeing the market potential.
“Africa is more a commercial and investment banking play but if a key market shows some movement we can’t ignore it,” Von Zeuner said. “We are mindful of the challenges.”
London-based Standard Chartered, which is interested in getting an Islamic banking licence, hoped to receive approval from the central bank within 12 months, Adepoju said on July 12.
“I don’t think it’s an accident that it’s the international banks who are pioneers; they have launched those products outside in other markets,” said Lagos-based David-Borha at Stanbic IBTC Bank, which is aiming to add 20 branches in the nation by the end of the year.
source : business report .za