Islamic-themed cyclone shelters

With shelters, Bangladesh will be better equipped to cope with the aftermath of its perennial cyclones. Six award winners of the International Architectural Design Competition for Fael Khair Program have given Bangladesh a helping hand.
     The architects devised plans for schools built on raised earth embankments and on reinforced concrete stilts. The schools will double up as shelters when cyclones are forecast.
     The brief of the competition, devised by the Islamic Development Bank (IDB), required Islamic architectural features to blend with the local environment.
Five of the six winners are Bangladeshi, and the winner received $50,000. The $110m assistance programme set up by the IDB hopes to build more than 600 schools-cum-shelters on the coastal belt of the country.

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Super Shariah-compliant bank

If an Islamic superhero were to open his own bank account he might just choose Unicorn Investment Bank. The worldwide success of the comic, The 99, inspired by the traits of Allah, would have been hard to achieve without the support of an Islamic financial institution.
     “Innovation is a priority for me personally, and I am always excited when I see others take the initiative to think outside the box,” says Majid Al Sayed Bader Al-Refai, CEO of Unicorn Investment Bank, which raised $25m for Teshkeel Media Group via a private placement.
The Shariah-compliant heroes, The 99, created by Kuwaiti tmg, has been such a great success that it will soon leap from the pages of comic books onto television screens.
     Teshkeel has formed a joint venture partnership with Endemol UK. In 2010 The 99 will entertain child TV viewers with 26 half-hour episodes. Frankie Shum, Teshkeel vice-president of finance and operations, says: “Our target market is a global audience. We will soon launch a mini-series with DC comics where The 99 will stand cape to shoulder with Batman, Superman and other superheroes of the Justice League of America.”
     The Bahraini Unicorn Investment Bank is Teshkeel’s largest equity shareholder, creating a Shariah-compliant partnership from the artist’s sketchbook to the accountant’s ledger. Mr Shum says: “Nowadays Teshkeel has a diverse portfolio of investors, from the Commercial Bank of Kuwait to many Arab investment companies. We are preparing for a third round of fundraising.”

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Movements afoot as Libya deemed more receptive to Islamic banking

Signals of change are in the wind as Libya’s government sees the contribution of Islamic financial institutions as a step towards liberalising the country’s financial system. Following the Libyan central bank’s go-ahead to Wahda Bank to open a Shariah-compliant window, Dubai Islamic Bank appears keen to follow suit with its own expansion plan.
     The remaining obstacle for Shariah-compliant finance in Libya is the uncertainty of scholars’ judgements. Mr Farhat Bengdara, Libyan central bank governor, says: “Problems with Islamic finance arise because of the scholars’ different interpretations of what is halal. People are sometimes confused.” In 2005, foreign banks were allowed to open Libyan branches and, in 2009, local banks were permitted to forge foreign partnerships.

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Mobile phone time rings the changes in tawarruq financing

A novel form of cash management has been devised by rhb Islamic Bank in the form of a tawarruq (“reverse murabaha”) based on mobile phone airtime as its underlying asset.
     RHB Islamic Bank will buy airtime from E-Pay, an electronic prepaid reload provider, at cost price and sell it at a mark-up to its customers. The customers will in turn sell the airtime to the content provider, Sedania Media Group, to raise instant funds. The Malaysian Bank hopes to finance $60m in tawarruq over the next 12 months. The minimum financing is $900, and the maximum is $45,000 with a payment period of two to 10 years.
     Dealing in airtime tawarruq attracts fewer charges compared with other commodities and this will offer customers savings of 30% compared with commodity trading. As the akad [contract] is sms it is paperless.
     Mr Zulkahiri Zabiri, head of retail banking at RHB Islamic Bank, says that tawarruq is preferred for liquidity issues because it does not invite numerous arguments. “But the technical requirements such as wadh, murabaha and tawarruq must be closely observed.”

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Registered trademark approved for Islamic Banking & Finance

New Millennium Publishing (NMP) Director David Williams has been given approval by the Patents Office for registration of the trademark Islamic Banking & Finance. The registration confirms the intellectual property rights of the user, New Millennium Publishing, to use the name in print magazines, electronic publications and the website, islamicbankingandfinance.com.
     “With all and sundry suddenly taking an interest in our sector, the decision was taken to apply for registration of our mark to protect the time and investment we have made,” said Mr Williams. “nmp has been publishing Islamic Banking & Finance for nearly seven years and we wanted to help ensure that its identity and its association with NMP is maintained.”
     Work began on Islamic Banking & Finance magazine in the summer of 2002 and it was officially launched at the International Islamic Finance conference in Dubai in February 2003. Subscriptions are available for 45 pounds for six issues mailed airmail worldwide.

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Mortgage fund builds hope for untapped Muslim population

Australia is still an uncharted territory in Islamic finance, despite being home to more then 450,000 Muslims. Muslims are Australia’s second fastest growing (40.2%) demographic group: half live in the state of New South Wales and 33% reside in Victoria.
     Australian Muslims have few Islamic banking facilities and generally are unfamiliar with Shariah-compliant products, even though the Islamic consumer and business finance market is estimated to be worth at least A$1.8bn. Against this background, the Muslim Community Co-operative Australia (MCCA) has introduced Australia’s first retail Shariah-compliant mortgage income fund.
     MCCA chairman Akhtar Kalam said: “With a large, growing and relatively untapped Muslim population, the existing opportunities can catalyse the next phase of growth.”
     The co-operative has already signed a non-disclosure agreement with two overseas Islamic banks intent on investing in large-scale property and infrastructure projects. But the banks are reluctant to commit unless the government can show an intention to review taxation and stamp duty legislation. mcca executives are hoping the government will select it as a building block of Islamic finance in Australia.

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Genuine alternative to Western products needed for consumers

Shariah-compliant products are bread and butter for Usman Hayat, director of Islamic finance at Chartered Financial Analyst (CFA) Institute, the global association for investment professionals.
     Mr Hayat says Islamic finance needs to address several challenges before being regarded as a strong alternative to conventional finance.
“There is a gap between Islamic finance and conventional products,” he says. “What Islamic finance has been doing so far is trying to replicate the products that are already in conventional financial space. The bigger issue is how Islamic institutions can provide products that fulfil economic needs and are commercially viable.” Mr Hayat attributes the restraint on Islamic finance’s uptake to the lack of global Shariah standards, especially on the debt and derivative sides. That aside, he sees a positive future for the sector.
     “Islamic finance is not a mystery anymore. “If anyone wants to learn about Islamic finance, there are plenty of books, multimedia, academic qualifications and training programmes,” he says.
     “If a banker wants to learn the basics of Islamic finance, he can do so in a matter of days. Where the bigger challenge arises is in the comprehension of the legal documentation and getting to grips with the details.”

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Harvesting a sweet deal

Makaseb Islamic Financial Services is considering investing in the Brazilian agribusiness sector, particularly sugar. Mohammed Azab,VP of the UAE investment bank, says: “We are really interested in Brazil because it has a stable economy in South America and has modern agricultural methods.
     “We are still learning about the country. Before any investment, we need to be highly confident about Brazil’s politics and economy,” Mr Azab says. Other possible Brazilian investments are a Shariah-compliant cattle slaughter house and rice, soy and wheat holdings.

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Nigeria on the cusp of growth

Nigerian Islamic finance may only be a minnow but the Nigerian Central Bank (ncb) appears resolved to make it a bigger fish. Complete Islamic financial industry guidelines are on the verge of publication after the draft policy framework was released earlier this year.
     There are already Shariah-compliant products in Nigeria, such as those of the Integrated Microfinance bank and Bank phb, but they have not attracted as much interest as hoped.
     An NCB spokesperson said: “Since March we have been collecting input to understand how to issue the guidelines. We recently had a conference to summarise all the comments.” There are no doubts about the potential of Islamic finance in Nigeria—65% of its 150 million population are Muslims. Nigeria may take a lesson from other sub-Saharan states. South Africa and Kenya have both devised legal frameworks for Shariah-compliant banks. Al Baraka has seen its annual deposits grow by 12% in 2008 to US $198m. Although small compared with conventional banks, the signs are encouraging.
     NCB Governor Sanusi Lamido Sanusi said: “It is evident that the opportunities are enormous as well as the challenges. The essential consideration for non-interest banks is to find the right balance between business development and risk management. We shall support the industry by making rigorous but fair regulations.”

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