Islamic economics, in particular the Sharia-compliant financial services and transactions, has its root in the century-old Islamic principles but as a scientific and modern financial discipline it took shape almost thirty-eight years ago following the First International Conference on Islamic Economics held in Makkah, Saudi Arabia in February 1976. Subsequent conferences held in various countries have made significant contribution to the growth of Islamic financial services discipline, leading to the founding of the first large Islamic bank. In line with this development, governments of Muslim countries were encouraged to establish financial institutions that operate in accordance with the principles of the Sharia. Interestingly, many large conventional banks are starting to open Islamic financing “window” within their establishments to provide Sharia-compliant products to meet the financial need among Muslims, and these products are also available to non-Muslims.
With the continuing development of many Muslim states and the growth in wealth throughout these states, an increasing number of Muslims have sought to invest their wealth without breaching the strictures of Islam against ‘riba’ (interest). The growth in Islamic banking has led to a growing pool of “Islamic” money looking for a home in investments which are consistent with the values of the Islamic faith.
Whilst the Gulf States and the Muslim states in the Middle East are key centres for Islamic finance, this sector is moving beyond its historic boundaries into new territories both within and outside the Arab world. Several Commonwealth countries, notably Malaysia and the United Kingdom, have become new centres for Islamic finance. Singapore, Bangladesh, Pakistan are in the process of developing Islamic finance. Nigeria has a large Muslim population, particularly in the north of the country, and a potential for Islamic finance. India, with a large Muslim population (over 150 million) the second larges Muslim population of the world after Indonesia, is keen to start Islamic banking.
There are a number of key challenges in the development of Islamic finance in Commonwealth countries, foremost of these challenges are:
In response to the growth of Islamic finance and the issues it faces and poses for Commonwealth countries the Ramphal Institute proposes:
Islamic Finance Conference - Wednesday 19 November 2014
The Ramphal Institute joined forces with the London School of Business & Finance to run a high level symposium for Commonwealth developing countries on the use of Islamic Finance, exploring the economic possibilities for sustainable advancement within the Commonwealth. The objective of this symposium is to set out the opportunities for governments and the private sector to raise finance for infrastructure from sharia-compliant (sukuk) sources. Representatives of High Commissions in London, banks and other purveyors of sukuk, aid agencies and think-tanks have been invited to take part in this conference. We would like to thank Sahar Ata and Dr. Andry Rakotovololona.
For more information about the event please see brochure;
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As part of the project the Ramphal Institute has put forward proposals to the Commonwealth Finance Ministers meeting in Washington in late 2015. In addition, the Institute is exploring with certain governments the potential to further develop the project.
Siti Norafzam has developed the project for the Ramphal Institute. She has completed a MSc at the London School of Business and Finance. Prior to this she worked at KPMG in her native Malaysia.