Today, Islamic finance appears to be held hostage to rule of personalities, price of oil, and politics of both fear and votes.
The message that it's about ethical investing, business, and finance with certain rules of engagement is still not clear, hence, to many, it comes about peddling religion for profits or setting the welcome mat foundation for extremists.
The message and practice of Islamic banking and finance in Dubai, UAE and Malaysia is clear, putting aside issues of Shariah standardisation, it's about business and finance. It's well accepted that non-Muslims in both the UAE and Malaysia, when they options for conventional banking, often opt for Islamic banking due to alignment of values and costs (at times). The question becomes, why it did not carry over to, say, other Muslim countries, like pre-Arab Spring North African countries?
Furthermore, Islamic finance, inadvertently, has also brought together the anti-Shariah movement in the west with the Islamic purist, where the former attempts to link it to funding extremism and the latter suggests its 'smoke and mirror.' In short, neither group, believes in the concept, yet they fail to show same level of 'contempt' for the banks that have paid hefty fines, which nearly collapsed the world global banking system during credit crisis I and II.
Its rather easy to criticise from the comfort of the living room sofa whilst watching vacation destinations on the television and sipping a drink, but impossible (for these people) to suggest alternatives. These are the same people that (anonymously) write the personal attack comments after articles, yet cannot pen original thought. Why?
Reuters reported on August 16, "... Shares in Turkish Islamic finance lender Bank Asya will remain suspended until uncertainty regarding its ownership is resolved... The bank has seen its profits and capital base collapse since December (2013) when it found itself at the cantre of a power struggle between Prime Minister Tayyip Erdogan and his political foe Fethullah Gulen, a cleric whose sympathisers found the bank."
What message does this send to (Islamic) investors considering investments in (G-20 country) Turkey participation (or Islamic) banks?
On August 5th, UK's Independent reported, "…The senior Foreign Office minister Baroness Warsi has resigned over David Cameron's stance on the Gaza conflict… Announcing her resignation this morning, the former Chair of the Conservative Party said that she had written to the Prime Minister 'and tendered [her] resignation... I can no longer support government policy on Gaza'."
How will Islamic finance 'grow' in London post sovereign sukuk launch and loss of Baroness Warsi? Its well understood that a high-profile politician, in a non-Muslim country, needs to champion Islamic finance at the early stages of acceptance via education to public and lobbying to fellow politicians, whilst courting (overseas) Islamic investors.
Christine Lagarde was France's Minister of Finance, and in summer of 2011, became the International Monetary Fund (IMF) Managing Director. During her tenure as Finance Minister, she was quoted as saying, "…From 2009, Islamic banks could be authorised to open their counters in France. They have good chances to reach there… Christine Lagarde asserted her intention to make Paris a capital of Islamic finance." — Webtranslation from www.redstate.com
It's well-known not much has happened in France concerning developing Islamic finance since the departure of Lagarde to the IMF. There seems to be no one to pass the 'Islamic finance baton'.
Former Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, was the leading (intellectual and actual) champion to bring Islamic finance to Nigeria until his recent 'resignation'. Where is Islamic finance now in Nigeria?
Finally, if one were to study pre-Arab Spring Egypt, Libya, Tunisia, and even Morocco, Islamic finance was reluctantly welcomed or of missing in action as 'leaders' feared catering to the extremists. Note to these 'leaders,' we have yet to come across an extremist group that espouses Islamic finance, not on their agenda, and a satellite issue, at best.
Islamic finance is slowly being de-linked from price of oil, as we are seeing the GCC based entities raising money in Malaysia, hence, capital markets phenomenon.
Is there a way forward to delink Islamic finance from personalities? In the non-Muslim countries, the answer for early stage traction is simply 'no,' as need support of high profile politicians.
In Muslim countries, the examples of Dubai and Malaysia, represent a blue print for Islamic finance traction as successive prime ministers in Malaysia have supported it, and the wise leadership of His Highness Shaikh Mohammed bin Rashid Al Maktoum, Prime Minister and Vice-President of the UAE and Ruler of Dubai, announced Dubai to the Islamic Economy Capital.
The important Malaysia based World Islamic Economic Forum (WIEF) will be held in Dubai in October, hence, a good opportunity to discuss the de-linking concept.
The writer is a global leader and head of Islamic Economy and senior partner at Dinarstandard. Views expressed by him are his own and do not reflect the newspaper's policy.