Issues in Islam – Conference on Islamic Banking and Finance
By Faisal Kutty – “There is a huge opportunity for Islamic banking and finance in Canada,” according to Don Blenkarn, former chairman of the Special Committee on Banks and Banking and of the House of Commons Finance Committee. The former Conservative member of Parliament chaired the first Islamic Banking Conference in Canada, held in Toronto on May 25, 1995.
The conference, attended by more than 75 participants, including representatives from government, the Export Development Corporation, and private banking and investment institutions, was co-sponsored by the Islamic Society of North America, Zafar & Associates, and the American Journal of Islamic Finance. Discussing the potential for Islamic finance in North America, participants said that the main problems centered around the existing banking and security laws, which were seen as unduly restrictive. Speakers included Dr. Ahmed Elnaggar, former general secretary of the Islamic Bankers Association and one of the pioneers of the Islamic banking movement, and other experts from Egypt, Bahrain, Kuwait and Malaysia.
Islamic banks are growing at the rate of 15 percent per annum, currently operate in more than 50 countries, and account for more than $80 billion in savings. Many Islamic banks are headquartered in Geneva, and some conventional banks in the U.K. have set up Islamic banking units. In fact, the British bank Kleinvort Benson has even set up an Islamic Banking research institute to develop new Islamic trade finance instruments in consultation with Islamic scholars.
Sheikh Nizam Yaquby, a graduate in ecoonomics from McGill University and presently the shariah (Islamic law) adviser to the Arab Islamic Bank in Bahrain, described the constraints imposed by the shariah on investment of savings. Maximization of profits is permitted, but within an ethical framework. The two distinguishing features of Islamic finance are the prohibition of interest, and the prohibition of investment in businesses dealing in alcohol, gambling, pornography and other socially destructive and Islamically objectionable products and services.
Islamic investors cannot receive a guaranteed return (interest). However, they can invest in profit-sharing ventures (which involve a business risk) and lease deals without interest. Islamic financial instruments include Murabaha (mark-up financing), Ijara (leasing), Ijara wa Iqtina (lease purchase financing), Mudaraba (trust finance), and Musharaka (equity participation).
Though it has not been possible to set up an Islamic bank, there have been successes since Islamic finance facilities were introduced into North America in the mid-1980s. These include two mutual funds, a number of housing co-operatives, and other investment vehicles adhering to Islamic law.
Conventional and Islamic institutions can successfully coexist.
“I wouldn’t say that this is a major part of American finance, but it’s definitely growing,” says Nicholas Kaiser, president of the Saturna Capital Corporation based in Bellingham, Washington. Saturna manages the $20 million Amana Mutual Funds in accordance with Islamic law.
Canada’s 500,000 Muslims and the growing number of socially conscious inventors provide a great market for institutions following the ethical guidelines laid down in Islam, said member of parliament and member of the House of Commons Justice Committee, Derek Lee.
In Toronto, the Islamic Co-operative Housing Corporation currently has an issued capital of more than $22 million. In addition, Muslims in Toronto now have Ansaroo Inc. and Al-Amin Association, providing venture capital and an Islamic alternative to invest RRSP funds, respectively.
Steven Thomas, the publisher of the American Journal of Islamic Finance, believes there is a great future for Islamic banking in North America if the regulators would ease up. Thomas, a banker by profession, publishes his internationally circulated journal to educate the financial community about Islamic finance.
The positive experience of Malaysia, a pioneer in this field, is seen by many proponents of Islamic finance as a model for North America. According to Dato Ahmad Tajudin Abdul Rahman, managing director of the Bank Islam Malaysia Berhad, more than 70 percent of the trade financed by Bank Islam is used by non-Muslims.
Nick Angell, a partner with the New York-based law firm Afridi, Angell & Baker, told the audience that “the two systems [the conventional and the Islamic] ought to supplement and co-operate with each other.”
Rahman also added that conventional and Islamic institutions can successfully co-exist. In fact, after Bank Islam Malaysia began operations in 1983, the government introduced legislation permitting dual banking, whereby conventional banks could offer Islamic products. Bank Islam currently has 66 outlets throughout the country, while the conventional banks operate 800 outlets which also provide Islamic financial options.
The Malaysian experience provides hope for American and Canadian Muslims who plan to lobby their respective legislators to ensure that Islamic finance is allowed to flourish.
For further information, contact the American Journal of Islamic Finance, 27114 Whitestone Road Court, Rancho Palos Verdes, CA 90274, tel. (310) 544-9618; or the Conference on Islamic Banking, 2345 Stanfield Road, Unit 3, Mississauga, Ontario, L4Y 3Y3, tel. (905) 277-4143.
ISNA Canadian Annual Conference
The 21st ISNA Canadian Annual Conference took place at Bock University in St. Catharines from May 19 to May 22, 1995. More than 1,400 participants from Canada and the United States attended the convention over the four-day period.
Speakers included Sheikh Jaafar Sheikh Idris, Moulana Malik Ghulam Mortaza, Mahmood Rashdan, Dr. Jamal Badawi, Imam Siraj Wahaj, Sheikh Ahmad Kutty, as well as ISNA president Sheikh Abdalla Idris Ali and Secretary-General Dr. Sayyed M. Syeed.
The theme of this year’s conference was “Living Islam: In the Shade of the Qur’an.” The speakers tackled the issue of how to tailor life so that it conformed to the Qur’an and Sunna (the way of the Prophet).
One of the most well-attended sessions was a dialogue between Sheikh Jaafar Sheikh Idris, and representatives of the Jewish (Rabbi Steven State) and Christian (Archbishop E.W. Scott, and Wilbur Sutherland) faiths about similarities and differences. The panel concluded there were differences but there was sufficient common ground to work together.
The Muslim Students’ Association (MSA) and the Muslim Youth of North America (MYNA) conducted parallel sessions dealing with issues of concern to students and youth, respectively.
Azhar Ali Khan, the former foreign editor of the Ottawa Citizen, and Jamal Hassan, founder of the Voice of Islam, presented an informative seminar on media relations. It was a very balanced treatment, with Khan sharing his knowledge of the inner workings of the media, while Hassan spoke about strategies to deal with anti-Muslim coverage.
For information: ISNA-Canada, P.O. Box 160, Station P, Toronto, Ontario, M5S 2S7, tel. (416) 977-2057; or Voice of Islam, 1711 McCowan Road, Unit 41543, Toronto, Ontario M1S 5G8, fax (416) 609-8499.
Faisal Kutty is a free-lance journalist based in Toronto, Canada.
Note: First Published: July/August 1995, pgs. 40, 104
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