Birmingham hosts conference on tapping into Islamic finance market
Birmingham will today play host to a conference looking at how the West Midlands can tap into the potential offered by the emerging multi-billion-pound Islamic finance market.
The half-day event, entitled Islamic Business: The Way Forward, brings together a range of speakers from the sector and will look at the potential for positioning Birmingham as an Islamic finance hub.
Aston Business School lecturer Dr Omneya Abdelsalam, who has organised and will chair the event, said one of the key themes was to look at ways to rebrand Birmingham as a centre for international Islamic businesses.
She said: “The West Midlands has real experience in managing investment funds, so there is great potential for areas like the West Midlands to attract Sharia-compliant funds to invest here or provide project finance for projects.”
About 70 delegates are attending, at least half from the legal and financial sector in the West Midlands, to hear speakers including Keith Leach, head of alburaq (Arab Banking Corporation); Omar Shaikh, private equity and Islamic finance, Ernst & Young; and Professor Habib Ahmed, Sharjah Chair in Islamic Law & Finance at Durham University.
Dr Abdelsalam said there was a shortage of skills in Islamic finance, particularly in the development of innovative new Sharia-compliant products, a gap which Aston University hopes to fill with the planned launch of a new Masters degree in Islamic Finance next year.
“There are opportunities not only for Birmingham but for Aston University. We are developing a Masters degree in Islamic finance where we will be able to produce the next generation of qualified professionals who will not only be qualified in Sharia finance but also in conventional accounting and finance.”
The university is also gearing up to offer a series of short courses in Islamic finance in July ahead of the launch of the Masters next October.
Dr Abdelsalam said the panel discussion would reflect not only on the opportunities offered by Islamic finance but the challenges emerging in the sector.
“For example, we need high quality financial reporting and enhanced disclosure of financial information. We also need an improved supervisory and corporate governance framework.
“There is also a need for a centralised Sharia supervisory board which is independent and consistent.”
Dr Abdelsalam said the conference would look at how Islamic finance could help in a recession and pointed to the factors that meant Islamic banks had not been caught up in the subprime financial crisis.
“Islamic finance is more conservative,” she said. “In Sharia-compliant finance the sale of debts is not allowed. Also, to be able to sell a product, you must hold this product. Usury (riba in Islam) is not allowed. Instead sharing risks and rewards is encouraged. Interest is not allowed, instead the bank and the depositors all share the risks and rewards so there is more scrutiny in the banks.
“Ignorance (gharar) must be avoided. Contracts should be completely clear to the contracting parties. With the subprime problems, they were packaged as securities and repackaged again and again. The banks shared in this subprime crisis but it took some time to realise this because there was some ignorance of the product. This is not allowed in Islamic finance.”
Dr Abdelsalam said the difficulties experienced by conventional banks spelled opportunities for Sharia-compliant finance.
“There is a continued liquidity restraint in conventional banks. Everyone is paying more attention to risk assessment, which is something Islamic finance encourages.”
She believes Islamic financial products could be targeted to the wider market, not just the Muslim community.