Leveraging Islamic Finance to Develop a Sustainable Capital Market
Facilitating Development of a Sustainable Capital Market through Regulatory Innovation
Zainal Izlan Zainal Abidin
Deputy Chief Executive, Securities Commission Malaysia
Supporting the Development of a Sustainable Capital Market – The CIMB Story
Ahmad Shahriman Mohd Shariff
CEO, CIMB Islamic
Moderator:
Zalina Shamsudin, General Manager, Capital Markets Malaysia
Panelists:
Mohamed Rozani Osman, Senior Financial Sector Specialist, World Bank
Saliegh Salaam, Investment Manager, Old Mutual Investment Group
Shaheen Suliman, Chief Operating Officer, FNB Islamic Banking
Yasmina Francke, CEO, South African National Zakah Fund
Roundup
South African players seek to build synergy between Islamic finance and sustainable finance
Industry players in the South African Islamic finance and banking sector are looking at the potential collaboration of Shariah and sustainable finance in the Republic, and how both can possibly grow and play a substantial role in economic development.
This was the topic of discussion at the South African edition of the recent webinar titled ‘Leveraging Islamic Finance to Develop a Sustainable Capital Market’, hosted by Capital Markets Malaysia, in partnership with the World Bank, the UNDP Financial Centres for Sustainability and IFN — a series of discussions with regulators and market participants in key markets.
“Currently, Islamic assets in South Africa, at least as far as the capital market segment is concerned, is probably looking at around ZAR30 billion (US$1.88 billion), and that has been growing quite significantly over the past few years. In the mutual fund and retirement fund industry, the pool of Shariah assets makes up around 10% of the total market,” noted Saliegh Salaam, an investment manager at Old Mutual Investment Group and who was a panelist at the webinar.
“Within the South Africa context, Shariah funds have been pioneers in terms of integrating ESG [environmental, social and governance] considerations into their frameworks, and I think it really places us, as an industry, quite well for the shift that we are seeing in consumer preferences and the regulatory environment,” Saliegh added.
In the Islamic banking sector, Shaheen Suliman, CEO of First National Bank (FNB) Islamic, shared that, as the principles of ESG are inherently found within Islamic finance, it makes it easier for the bank to design products that help FNB play a role in sustainability.
To put it in perspective, the Islamic banking sector in the Republic has recorded a year-on-year growth of 12%, while the South African Muslim community makes up only 2% of the entire population.
“Where the opportunity sits is in utilizing Islamic finance structures in conventional funding because the pool is much bigger. If we only cater to the 2% Muslim population, we miss out on [a] majority of the market,” Shaheen explained.
“We understand the significant amount of activity in the non-Islamic financial side (in terms of funding sustainable projects) and so we look at overlaying some of the Islamic structures on existing projects and seeing how we can leverage a different form of financing to assist in growing the sector,” Shaheen added.
In terms of the support the market players are seeking, Saliegh said a framework that allows mutual funds to price in sustainability elements more robustly and accurately and a regulatory or tax regime that would unlock incentives to invest in sustainability are key.
Meanwhile, Yasmina Francke, CEO of the non-profit South African National Zakah Fund, said: “We are looking for long-term sustainable relationships with the for-profits and commercial entities to make way for impact investing.”
Moderator:
Zalina Shamsudin, General Manager, Capital Markets Malaysia
Panelists:
Mohamed Rozani Osman, Senior Financial Sector Specialist, World Bank
Akeem Oyewale, CEO, Marble Capital
Norfadelizan Abdul Rahman, Managing Director, Taj Bank
Patience Oniha, Director-General, Debt Management Office Nigeria
Roundup
Opportunities for Islamic finance in Nigeria can extend to sustainability, say market players
As Islamic finance begins to take shape in Nigeria with the increase in non-interest transactions and the issuance of new regulations to support them, the opportunities for sustainable finance has also grown, according to the stakeholders.
A group of panelists led this discussion at the Nigerian edition of the webinar titled 'Leveraging Islamic Finance to Develop a Sustainable Capital Market', hosted by Capital Markets Malaysia in partnership with the World Bank, the UNDP Financial Centres for Sustainability and IFN.
"Nigeria has issued three Sukuk facilities since 2017, raising over a billion naira, all dedicated to road projects, and we are in the process of issuing another Sukuk sometime in mid- to late December. (This interest in Sukuk) can be extended to sustainable projects, so opportunities certainly exist," said Patience Oniha, the director-general of the Debt Management Office of Nigeria, referencing the overlap between the Shariah principles that govern Islamic finance and those of sustainable finance.
Supporting this, Akeem Oyewale, CEO of Marble Capital, which focuses on impact and Shariah compliant investing in Nigeria, added: "We've seen a bit of growth in Islamic finance especially on the back of the government Sukuk issuances, and now the expectation is that to fund infrastructure in a sustainable way, we have to use Sukuk."
In the private sector, Marble Capital has also worked with a power company that found green Sukuk to be the best route to raise funds, Akeem added. "We are estimating the demand to go up to NGN2 trillion (US$4.86 billion) in the next few years."
There remain challenges, however, and market players agree that the first steps toward integrating sustainability into Islamic finance need to be taken.
As one of these first steps, Akeem suggests the Nigerian regulators encourage corporate entities to own one or two of the UN sustainable development goals (SDGs) and to channel their corporate social responsibility investments toward those SDGs.
Mohamed Rozani Osman, the senior financial sector specialist at the World Bank, noted that a strong but simple step that would deliver high dividends is continuous capacity building and knowledge sharing. "When you build the capacity and awareness of the financial sector of a country, the people become more interested in sustainability and this in turn spurs innovation, with products customized for local needs."
Speakers
Ahmad Shahriman Mohd Shariff
CEO, CIMB Islamic
CEO of CIMB Islamic Bank Berhad with over two decades of experience in the corporate sector, of which 16 years were in Islamic Banking and Finance-related roles and has been a key contributor in the development of the Islamic banking and finance industry, with primary focus on capital markets and treasury solutions.
Headed Wholesale Banking at HSBC Amanah Malaysia Berhad as Director, and prior to that he served as Head of Islamic Banking at Citibank Berhad. In these roles, he was tasked with building the Islamic Wholesale Banking and Treasury businesses globally, in which he gained strong leadership, technical, legal and risk management expertise from his stint in these cross-border institutions.
Played an active role in the development of Malaysia’s Islamic banking industry, with a longstanding role in the Treasury committee of the Association of Islamic Banks in Malaysia (AIBIM). In this capacity he was involved in key industry initiatives such as developing, amongst others, a commodity exchange for Islamic finance purposes, Islamic structured products, documentation standards for Islamic derivatives as well as Islamic credit support mechanism.
Prior to joining the banking industry via Citibank’s Management Associate programme, he was in the oil & gas industry for four years while serving his scholarship bond with a Malaysian conglomerate.
CEO, CIMB Islamic
Akeem Oyewale
CEO, Marble Capital
Akeem Oyewale, an Arthur Anderson scholar, has over 20 years of extensive Investment Banking, Credit Marketing, Trade Finance, and Sustainable Finance. He managed the Stanbic IBTC Nigerian Equity Fund, Nigeria’s largest mutual fund, and was responsible for the launch of the Stanbic IBTC Ethical Fund.
Akeem is a Fellow of both the Institute of Chartered Accountants of Nigeria and the Chartered Institute of Stockbrokers. He is an Associate of the Chartered Institute of Taxation of Nigeria and the Chartered Institute of Bankers of Nigeria. He also holds various decorations and awards from various notable institutions.
He holds a Doctorate Degree from Da Vinci School of Business, an MBA from Manchester Business School, United Kingdom, and a B.Sc. (Hons) degree in Accounting from the University of Lagos.
He is currently a member of the Security Exchange Commission (SEC) Financial Literacy Technical Committee.
CEO, Marble Capital
Mohamed Rozani Osman
Senior Financial Sector Specialist, World Bank
Mohamed Rozani Osman is a Senior Financial Sector Specialist with the Finance, Competitiveness and Innovation Global Practice of the World Bank in Kuala Lumpur, an assignment he started in June 2016. He is currently working on several areas including sustainable finance (green and social finance), Islamic finance, disaster risk finance, capital markets, financial sector development and financial stability monitoring in the East Asia Pacific region.
He has 18 years of investment management experience, including 10 years as Head of Treasury and Liquidity Management at Khazanah Nasional Berhad. Prior to that, Rozani headed the fixed income teams at Mayban Investment Management and KLCS Asset Management. He has also managed a leveraged multi-asset portfolio focused on the US technology and financial sectors. Before entering the financial industry, he worked in the oil and gas industry. Rozani has a MBA from Cornell University and a Bachelor of Science in Electrical Engineering from the University of Virginia.
Senior Financial Sector Specialist, World Bank
Norfadelizan Abdul Rahman
Managing Director, Taj Bank
Norfadelizan Abdul Rahman is a senior Islamic finance consultant with experience in Islamic banking, Islamic capital market, Islamic asset management and Takaful.
Norfadelizan’s 29-year award-winning career has seen him hold several key appointments such as president and CEO of Maybank Syariah Indonesia, CEO of Islamic Bank Australia (pending license), global head of Islamic markets at Bursa Malaysia, head of derivatives for RHB Investment Bank, senior manager of treasury of Tenaga Nasional and senior manager of derivatives (floor/trading team), head of AM Futures and head of treasury sales at AM Investment Bank.
Norfadelizan is an accredited trainer under the Securities Commission Malaysia and Islamic Banking and Finance Institute Malaysia and has offered advisory services in the field of Islamic banking, Islamic capital market and Islamic derivatives. Norfadelizan was the team lead (banking sector) in the establishment of the Finance Professional Qualification Standard under the Finance Accreditation Agency of Malaysia and was the co-author of the book titled ‘Understanding Islamic Capital Market’.
Norfadelizan received his MBA from Charles Stuart University of Australia and obtained his first degree in business administration from International Islamic University Malaysia.
Managing Director, Taj Bank
Patience Oniha
Director-General, Debt Management Office Nigeria
Patience Oniha began her career at Icon Limited Merchant Bankers in 1986, where she rose to the position of manager, before joining First Securities Discount House (now FSDH Merchant Bank) in 1992. She rose to the position of general manager/director before joining Ecobank Nigeria in 2000. Between 2004 and 2008, Patience was in Standard Chartered Bank Nigeria as the general manager.
After a fulfilling career in the banking sector spanning over 22 years, Patience made a career move to the public sectors when she joined the Debt Management Office (DMO) in 2008 as the director of the Market Development Department. A major achievement of hers during her eight years at the DMO was the introduction of benchmark bonds to develop the domestic bond market in order to improve liquidity and to create a sovereign yield curve which created opportunities for state governments, multilaterals and corporates to raise long-term funds. She was appointed the director-general of the DMO with effect from the 1st July 2017.
Patience obtained a Bachelor of Science degree in economics with first class honors from the University of Benin in 1983 and went on to earn a Master of Science degree in finance from the University of Lagos in 1985. She is a member of the Institute of Chartered Accountants of Nigeria in 1990 (a fellow in 2008) and also an associate member of the Chartered Institute of Taxation of Nigeria.
Director-General, Debt Management Office Nigeria
Saliegh Salaam
Investment Manager, Old Mutual Investment Group
Saliegh is responsible for the Quantitative Investment team, within Old Mutual Customised Solutions. He is also responsible for the Shari’ah proposition and has been the lead portfolio manager of Shari’ah products (equity, multi-asset and global equity) since 2007. Over more than a decade, he spearheaded efforts to grow the award-winning Shari’ah proposition to a significant player in the market.
He has more than 25 years of financial markets experience which spans leadership roles at smaller boutique asset managers and large asset managers.
His previous roles include Head of Equity, Head of Specialist Equity, Head of Dealing, Portfolio Manager and Investment Analyst. Saliegh is also a member of the Old Mutual Customised Solutions Management team.
Investment Manager, Old Mutual Investment Group
Shaheen Suliman
Chief Operating Officer, FNB Islamic Banking
Chief Operating Officer, FNB Islamic Banking
Yasmina Francke
CEO, South African National Zakah Fund
CEO, South African National Zakah Fund
Zainal Izlan Zainal Abidin
Deputy Chief Executive, Securities Commission Malaysia
Datuk Zainal Izlan Zainal Abidin was appointed Deputy Chief Executive of the SC on 5 April 2018. He joined the SC in January 2011 as Executive Director, Islamic Capital Market and was appointed Managing Director, Development and Islamic Markets in November 2016. He currently provides direct oversight on the SC's Surveillance and Supervision functions as well as the People and Corporate Resources division.
He is also Chairman of Capital Markets Malaysia, an entity established by the SC to promote the Malaysian capital market. Datuk Zainal Izlan has over 30 years' experience in the financial services industry. He began his career with Citibank before moving to MIDF Amanah Asset Management. Just before joining the SC, Datuk Zainal Izlan was the CEO of i-VCAP Management.
Datuk Zainal Izlan holds a Bachelor of Science in Economics (dual concentration in Accounting and Finance) from The Wharton School, University of Pennsylvania, US, and is a Chartered Financial Analyst (CFA) charterholder.
Deputy Chief Executive, Securities Commission Malaysia
Zalina Shamsudin
General Manager, Capital Markets Malaysia
Zalina is currently the General Manager for Capital Markets Malaysia. She joined Capital Markets Malaysia in June 2014 as Head of Strategy and Business Development. Zalina has over 25 years of experience, predominantly in corporate advisory, and has worked in five countries in different regions of Asia, the Middle East and the Indian subcontinent. Her key skills are in analysing and identifying solutions for long-term growth and sustainability.
Zalina returned to Malaysia in 2011 and joined InvestKL, a promotional agency for Malaysia’s capital and largest city Kuala Lumpur, as Head of Advisory and Research. She holds an MBA in Finance from CASS Business School, UK and is a Fellow of the Association of Certified Chartered Accountants (ACCA).
General Manager, Capital Markets Malaysia