Canada has seen some considerable growth in the Islamic finance sphere, which is always pleasing to see. One thing has become clear: from the 2021 Canadian census that has been released throughout 2022, the Muslim population has grown exponentially from the 2001 census and is the second-largest faith group in Canada comprising nearly 5% of the population. With that stat, there is critical mass to help push, for not only Muslims, but all people to have access to Islamic and ethical options.
Review of 2022
Canada’s behemoth, Manulife, got on board by adding two Shariah compliant exchange-traded funds to its portfolio to meet the growing demand of Canadian Muslims. One of the funds is part of ShariahPortfolio which is a boutique asset management firm that started in the US and has established itself in Canada as well. This offering allows Manulife’s savings sponsors and members to place capital in Shariah compliant instruments from an equity and fixed income pool, thereby aiding Muslims in Canada.
There is also active Halal wealth management being offered by financial planners such as Hash Assad (of Assad Wealth) and Jesse Reitberger (of Canadian Islamic Wealth) who are working with Muslim families throughout the country and aiding them in planning, managing and growing their wealth.
There was activity in the fintech sector through Manzil acquiring Muslim Will Solutions, an Islamic digital wills platform; it believes, in addition to this being another product offered on its shelf, it is much needed that Muslims have accessible, reliable and faith compliant final wills. Furthermore, Manzil also launched a new platform called Manzil Invest to help Muslim Canadians build wealth in a Shariah compliant manner.
Student loan financing has also made some strong gains this year. The growth of Islamic finance is not just limited to profit-creating mechanisms but also to benevolence as well and aiding people with their debt. Beneficent is one such offering that aids individuals to refinance a heavy short-term high-interest debt burden through a fund of donors and then setting the course of action on principal repayment through financial planning and coaching.
Defynance is another offering that is working to break into the Canadian market, which works through a setup that includes, but is not limited to, an original debt repayment setup, an income-sharing agreement and career coaching.
Vehicle leasing is another area where there was growth this year by an innovative start-up, Econommi, dealing with car leases and asset tokenization. By bridging people who need vehicles and investors who purchase tokens of investment with daily returns, it is providing a new avenue of vehicle leasing and investing. It is currently closing its seed round in December.
There are Halal investment setups for real estate also being offered through companies like Verona by issuing Canada’s first Shariah compliant fund for real estate projects and developments and it has been actively engaged with funds in Ireland. Royal Canadian Development (and Nur Homes) are development and home-building companies which are structuring projects in a Shariah compliant manner for investors; their goal is to keep things simple and understandable from agreements to focusing on consistency and well-rounded returns rather than going for big hits.
Education is an important pillar toward the growth of Islamic finance both in Canada and globally. When people understand what it is, they will understand why it is important and further understand the differences and similarities between conventional and Islamic offerings. The community being informed with knowledge is where further calls can be made to the government for financial parity for Muslims (and other faith groups such as Mormons and others) by amending regulations which will inevitably lessen barriers and facilitate the growth and prosperity of this industry.
Abrahamic Finance is one such organization that not only provides Shariah compliant advisory (to Canadians and beyond) but also provides seminars educating people on this topic. I (Momin Saeed of Abrahamic Finance) was involved with a book authored by the distinguished scholar, Dr Ahcene Lahsasna from Malaysia, on commodity Murabahah (Tawarruq) — a vital book on understanding this product of monetization and its application.
Preview of 2023
With news articles being issued by leading Canadian news providers on Islamic finance, especially in the last half of 2022, this has been a great sign of awareness by the mainstream media. As we longingly look to countries such as the UK and now Australia (with their first Islamic bank), we need to recognize the incremental and consistent growth that is happening in Canada.
The fintech space will continue to grow with more offerings coming out as well as more and more start-ups popping up during 2023; we will see more movement in the crypto, defi and blockchain sphere. This positive momentum will only continue strongly by building trust and engagement with the community and in doing so, it will allow Canadian start-ups to stop looking to Southeast Asia or the Middle East for angel or venture capital funds, but rather fostering those links within the local Canadian market and Canadian players. It behooves the community to support start-ups with their seed raises to help them get off the ground and take a stake in their future growth — without doing that the Canadian market will be lagging as there will always be reliance on outside money for inside needs.
Furthermore, education will always be the hallmark of progress for understanding this industry, and advising according to it, resulting in awareness and growth, and organizations like Abrahamic Finance and others will continue to lead the way there.
Conclusion
The way to make things grow further will require uptake by the Muslim community and marketing this as not only Islamic but ethical so that it is also taken up by the larger society due to having the SRI and ESG components. It befits the community to push the government for regulatory amendments to allow this industry to flourish — and all we must do is look at the new kid on the block, Australia, in how to make a case to start change and the old kid on the block, the UK, in how to make that case successful.
Momin Saeed is the head of Abrahamic Finance, an Islamic finance advisory in Canada providing services through its global network. He can be contacted at [email protected].