Could you provide a brief journey of how you arrived where you are today?
Though my original background is in conventional investment banking, I developed very early a genuine interest in the value proposition of Islamic finance.
In the mid 1980’s I pioneered some Shariah compliant transactions in Europe while working at Merrill Lynch. In September 1986, I attended the first ever conference on Islamic finance organized by the World Bank in Washington where two iconic figures, Ahmed al-Naggar and Mohammad al-Faisal encouraged my first steps in Islamic finance. From 2000 on I was able to complete some debut transactions such as the first Shariah compliant real estate financing in Italy and the first environmentally-focused Islamic finance project in Syria.
What does your role involve?
Over the years I have structured Islamic products for investment banks, family offices and individuals both in the Gulf region and Europe. Nowadays, with Islamic finance almost mainstream, I am putting my efforts in bringing Islamic finance to new regions such as the Russian Federation and the CIS countries; developing new areas such as microfinance and micro-Takaful, Islamic accountancy and Islamic social design and as well as raising the issue of the nature of currency.
What is your greatest achievement to date?
We take great pride in two projects we are working on right now. The first one is an Islamic syndication on behalf of one of the largest Russian banks, after selecting two world known financial institutions as co-arrangers, one from the west and one from the Gulf, we are now building up the structure. With this syndication we aim to bring Shariah financing to Russian SMEs through Murabahah and Ijarah contracts and therefore give domestic Muslim businesses the choice between conventional and Islamic finance. The second one is an Islamic microfinance fund that will be launched next October. Besides, the lives of common Muslim individuals have not significantly benefited from Islamic finance. In this initiative we will add positive screening to the negative screening embedded in the Islamic finance proposition.
Which of your products/services deliver the best results?
Our best product is communication and the ability to get the Islamic finance message across cultural backgrounds. We invest a disproportionate amount of resources and time in capacity building.
What are the strengths of your business?
All these activities are done on a strictly non-profit basis and though they do not have an immediate financial return we deem it important to contribute to the creation of awareness around Islamic finance.
What are the factors contributing to the success of your company?
Living in a part of the world where regulators and professional practices can freely share their points of view on Islamic finance is certainly an asset and makes life easier.
What are the obstacles faced in running your business today?
The lack of enabling legislation, tax and fiscal issues and sometimes a misperception of Islam and Islamic values are hurdles that make life a bit challenging.
Where do you see the Islamic finance industry in, say, the next five years or so?
The future of the industry will depend on how it will address the credibility issue hanging over it. The realities of financial markets which prioritize economic incentives rather than religious and ethical norms, have forced Islamic finance to become part of the international financial system by adopting the commercial banking model, its banks’ lending criteria and costs of financing. The primary objective of profit maximization and efficiency has overshadowed its foundational claims of social justice and prevention of exploitation.
This tendency has led to a number of disturbing consequences, which are avoidance of equity financing to the extent that debt contracts represent more than 90% of the Islamic market; commodity Murabahah transactions with non-Islamic banks have allowed the siphoning of Islamic funds out to the conventional market, which in turn utilizes them for conventional interest based activities thus distorting the demand and supply parameters of the Islamic fixed income market.
Name one thing you would like to see change in the world of Islamic finance.
The brand name of Islamic finance should emphasize issues such as community banking and socially responsible investment. To achieve this aim, a collective effort is needed to rearrange the instruments and contractual structures used by Islamic finance in light of the goals of Islamic economics.