2020 has been the year of COVID-19, but New Zealand has been lucky with a small, isolated community and the nearest neighbor, Australia. So locking down its borders and controlling international movement through 14-day mandatory isolation facilities (five-star hotels) have been easy. The Muslim community is approximately 60,000, unsurprisingly most are children. The major Islamic financial institution is Amanah Ethical, which operates Shariah compliant KiwiSaver, a New Zealand superannuation scheme.
|Table 1: Amanah KiwiSaver plan performance returns (net of fees and before tax) until the 31st March 2020|
|Reporting period||Fund return (%)|
|Three years (per annum) *||11.99|
|Five years (per annum) *||7.98|
|Source: Jimmy Jiang, investment manager of Amanah Ethical|
Review of 2020
The funds under management just topped NZ$30 million (US$20.01 million) (as at the 13th October 2020) with 1,474 members; it is estimated that the total market has about 5,000. Many Muslims, however, are still concerned that the investments are not held by a big institutional Shariah compliant financial service provider.
Amanah Ethical has shown that Shariah investment principles with strict application of AAOIFI rules can be a world winner. Compared to its non-Shariah competitors, Amanah Ethical has seen its members prosper. As a result, Amanah Ethical as at the 31st March 2020 is New Zealand’s highest performing KiwiSaver plan, without any breach of the strict application of AAOIFI Islamic Financial Principles. The New Zealand media, however, will not report Amanah Ethical’s performance which shows that despite the Christchurch tragedy, there are still many steps to be built in order to have more acceptance and tolerance of Islam in this predominately Christian country.
Preview of 2021
New Zealand held its tri-annual elections on the 19th October, with current Prime Minister Jacinda Ardern sweeping the vote. For the first time since adopting mixed-member proportional representation, we have a left-wing Labour government holding a single-party majority. The prime minister’s handling of the COVID-19 pandemic has been rewarded by the electorate with voters sweeping the National Party vote throughout the farming community into her hands; her popularity due to the ‘go early, go hard’ isolation of the virus has shifted historically right-leaning voters to provide her with a landslide and historic victory.
Expectations, however, are high for Ardern and her government to solve the financial ills caused by the pandemic and to commence a housing program to meet the desperate need for the lower socioeconomic sector of the population.
While the Muslim community is economically thriving, it has a desperate need for Shariah home finance products, which needs the help of a large Islamic bank that is willing to work in conjunction with Amanah Ethical to serve a wealthy and hardworking population. Local groups are attempting to build self-funding schemes but must comply with the strict regulation for financial offerings under the Financial Markets Conduct Act.
Amanah Ethical is working on a new product involving the financing of New Zealand agricultural and horticultural businesses, all secured on New Zealand’s prime farmland. The aim is to replace the western style mortgages offered by the principally Australian banks, with an ethical alternative; the agreement will be a Mudarabah offering.
The New Zealand farming expertise is second to none, with quality soil, plenty of sunshine and despite climate change, plenty of clean fresh rainfall filling the rivers and streams.
The next three years will be very challenging as the New Zealand economy adjusts to the consequences of the ban on international travel. The economy was — through the 2010s — focused by the government on tourism as a major financial driver, and this resulted in many small business owners losing their business overnight when the first lockdown occurred. The ban on international travel has seen New Zealanders now exploring their own beautiful country, creating a new internal economic revival.
New Zealand has for the second year in a row been ranked by the Islamicity Index as the non-Islamic country that most fits Islamic ideals.
Sounds idyllic, New Zealand is.