There is no reason why Canada cannot emulate the United Kingdom’s successes and create a North American hub for Islamic finance.
The UK & Islamic Finance
The United Kingdom introduced Islamic finances to the Western world 15 years ago. The United Kingdom hosted the first stand-alone Islamic financial institute in the European Union and has since managed to secure the greatest value of Shariah Compliant assets of any non-Muslim country. According to the 2011 census, the United Kingdom has a Muslim population of approximately 5%, which has provided a strong foundation for growth. In March of 2013, the government introduced the United Kingdom’s first Islamic Finance task force, with the mandate of helping build upon the London status as the Western hub for Islamic finances. A critical objective of the task force is to collaborate with the United Kingdom Islamic Finance secretariat to grow the international profile of the industry. In June 2014, the United Kingdom implemented the wide-spread sale of Sukuks, which attracted more than £2 billion from global investors. It is important for Canada to study and learn from the United Kingdom and develop a North American hub for Islamic Finance.
Steps Canada Must Take
In order for Canada to implement a North American Islamic Finance hub, it is essential that Canadians use the blueprint for success that the United Kingdom has already implemented and tailored for nearly two decades. One of the first steps that Canada must take is to introduce Islamic finance on a wider scale. Data collected in 2011 determined that 3.2% of Canadians are Muslim, which in turn creates an excellent foundation for growth, not unlike that of that United Kingdom. To further peak the public’s involvement in Islamic Finance, Canada must create a government task force to mandate and push the sale of Islamic Finance. The task force must showcase why Canada is the preferred choice for the Muslim world to invest in North America. Canada must introduce the Sukuk as a Sukuk al-ijarah that will pay out benefits based on the rental income from government-owned properties in lieu of riba (interest), just as the United Kingdom did in 2014. The introduction of Sukuk would attract global investors and help to solidify Canada’s position as the North American leader of Islamic finance. The United Kingdom’s approach has been to level the field for Islamic financial products and traditional investment opportunities, and so the United Kingdom has proactively responded to any unequal treatment by introducing remedial legislation. Mohamad Sawwaf believes that for Canada to be successful they must have the same approach to Islamic finance.
What Canada Stands to Gain
The introduction of Canada as the North American hub for Islamic finances proves to be extremely beneficial for all Canadian citizens. With the success the United Kingdom has seen from global investors, it is easy to see why Canada needs to implement a more structured system to handle the potentially billions of dollars being invested from global investors. The Canadian economy would receive a much-welcomed boost as a result of Islamic finance and institutions. It has been observed that the growth of Islamic finance in the United Kingdom has been beneficial to all citizens, which in turn has led to the belief that Islamic finance must be available to all. Canadian citizens will gain from a wider choice of financial services, especially those whose religious beliefs prevent the access of traditional North American finance. On a larger scale, the entire country would benefit from the financial services that Islamic finances promises, and success as a North American hub would further the benefits for all Canadians.
Mohamad M. Sawwaf is the Chief Executive and Co-Founder of Manzil.