When discussing the location of a North American hub for Islamic finance, it is difficult to match the value proposition that Toronto, Ontario, Canada, offers. In this post I will share insights into the case for a North American hub for Islamic finance in Toronto, and why Toronto is the only appropriate fit.
Toronto Values Diversity
Approximately half of the Toronto population was born outside of the country. With over 200 ethnic groups, it is easy to see the acceptance that Toronto offers. Not only Toronto, but Canada as a nation has a history of embracing cultures with open arms in order to create a diverse nation. This has certainly been the case for Islamic finance. Canada is making strides to foster alternative and socially conscious forms of investing and that is exactly where Islamic finance enters the conversation. Islamic finance creates new responsible investing opportunities for those seeking to adhere to the Shariah Laws. While the Islamic finance sector of the Canadian economy is a relatively new sector, steps are being taken to streamline the use of Islamic finance. A recent G20 group decision voted for the exploration of Sukuk investing infrastructure as a critical step towards the widespread acceptance of Islamic finance and the positive attributes that Islamic finance ultimately brings to the economy.
Economic Duress in the United States
With tensions rising in the United States due to economic duress and a deeply divided nation, the introduction of a North American Islamic finance hub currently does not seem feasible. While the United States is one of the more diverse nations, globally the volatility of the American government ensures that the introduction of an Islamic finance hub would be much riskier than that of Toronto, after all Shariah law works to mitigate risks whenever possible.
Canada’s Growing Islamic Finance Sector
Canada currently has a Muslim population of approximately 3% of the total population, with this total expected to increase to three million individuals by 2030. The value of Sariah-compliant mortgages within Canada during 2017 was estimated at a total of $2 billion. Mohamad Sawwaf believes that this value will increase to approximately $18 billion by 2020, with a steady increase moving toward the future. With the potential to boost the Canadian economy by a total of $16 billion by 2020, it is difficult to formulate a strong case as to why Toronto isn’t the perfect fit for an Islamic finance North American hub.
Mohamad M. Sawwaf is the Chief Executive and Co-Founder of Manzil