Fighting global inequality with Islamic finance

A January 2017 report issued by Oxfam found that the eight richest individuals in the world have a net wealth of $426 billion–equivalent to the total amount of wealth held by the poorest 50% of the global population (some 3.7 billion people). That same report found that the world’s 10 largest corporations together have revenue greater than that of the 180 poorest countries combined. Not included in the report is the similarly deplorable statistic that nearly 25% of the 1.6 billion Muslims globally live in extreme poverty. While tools like zakat — which requires Muslims to give 2.5% of their wealth each year to help those in need — are vital in the struggle to mitigate the effects of inequality, we can sometimes overlook the potential of faith-based solutions to address the root causes of inequality as well. One of the most significant of these causes — the lack of financial inclusion — can be effectively addressed through access to Islamic banking. Only 10-15% of adults in Muslim-majority countries in Sub-Saharan Africa and Central, South, and Southeast Asia have bank accounts. Greater access to formal financial services like Islamic banking could help alleviate the structural poverty in these regions and

February 16, 2017 No Comments

Turkey’s failed coup creates an unlikely winner: Islamic banking

As the Turkish people pick up the pieces following the attempted military takeover of their government on June 15, speculation about the country’s economic future is rampant. From a slump in capital and credit markets to a downgrade in the country’s sovereign credit rating, many pundits are bearish about the long-term prospects for the republic. At least one sector, however, is standing strong after the coup attempt: Islamic banking. As a dual financial system that practices both conventional and Islamic finance, Turkey was introduced to Islamic lenders (or “participation banks,” as they’re known there) at the end of 1980s, and the sector grew rapidly by the beginning of the 2000s. In 2005, the Islamist-oriented government officially recognized them and offered state guarantees on deposits, attracting interest from religious depositors and nearly doubling the industry’s market share by 2013. Growth over the last few years has also been compelling. The Participation Banks Association of Turkey reveals that total assets in five Turkish Islamic lenders grew to 120.3 billion Turkish lira ($33.6 billion) in 2015, an increase of more than 15% from the previous year. And there is more room for expansion, considering the size of Islamic lenders as compared to the

July 27, 2016 No Comments