Tag Archives: Islamic Finance Gateway

New tech competition wltm entrepreneurs with big ideas to win $10,000

The technology industry is abuzz these days with stories of companies raising money at ever higher valuations and the number of technology-focused companies getting huge amounts of capital and even higher valuations. This year alone, 107 companies have completed fundraising rounds with venture capital investors of $100 million or more, according to a report from CB Insights and KPMG.  Of these companies, 35 have entered the ‘unicorn club’ (VC-backed companies with $1 billion valuations).

One area where fundraising from venture capital is rare is in the Islamic economy overall and the Islamic digital economy in particular.  In their Digital Islamic Services Report, Deloitte reports “no VC funds in the Middle East […] specifically targeted at Islamic needs and Digital Islamic Services”.  The dearth of venture capital interest in the Islamic digital economy does not mean there is a lack of a market. Muslim consumers represent an estimated 8% of the global digital economy according to an ongoing Thomson Reuters study on the Islamic Digital Economy that we had an exclusive look at and the aggregate value of Muslim consumers within the digital economy is expected to grow 20% annually through 2020, outpacing the rest of the global digital economy.

The growth rate of the Islamic digital economy, and its potential to outpace the (still rapidly growing) digital economy is entirely understandable with a large Muslim population that is younger on average than the global population.  In some markets, such as Pakistan, the digital economy is just becoming enabled with the recent launch of 4G mobile networks that make it possible for many apps (particularly those relying on GPS technology to customize content based on specific location).

Progress, such as the introduction of 4G in Pakistan, will create a massive opportunity in similar markets where the cost has been too high and the mobile networks not ready to support the demand for capacity from widespread diffusion of smartphones.  This is particularly likely to be the case in markets where the population is younger, which will support rising demand for mobile technology from Quran apps to Halal Travel Apps, online Islamic education websites and location-services software to locate the nearest Halal restaurant.  The Islamic Digital Economy has woven into the lives of many Muslims worldwide and has become part of their day to day lifestyle.

With the backdrop of venture capital funds seeking out the latest ‘hot’ digital economy company and the dearth of Islamic digital economy companies being a part of this ‘unicorn economy’, there is a big opportunity for tech entrepreneurs if they can get noticed.  One way to get noticed is through the first #Innovation4Impact competition that will be a feature at the Global Islamic Economy Summit (GIES) in Dubai, UAE from 5-6 October 2015.

Innovation 4 Impact, which is organized by the Dubai Silicon Oasis Authority and Thomson Reuters, in collaboration with the American Muslim Consumer Consortium, is looking for innovative entrepreneurs across the globe whose solutions will disrupt the status quo across the digital sphere. The competition aims to support start-ups and businesses in the Islamic digital economy and serve will as an incubator for SMEs across the world. The winner will receive a combination of incubation services worth over $10,000 with an all-expense-paid trip to Dubai to showcase their business in GIES.

The Innovation 4 Impact competition is open to any company or entrepreneur with a potentially groundbreaking idea or business venture. Applicant’s ideas will be judged on different aspects including: innovation, economic and social impact as well as the scalability across markets and regions. Visit the website for details on how to submit your idea and to enter.  The deadline is August 10, 2015!

i4i-Big_Ideas-320x50-R1

Written by Blake Goud, Islamic Finance Community Leader at Thomson Reuters.

Ethical Finance Innovation Challenge & Awards (EFICA) returns for third year

Each year the list gets longer: the biggest banks admitting guilt in LIBOR rigging, FX rigging, money laundering and other misbehavior that leads them to multi-billion settlements with regulators.  It is no wonder people are looking at different models for how finance can better serve the people around the world who rely on the banks for financial intermediation, rather than just the banks and their employees.

For the third year in a row, Thomson Reuters and Abu Dhabi Islamic Bank find and recognize individuals and institutions that are leading the way towards a more ethical future for the financial services industry.  The EFICA award in the past two years have recognized bankers and new banking products that share risk and reward between the banks and their clients, as well as several innovative methods of microfinance.

Last year, the Lifetime Achievement Award recognized Dr. Amjad Saqib who developed a unique microfinance institution, Akhuwat, based on the principle that by empowering the poor through small, interest-free loans and involving centers of community activities like the mosque in the process, the overall costs can be reduced.  In addition, by giving small loans without expecting to receive interest, it can more quickly benefit the client and their business, make them self-sustaining and eventually allow them to donate to support future clients.

The EFICA Awards are looking to benefit the ethical finance and Islamic finance industry with three tracks:

  • Ethical Finance Initiative Award to recognize a new or existing ethical financial solutions or initiatives that can be implemented within the financial sector
  • Islamic Finance Industry Development Award to recognize the best practice business model initiated by an institution or an individual that have successfully implemented initiatives that have made a significant impact on promoting Islamic finance to the global community.
  • Lifetime Achievement Award to recognize an individual that has made a significant ethical impact in the practice of ethical and/or Islamic finance.

Applications for the 2015 Ethical Finance Innovation Challenge and Awards (EFICA) are now open at www.efica.com

The Opportunity for Ethical Sukuk

Author: Michael Bennett[i], The World Bank.

Source: Thomson Reuters Sukuk Perception & Forecast 2015

Islamic finance shares a strong similarity with ethical investing. Like ethical investors, Shariah-compliant investors demand that their investments not only be attractive in economic terms, but that they meet certain non-financial criteria as well. In the case of Shariah-compliant investors, these non-financial criteria involve compliance with Islamic law and principles.

Growth of ethical investing

The concept of ethical investing – investors using their money to promote ethical activities and social good – has deep roots in the doctrine of many religions. Islam, Christianity and Judaism, for example, all share a focus on the individual’s moral responsibility to use money in a way that betters one’s community and is consistent with one’s faith. These religious prescriptions have impacted individual investment decisions for centuries.

Over the past few decades, ethical investing has grown from being just a matter of individuals exercising their faith to become a comprehensive investment strategy. A large and growing number of individual and institutional investors, including asset managers, pension funds and university endowments, now include achieving certain social, environmental or corporate governance objectives as a part of their money management process. In making investment decisions, these investors overlay a qualitative analysis of a company’s policies or practices in the specific area or areas of concern to the investor onto their quantitative analysis of the company’s financial condition and prospects.

Ethical bond market

The conventional bond market has been used to channel investment to worthy causes for decades. The World Bank pioneered this use of the bond market when it issued its first bond in 1947.  The World Bank, and other supra-national institutions, issue bonds and use the proceeds of those issues to fund sustainable development projects in developing countries. Only recently, however, with the growth of the ethical investing movement, have investors sought to invest in bonds in which the proceeds will be used to promote specific ethical activities. Driven by this investor demand, the ethical segment of the conventional bond market has begun to expand rapidly, with supra-national “theme bonds” (linked to specific development themes such as women’s empowerment or access to water) and “green bonds” (bonds for which the proceeds support specified environmental projects or activities) leading the way.  Table 1 illustrates the growth trajectory of the green bond segment of the ethical bond market.

Get the full article by download your complimentary copy of the sukuk report hosted on Zawya Islamic, to know more about the opportunity for ethical sukuk. Click Here for Download

Thomson Reuters Zawya released enhancements to the Zawya Sukuk Monitor including features allowing visual data alongside figures signifying the global sukuk market overview, Click here

==============================================================================

[i] Michael Bennett is the Head of Derivatives and Structured Finance in the Treasury Department of the World Bank. The findings, interpretations and conclusions expressed herein are those of the author and do not necessarily reflect the views of the World Bank or its affiliated organizations.

2nd Islamic Economy Awards nominations now open

Author: Blake Goud – Islamic Finance Gateway Community Leader

The Islamic economy is too often characterized around its biggest silos: the multibillion dollar banks recycling petrodollars across the world and the expansion of global and regional conglomerates into the halal food market as their indigenous market growth slows to a crawl. SMEs are always either the next big thing in the $1.1 trillion halal food market and $1.35 trillion Islamic finance market, or the acquisition target, but they rarely get recognized in between.

In the future, the evolution of the Islamic economy will be dictated by not just small and medium-sized enterprises (SMEs) but microbusinesses that start with an idea and end up creating and capturing a niche market. The Islamic Economy Awards is looking to find these idea-driven SMEs. Last year, the awards highlighted, among other winners:

• Tanamera, a small natural products manufacturer in Malaysia
• Saffron Road, an American halal food producer that equally values the sustainability of its products for a broad consumer base
• TimeZ5, which designed and manufactures the first physiological prayer mat offering pain relief and improved posture

The Islamic economy awards cover eight categories including media, hospitality & tourism, waqf and endowment, SME development, Islamic arts, food & health, finance and Islamic economy knowledge infrastructure. Apart from food and finance, many of these markets are filled with ideas but few established companies, which provides a huge opportunity for people with an idea to meet market demands.

As entrepreneurs know, it is important to find a niche within the market that the bigger companies are not able or not willing to serve and the Islamic economy offers many, both within the established sectors like halal food where specialty producers can tap into consumer demands more rapidly than multinationals or in Islamic finance where the big banks have not found an effective way to tap the base of the pyramid. There are also opportunities in the less developed areas of Islamic art and design and media where a shortage of offerings, highlighted in the Review Report from the 2013 Global Islamic Economy Summit, has constrained growth of entire sectors within the Islamic economy.

The employment crisis facing majority Muslim countries can be solved in part by bringing local ideas to meet local needs, which is always something the SME will be better at than the multinational. But the Islamic economy is not limited to Muslim consumers. As Saffron Road showed with its frozen food offerings, moving beyond just the basics of being halal or sharia-compliant can win consumers among the wider base of customers who are searching for companies that slow down the wheels of production to make sure things are done the right way, in accordance with their values.

The Islamic Economy Awards are searching for the next product that is halal and which can disrupt existing markets and offer consumers something more closely aligned with their values. Nominate yourself or a company you respect in 1 of 8 Islamic Economy Awards. Hurry, the deadline is October 7, 2014!