NEWHORIZON

IIBI Retrospective
NEWHORIZON October–December 2010
Islamic banking was in its infancy and still
very fragmented.
His contributions have not gone
unrecognised. This year the Malaysia
International Islamic Financial Centre
(MIFC), under a plan devised by Bank
Negara Malaysia (Central Bank) and the
Securities Commission Malaysia, is
proposing to give Mr Muazzam Ali a
posthumous mention and put on record his
untiring contribution to the development of
Islamic finance.
Reflecting on the significance of IIBI’s
contribution, Richard T. de Belder, Partner
and Global Head of Islamic Finance with
Denton Wilde Sapte LLP, comments, ‘Over
the last 20 years the IIBI has proved to be a
most durable and invaluable organisation.
In the mid 1990s, when Islamic Finance was
not as mainstream as it is now, it was one of
the very few bodies where you could get
information on Islamic finance. The way in
which the IIBI has expanded its training and
educational programmes is to be highly
commended; it is thanks to the foresight of
Mr Muazzam Ali, whose work has
continued under the dedicated stewardship
of Mr Qayyum, that so many people over
the years have been able to obtain
knowledge about Islamic finance. The work
of the IIBI has helped to raise the profile of
the UK as a leading Islamic finance centre
and I am confident that it will continue to
be a key provider of education, training and
research services in the years to come.’
State of the Industry: A Long and Winding
Road
In 2004, the late Mr Muazzam Ali wrote to
Dr Abbas Mirakhor, who was the first to
hold the INCEIF Chair of Islamic Finance,
following a long and distinguished career as
an economist and having made a considerable
contribution in the field of Islamic economics,
finance and banking. He spoke of his sadness
that not enough was being done to realise the
benefits of Islamic finance for mankind. He
was concerned with the divergence of views
among Muslim Fuqaha (jurists) on the
permissibility of various transactions in
Islamic finance in particular and Islamic law
in general. He expressed disappointment at
the lack of a codified, consensus-based
Islamic law that could be taught in
universities the world over. He lamented the
fact that with all the resources that Allah
(S.W.T.) has bestowed upon the Muslim, very
little financial support is given to research,
academic positions in universities and general
scholarship on Islamic law, finance and
economics.
Mr Muazzam Ali believed that Muslims
could learn useful lessons from the financial
developments in the West and expressed the
view that ‘if Islamic banking has to develop,
one has to take advantage of innovative
products wherever available.’ Equally, he
often admonished the Westerners to learn
from Islam for their own benefit, as he did
in his opening speech to the IIBI Conference
on the Documentation of Islamic Banking
Products, where he said, ‘I would suggest
that Western bankers and financial experts
shed their deep-rooted prejudice against
Islam and examine the Islamic parameters.
You will, if you look with an open mind,
note that therein lies the solution for most
of the financial ills of the present age. For
your own sake, accept anything good
wherever you find it. Do not stick to
stereotyped philosophies.’
There is no denying that Islamic banking
and insurance have made impressive
progress in a short period – some 500
Islamic financial institutions are functioning
around the world today. This is no mean
achievement, considering that the pioneers
of Islamic banking had to start from scratch
and without the benefit of past experience.
Western countries with significant Muslim
populations are looking to make the
necessary regulatory and legal reforms that
would facilitate the market in Islamic
financial products. There is significant
potential too in North and East African
countries, with Kenya fast developing as the
Islamic finance hub of East Africa and in
Russia, where there are more than
30 million Muslims.
It should not be forgotten, however, that
Islamic finance still has a long way to go
before it can claim to have ‘arrived’ and
what has been achieved so far is no more
than a tiny fraction of what is possible and
necessary.
In future issues of NewHorizon, we will be
trying to establish where barriers remain to
further progress, in a ‘State of the Industry’
series which will be looking in depth at each
of the major challenges likely to shape the
future of the industry over the next 10-20
years.
In the January-March 2011
issue, we begin our ‘State
of the Industry’ series by
looking at constraints on
the development of a truly
global market in some
financial instruments as the
result of different
interpretations of what is
permissible according to
Shari’ah and in the
absence of defined
standards across markets.
12 IIBI www.newhorizon-islamicbanking.com