My dispatch from the final day of the World Islamic Economic Forum is Iqbal Khan’s speech on the global financial crisis. He is one of the most inspiring individuals I have met. I’ve got a propensity to like people that have strong principles, but also manage to carry them out successfully in reality. He’s one of the top Islamic bankers around, is full of knowledge and wisdom, and as CEO of Fajr Capital, a highly successful entrepreneur to boot.
He criticised governments that think that things can be turned round by the people who created the problem in the first place. He had concrete proposals for the billions of taxpayer money recently injected into the banks:
- 10-15% should go to microfinancing
- 15-20% on venture capital
- 20-25% on SMEs
- 25-30% to build infrastructure that makes the economy competitive e.g. communications
As far as the banks are concerned, they are being funded at the moment because they are at the basis of the payment system. Banks should be responsible and there is a need to separate the payment system from the investment function. If the banks are to control the payment system then they should be told to behave – we need “narrow banks”.
Thought needs to be given on converting debt into equity. Banks have charged more for equity deals up till now, incentivising people towards debt.
At the forthcoming G20 summit, three Muslim countries are preparing speeches on Islamic finance in relation to the current crisis – Turkey, Indonesia and Saudi Arabia. Khan said that we need a thinktank and a “dotank”. The Islamic system should be based on justice and equity, and should have a demonstration effect – currently 70% of investments in the Muslim world are in non-Shariah compliant holdings.
Lastly, there was a presentation on the work of UEM, Malaysia’s building conglomerate. As well as all the massive bridges, roads and buildings, they mentioned their role in constructing the stadiums for the Commonwealth Games in 1998. That 11 years later such a big company voluntarily mentions this, and still talks about the tourism and other benefits of hosting the games, bodes very well for Glasgow and Scotland for 2014.
Posted by Osama Saeed