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Regional nations discuss Islamic Finance

Sep 20, 2016, 12:36 PM | Article By: Kaddijatou Jawo

A three-day regional workshop on Islamic Finance organised by the Committees for Economic and Commercial Cooperation (COMCEC) in collaboration with the Central Bank of The Gambia, is underway at the Baobab Holiday Resort in Bijilo.

The regional workshop, which aims to improve the institutional framework for Islamic finance, was held on the theme: “Islamic Finance for Regulators and Practitioners”.

The project funded by COMCEC, under project number 2015-Gamfinan-13, brought participants from Nigeria, Sierra Leone and The Gambia.

Delivering the opening statement on behalf of the Governor of the Central Bank of The Gambia, the second deputy Governor, Oumie Savage Samba, said going by experience in The Gambia, even though Islamic finance represents a small share of the global finance market, the sector is growing “exponentially” and has fundamentally transformed the financial landscape in several countries in Asia and the Middle East.

“This trend is expected to continue, driven in particular by strong economic growth in countries with large, unbanked, Muslim populations,” she said.

According to Mrs Savage Samba, data from the IMF indicates that Islamic finance assets grew at double-digit rates during the past decade, from US$200 billion in 2003 to an estimated US$ 1.8 trillion in 2013.

However, she said, despite this strong growth, Islamic finance assets are still concentrated in the Gulf Cooperation Council (GCC) countries, Iran and Malaysia, and represent less than one per cent of global financial assets.

The potential of Islamic finance, especially in countries in Africa with significant Muslim populations and low levels of Islamic finance penetration “is no doubt huge”, she noted.

She  also said to realise the potential of the sector requires a multi-pronged approach and concerted effort from all players in the value chain - the regulators, governments, private sector finance companies (banks, insurance, microfinance and capital market operators), entrepreneurs, purveyors of knowledge in Islamic finance and a broad financial services consuming public.

Also speaking on behalf of the permanent secretary at the Ministry of Finance and Economic Affairs, was the deputy permanent secretary, Juldeh Ceesay, who said the first phase of the project, which commenced in April 2015, was secured through a joint application from the Ministry of Finance and Economic Affairs and the Central Bank of The Gambia.

The project focuses on enhancing Islamic banking literacy within the three beneficiary countries, she said.

Mrs Ceesay also said one of the key aims of the OIC is to foster strong links within the Islamic world, adding that economic cooperation is seen as one of the key facets for building such ties.

“This belief spurred on the creation of COMCEC in 1981, with the central aim of coordinating all OIC-wide economic activities.”

COMCEC’s vision, she added, is geared towards building solidarity, interdependence, mobility and good governance in OIC member states.

It is also out to actualise this vision by promoting activities that help to disseminate knowledge and best practices, in target areas that would help to address the economic and social challenges prevalent within some OIC member states.

“The term Islamic Finance seems to imply that it is a form of finance that is targeted solely at Muslims; this is, however, not the case,” she said, adding:  “Islamic Finance is broadly governed by a set of principles, which both Muslims and non-Muslims subscribe to.”

Islamic Finance refers to the provision of financial services in accordance with Shari’ah Islamic law, principles and rules, she continued.

“Shari’ah does not permit receipt and payment of ‘riba’ (interest), ‘ghara’ (excessive uncertainty), ‘maysir’ (gambling), short sales or financing activities that it considers harmful to society,” she pointed out.

“Instead, the parties must share the risks and the rewards of a business transaction.”