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The month of January started out as uneventful and the rest of 2011 seemed confined to the same fate... clearly the demonstrations, protests and clashes that have engulfed the Middle East since then have proven otherwise. Very few could have foreseen the depth of this change (which is still unfolding) - with a substantial impact on the socio-political landscape of the region. Even more difficult to predict the breadth of this change - simultaneously across various countries and different political systems.

What this means to the region (and to Islamic finance) is near-impossible to predict. With such a complex landscape and an ambiguous outlook it is best to get back to basics. During this time it can be difficult to make sense of what we see, hear and read but this can be a time to renew our convictions and remind ourselves of our ideals.

Hence I find myself pondering: what draws us to Islamic finance, what fuels that interest in the concept and in the people around this industry? Unfortunately for the reader this has rekindled several anecdotes...

In the beginning...

My introduction to Islamic finance can be traced back to research conducted several years ago on Islamic investment funds. There was an emphasis on making the scope of the research global so special interest went into markets that, in my view at least, had been sidelined or ignored. This exploration included countries such as Pakistan, Morocco, Indonesia, Canada, South Africa and Egypt (just to name a few).

In fact it seems I hold the rather dubious honor of being the first person to write a comprehensive analysis of Islamic funds in some of these countries (specifically Indonesia, Pakistan and Egypt). This analysis can still be found in the form of articles published with the likes of Islamic Finance News, Eureka hedge and elsewhere. 'Dubious' because it highlights the inadequate attention that the industry service providers have given to these markets. Witnessing such an imbalance is a strong reminder of how much we should cherish views that are objective, balanced, and faithful to that long-lost art of common sense.

The Moroccan Connection

Morocco was particularly intriguing, since it presented a thriving capital market with numerous investment products (albeit none of which seemed to be Shariah compliant) and this also offered the opportunity to practice my fast-decaying French vocabulary. After a few calls (and admittedly some dead ends) I bumped into an energetic gentleman, Mohammed Mejai, who offered his help to figure out exactly how many Islamic funds there where in the market.

We spoke again a few days later and to my surprise he had proceeded to call every fund manager in the country (from Marrakech to Casablanca!) and thus confirmed the existence of a discretionary account (managed according to Islamic principles) and one 'proper' Islamic mutual fund. Indeed that lonely Islamic fund, Attijari Al Moucharaka (see reference link)from Wafa Gestion, remains one of my favourites. Partly due to is great track-record but most poignantly from the methodical initiative of this unsung hero. Local fund managers had warned me that the data might not always be reliable and this was confirmed early on - in particular with the lack of a complete historical archive (for mutual funds it is crucial to have performance data since inception, not halfway-through the life of a fund). Explaining this to a marketing manager at Tadawul, a fellow by the name of Mohammad Saab, he seemed adamant on finding a solution to my problem.

He conferred with colleagues and further quizzed the IT department but to no avail, the data did not exist or was impossible to extract. He then contacted a friend of his (perhaps a distant cousin) who devised a most intriguing solution: somehow they had painstakingly recorded the Tadawul reports for several years and compiled them on a CD-ROM. This joyful piece of polycarbonate plastic soon found its way to my desk via express courier. It was heartbreaking that I could not use this data in any way (since it was not an official source) but I avoided mentioning this to them, instead opting for expressing my immense gratitude to them. Afterwards I proceeded to interrogate half of Saudi Arabia to obtain the official data for each fund (no fun there). However, I still have this 'gift' and I regard it as one of my most prized possessions. It is testament to how much humility and commitment one can find in certain individuals in this industry.

My Kuwaiti Cousin

Next on the list was Kuwait. This was another industry orphan: while the Central Bank of Kuwait listed more than 50 finance companies that conduct their business in accordance with Islamic Share'a (see reference link), the number of Islamic mutual funds reported by fund portals did not match this reality. There was something amiss.

The neglect was surprising, talking to a VP from one of the largest fund managers in the country I soon stumbled on one of their conventional funds (i.e. not Islamic) which had been classified as such by one of the major fund portals. It seems that just because one of their mutual funds had an Arabic name it somehow made it 'Islamic'. I highlighted the error and the guys had a good laugh, then proceeded to correct the mistake. Worryingly, this pointed to a recurring theme: market research and data collection have often failed to keep up or keep current (or both). One can forgive this happening in frontier markets, but one can hardly argue that Kuwait is at the periphery of Islamic finance.

Still we managed to uncover some fascinating products, like the ones from Al Madina for Finance and Investment. This unassuming team had recently launched an India Fund (see reference link) similar to the Akkadian misru (border territory) and the Aramaic mișrā (frontier).

The plural being amsār, this refers to a variety of outposts such as Qomm in Iran, Fustāt in Egypt, Qayrawān in Tunisia. In fact Basra and Kufa are also named as being part of this family of regionally important cities. They had a significant role in terms of interaction and trade with other regions, cultures and civilizations.

Furthermore, the term amsār, which is phonteically closer to "imisr" is also considered as a root word for emissary. While you certainly have military overtones (a garrison is no playground), the overall feeling is that this term had a broader concept. Each misr was a portal linking the Arab world with the outside world (be that the lands north of the Mediterranean, sub-Saharan Africa, of the Far East). And the plural term was further focused on the notion of a cultural/economic periphery.

Relating misr/amsar to modern Islamic finance was therefore quite appealing - as we have multiple 'frontier towns' (from Toronto to Singapore, Luxembourg to Sydney) bridging a gap between Muslims and non-Muslims, transmitting (perhaps unwittingly) a message of goodwill to others. This linguistic excursion always reminds me that there can be more underneath a story if we care to be slightly inquisitive and challenge even the most obvious answer.

What is Next?

It seems out of place to consider how Islamic finance can 'benefit' from the political turmoil of recent weeks. I would much prefer to see how the industry can 'contribute' to the rebuilding of society and the reassembling of normalcy.

In fact it is rather un-assuring to witness the technocrat frenzy to provide predictions and forecasts. Personally, I just hope that we can promptly return to gathering more anecdotes from so many colorful individuals and uncovering even more surprises in this wonderful region. Thus my fondest wishes and prayers go to everyone in Misr, although which Misr that might be is up to you to decide.

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