|
It was in the year 1896 that the ruler of what is now present-day Afghanistan
launched a final attempt at conquering a stubborn northern province in the
Hindukush, one that was known for its predominantly non-Muslim inhabitants.
Hence the name given to this region was that of Kafiristan, the land of the
unbelievers. It was a small expansionary endeavour in the late 19th century, a
far cry from the large scale Ottoman challenges to Christendom (such as the one
that ended under the walls of Vienna in the year 1683), but it provides us with
an interesting backdrop for discussing Islamic finance. This is an industry that
has developed with contributions from both Muslims and non-Muslims alike.
Furthermore, the products & services are not only offered within the historical
boundaries of the Muslim world, but across jurisdictions from all over.
The N Word
Islamic finance presents us with a remarkable opportunity to promote dialogue
and understanding, although it is rather unfortunate that we seldom hear about
this particular aspect. Perhaps it is taboo to openly talk about religion (even
in a faith-based environment) or perhaps the interactions between Muslims and
non-Muslims have become so casual and 'normal' that they pass seemingly
unnoticed. "People getting along just fine" is not an enticing headline, it
doesn't sell newspapers. For whatever reasons, we rarely discuss this N word:
Non-Muslims, and more specifically the role and the contributions that these
non-Muslims have had or what role they play in it. Perhaps it is political
correctness, indeed the term non-Muslim is much kinder compared to 'heretic',
'unbeliever' or the less apologetic 'infidel'. Even the use of the arabic term
kafir (plural kuffar) has been discouraged (seen by some as derogatory).
Non-Muslims represent a significant component of the human capital in Islamic
finance, many having brought extensive experience from the conventional
financial world. At the same time, a new wave of young Muslim professionals are
gradually filling the industry ranks as they seek to directly engage the
industry (and their faith). Wait a minute, I've seen this movie before: Muslims
and non-Muslims coming together and delving into issues of faith and God.... the
perfect script for a summer blockbuster that likely involves conflict and dis-chord.
In practice though the outcome in Islamic finance is very much anti-climactic,
we see a dynamic and peaceful integration of multiple backgrounds, cultures,
races, and faiths.
The J Word
Of course it is no mystery that Islam has expanded throughout history, it has
done this both peacefully and under the sword. It is no different to the other
major religions of the world, although you would struggle to find an equivalent
in Islam for the Spanish inquisition, for a Torquemada or the Encomienda. If you
are rushing to Google allow me to save you some clicks of the mouse, the latter
refers to the worker camps that transformed the Americas into a cultural
wasteland. The inhabitants of Kafiristan might have been converted to Islam, but
history has shown that this was not always a priority (or even a goal) of Muslim
expansion, it responded more to political and economic requirements rather than
the urge to indoctrinate neighbouring lands. The concept of freedom of religion
is part of the teaching of Islam and while it might have been at the discretion
of the Afghani ruler it has been exemplified in many different occasions across
antiquity.
Nonetheless some Western commentators have been more than eager to saturate any
discussion about Islam with the J word: Jihad. There have also been plenty of
attempts to demonize Islamic finance itself by labelling it as some sort of
'financial jihad'. This is rather ironic (if not very unintelligent) since the
industry is an example of modern Islamic principles being put into practice, a
transparent and pragmatic exposition of the values of Islam. Not only that but
jihad is not a synonym for holy war, its meaning is multidimensional and by most
observers it constitutes a prompt for internal self-discovery rather than an
external directive. I wonder if those same commentators are familiar with any
other concept beyond their narrow definition of jihad.
Some individuals assume that because a Muslim ruler declared a holy war sometime
in the 16th century this somehow equates to Muslim society today. The same
faulty logic would suggest that a modern day Christian would be an accessory to
the Spanish inquisition or should answer for the cultural obliteration of the
native Americans! Lets remind ourselves that we should learn and appreciate
history, not be the slaves of it.
To Read or to Write, That is the Question
So what is the role and standing of non-Muslims in Islamic finance? Recently, a
discussion in our online forum (see
reference link) revolved around whether a non-Muslim could make inroads into
the field of Shariah advisory. This raised the additional question of whether a
non-Muslim could become a Shariah scholar (as well as whether a scholar can be a
man or a woman). While I am not aware of any precedent for a non-Muslim scholar
I doubt this would be possible. However, the short debate did highlight an area
where frictions could arise even though they rarely did as reason and
understanding prevailed.
This might be a sensitive issue, but it boils down to a very simple distinction:
having the ability to issue/write a fatwa is different from having the knowledge
to read/understand a fatwa. In other words, the focus should not be on Shariah
scholars but rather on compliance officers. Our attention seems to be geared
towards the knowledge and intention of the individual that wrote the fatwa for
the financial product. However, lets also focus on the knowledge of the
individual that is tasked with digesting such a fatwa and implementing its
message within the financial institution.
Should we expect every compliance officer in Islamic finance to be Muslim? This
might be impractical for boutique firms and could create yet another bottleneck
of human capital. Instead, we should ensure that compliance officers are
well-trained in Shariah, shower them with plenty of helpful tools, and ensure
that their roles & responsibilities are better defined. It is curious that when
you perform due diligence on a fund manager we will direct our queries to the
head of risk management, trading teams, or chief financial officer. However,
when it comes to matters of Shariah compliance we are directed to an external
individual, sometimes located multiple timezones away, who probably has had a
few days of interaction with the financial institution and maintains an
arms-length relationship.
It seems that the understanding of fatwa (and that of Shariah itself) has been
outsourced to this third party, which sits outside of the financial institution.
Thus when you inquire on the Shariah compliance of a product you are invited to
refer to the Shariah supervisory board (often comprised of three or more
well-renowned Scholars). Of course one cannot downplay or diminish the
importance of scholars in this process, but shouldn't we also be directed to
talk to the Chief Risk Officer or Chief Compliance Officer or someone in a
similar capacity? It boils down to whether Islamic finance and the understanding
of the principles of Islam is to be an internal function, rather than an
external one. What is the point of having an investment bank launch an Islamic
product (with all the corresponding bells and whistles) if nobody within that
organization understands an iota of Islam?
The Modern Day Nuristan
Upon the conquest of Kafiristan, the region came to be known as Nuristan, the
land of light. Islamic finance has the opportunity to be regarded as a new land
of enlightenment, where we can shine a spotlight on its multi-ethnic and
multi-cultural amalgamation. We might as well regard Islamic finance as a large
'special purpose vehicle' as it can be used to exemplify a progressive & modern
Islam, a testament to its inclusiveness.
Your feedback and comments are very important to us, please feel free to contact
the author via email.
|