The Dubai Islamic Economy Development Centre (DIEDC) was set up in 2013 to spearhead the emirate’s aim of becoming the capital of the Islamic economy. One initiative it has supported since 2013 is the production of the annual State of the Global Islamic Economy (SGIE) report. This year’s report, produced by DinarStandard and supported by Salaam Gateway, was released on Monday (November 11) in Dubai. We asked DIEDC CEO, Abdulla Al Awar his take on the state of the global Islamic economy, including what the changes in Saudi Arabia mean for Dubai.
SALAAM GATEWAY: Since its inception in 2013, DIEDC has seen the Islamic economy develop at the global macro level as well as grow at the micro level. During this time, climate change, sustainability, responsible finance, food security, and strategic philanthropy have started dominating the global landscape. All these topics are addressed by the UN’s Sustainable Development Goals (SDGs). At the 2018 launch of the State of the Global Islamic Economy 2018/19 report, you told Salaam Gateway: “Islamic economy sectors have underlying principles that are very closely linked to the SDGs.”
How has the Islamic economy addressed the global challenges, and do you see anywhere or anyone in the Islamic economy staying ahead of the curve on any of these issues?
ABDULLA AL AWAR: There is a very close relationship between the aspirations of the SDGs and the ethical values underpinning Islamic economy principles. For example, Islamic finance contributes to 11 SDGs – No Poverty, Decent Work and Economic Growth, and Reducing Inequality, just to name a few – while the halal sector contributes to Zero Hunger, Good Health and Well-being, Responsible Consumption and Production, and Climate Action.
Many players in the Islamic economy are staying ahead of the curve on these issues, especially those operating within its start-up sectors. We are witnessing innovative work by Islamic economy entrepreneurs that not only addresses global concerns across the full range of the SDGs, but also motivates Muslims to actively participate in achieving the SDGs.
What still needs to be done by Islamic economy industry players and other stakeholders in the near to mid-term to contribute positively to finding, and indeed being, the solutions to the world's key challenges?
The global economy – increasingly being driven by young, digitally astute stakeholders – is undergoing a vast technological transformation amidst the Fourth Industrial Revolution. It is imperative for Islamic economy players to keep pace with this trend and integrate state-of-the-art technologies into their operations in order to maximise efficiency and close the gaps in the Islamic economic system, in addition to ensuring the competitiveness of their services and expanding their reach. The Islamic economy has substantial room to grow, however, it must leverage the latest technologies to unlock its full potential and consequently bolster its impact on the world’s challenges.
Looking back at the last seven years of the Islamic economy, several key trends have emerged and taken flight, such as fintech. How have Islamic economy industry players and other stakeholders made use of fintech to improve the lives of fellow human beings?
There are many such examples. For instance, Muslim-majority countries continue to rank among the world’s poorest in terms of GDP per capita. Muslims in these countries are in need of financial services to improve their economic situation, but struggle to find Shariah-compliant investment opportunities without high minimum investment requirements. In order to rectify this, Islamic economy platforms have begun utilizing fintech to drive down costs, reduce minimum investment requirements, and make these resources available globally so that Muslims around the world can work towards economic empowerment.
From your vantage point, what opportunities can you see that are still to be exploited by the Islamic economy with regard to fintech?
A promising opportunity within Islamic fintech is the integration of big data and AI into Islamic banking services. By using big data, Islamic banks can vastly reduce the time and error margin associated with traditional banking intelligence methods. In the same vein, AI has the potential to automate labour-intensive manual tasks and generate insights at a much faster rate. Both technologies improve the overall customer experience and lower operating costs for financial services providers and users alike.
Another critical opportunity for fintech in the Islamic economy is leveraging blockchain to boost its competitiveness within the global market. Trade finance represents the vast majority of global trade, however, despite the market size, Islamic trade finance accounts for a substantially smaller industry share with considerable room for growth. The ability of blockchain to verify official documentation through smart contracts serves a significant need in trade finance, and implementing this technology will enable Islamic finance to position itself as a leader in the broader ethical finance industry.
There are very big changes taking shape within the Islamic economy, with Saudi Arabia diversifying its economy so quickly, and "liberalising" its tourism sector, opening its markets, and making big changes to the hajj and umrah sector. It feels like things are happening overnight, and these have huge impacts for the global Islamic economy.
How do these changes in Saudi Arabia that have global repercussions affect the work of DIEDC with regard to establishing Dubai as the capital of the Islamic economy?
Saudi Arabia, a powerful player in the Islamic economy, is witnessing ground-breaking changes that are bolstering its competitiveness in this domain. The government’s efforts to tighten halal food standards, develop Islamic financial infrastructure, and maximise the country’s tourism potential, particularly in terms of halal travel, mean that DIEDC as well as all other Islamic economy stakeholders need to be proactive about incorporating this evolving market into their strategies and operations. Ultimately, we believe that strategic cooperation with Saudi Arabia can build on the natural synergy between our two countries and go a long way in driving the growth and expansion of the Islamic economy.
What would be your advice to industry players and other stakeholders who are concerned that the sweeping changes in Saudi Arabia will negatively impact their own businesses? In other words, what is your advice to industry players and other stakeholders in the Islamic economy as to how to leverage the opportunities presented by the sweeping changes in Saudi Arabia?
While these changes may increase competition in the Islamic economy sectors, they also mean the introduction of new markets and consumer bases that share the common values of the Islamic economy. The country’s transformation offers enormous potential, and key stakeholders would do well to leverage those opportunities as part of their growth plans.
Any other comments?
The Islamic economy has undergone significant changes to get to where it is today. Stakeholders are implementing the latest technological developments, the halal industry is evolving with a rising demand for ethically sourced products and services, and investments are being made into smart technologies that meet the modern Muslim consumers’ needs in an innovative manner.
In addition to enabling Muslims to live their daily lives in compliance with Shariah, the Islamic economy contributes to the global efforts to address the most pressing issues facing our world today. Therefore, it is important to think of this domain not only in terms of growth and expansion but also of its impact on the global community.
© SalaamGateway.com 2019 All Rights Reserved