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Last Updated: Sep 25th, 2006 - 11:36:04 |
Halal Food and Islamic Finance:
Natural Allies
At my presentation at the recent Middle Eastern Food Marketing Forum in Dubai, I finished with the statement that the emerging global market for halal products and services represented the tip of the iceberg of the impact of Islam on commerce, a convergence which we believe is destined to be one of the defining factors of the coming decades.
At The Halal Journal we are focusing exclusively on what we define as the Global Halal Market. By this, we are referring to a dynamic market arena for halal products and services, traded according to halal transaction and contracts, using – ultimately – halal currencies.
The two major components of this market are halal food and Islamic finance. These two elements represent an emerging market force that is effectively the direct result of the impact of Islam on commerce.
These two – food and finance – are not separate markets. They are rather two faces of one coin, with similar developmental histories and with many parallels.
Both began out of the need of the Muslims to have halal goods and financial services. Initially, both served a primarily Muslim market.
Those who were quick to understand the potential power of this market, got into position. The major food producers – Nestle, Unilever, Walls – and fast-food chains – MacDonald’s, KFC, Burger King – as well a the major meat producers around the world – Australia, New Zealand, India, Brazil, Argentina, USA and UK – all saw the potential of the halal market and took advantage of this multi-billion dollar market.
This has been basically paralleled by the development of Islamic banking. Initially developed by the Muslims to serve the needs of the Muslims, the major banking houses around the world, mostly from the non-Muslim world, have been quick to recognise the potential returns.
If you monitor news items on Islamic banking, everyday you will see new developments, worldwide, as in Malaysia, now with 5 domestic and 3 international fully-fledged Islamic banks, and every other bank with an Islamic window demonstrating the rapid growth in this field. Similarly in the GCC region, Islamic banking is developing at an unprecedented rate with both local and international banks jockeying for position.
In the UK, with the recent opening of the first dedicated Islamic bank, the Islamic Bank of Britain, and the move by Lloyds TSB to offer Islamic banking on the high street can leave no doubt that Islamic banking is transforming from a specialist to a main-stream phenomenon.
We maintain again; these are not two separate phenomena; they are two parts of one phenomenon, the impact of Islam on commerce, and the subsequent emergence of a global halal marketplace.
Dynamics of growth and boundaries.
So where is this heading? Islamic banking is a work in progress, not a finished product. Like the market for halal products, it is a fledgling industry now developing global standards.
Both halal food and Islamic finance are driven by two dynamic – and sometimes opposing –forces that fuel their growth and determine their shape; the desire for growth and innovation – and therefore market share – and the need to remain within the parameters of the Shariah of Islam.
In both the halal food market and the Islamic finance market, we can perceive similar prevailing conditions.
• Vibrant growing market demand, both retail and commercial
• Strong interest from producers and suppliers worldwide
• A dawning recognition of the potential size and strength of a market of 2 billion consumers – likely to be 3 billion by 2010
• Dynamic cross-over components – not just a market for the Muslims. Among both producers and consumers there is a strong non-Muslim element.
• Global reach. SE, Central and West Asia, GCC region, Europe, US.
Recent geopolitical currents have driven Islam firmly into the public awareness, most of it negative, but frankly, that is to be expected. However, both halal food and Islamic finance are riding on this wave of heightened awareness and curiosity, which is not about to diminish. And there are other factors at work.
For example, ethical awareness is becoming a dominant feature in many market sectors, and markedly so in the food market. Halal food represents the ‘lawful and wholesome’, therefore it encompasses such elements as the current – and growing ¬– concern for the environment, ethical and humane treatment of animals, healthier meat, moderation in consumption, and quality control from the farm to the plate.
Islamic finance similarly represents justice and equity in the transaction, abandoning riba according to the command of Allah, removal of doubt in transactions, sharing risk and reward in investment, protecting the disadvantaged.
So, what began as a service just for the Muslims, has expanded to serve the needs of others also. Halal meat is not just the preference of the Muslims, as the figures in UK demonstrate, where there are 6 million consumers of Halal meat, and only 2 million Muslims.
Similarly, Islamic banking is also the choice of many non-Muslims, as in the figures from one of the leading Islamic banks in Malaysia, 80% of whose commercial customers are non-Muslim Chinese.
So what do we have?
Two interrelated components that began separately, serving the same market, now expanding to serve a wider market, both high growth sectors of their particular markets.
And both now calling for global standards. In this respect, Islamic finance is more advanced, with the creation of the Islamic Financial Services Board as a consultative body to develop global standards for Islamic banking practices worldwide. On this note, The Halal Journal is proud to have been invited by the IFSB to be a Media Partner at the 2nd IFSB Summit in Doha on 24-25 May. We see this as a confirmation that our view of the integrated Global Halal Market is a correct one.
There is a similar call emerging for global standards for halal products, and this is likely to be one of the major developments – and challenges – in the coming years.
As a media company that focuses exclusively on the halal markets, we have from day one considered Islamic finance to be an integral component of the halal market. KasehDia’s involvement in MIHAS 2004, the world’s first Halal-only trade expo was instrumental in ensuring a strong representation from the Islamic banks, making the event a fully integrated Halal market event.
We predict that as these two elements continue to grow, the zone of overlap will naturally increase, creating a synergy that will not only benefit both markets, but will actually benefit people all over the world, from all races, colours and creeds.
Why? Because halal is for everyone, not just the Muslims, as is stated in the Qur’an, “Oh Mankind! Consume what is lawful and wholesome from the earth.” For a great many people this includes not just the food, but also the transactions that produce and procure it. As Imam Malik said in al-Muwatta, “What makes a transaction halal, makes it halal. What makes it haram, makes it haram.”
So I return to my opening statement, with an added component – Halal products and Islamic finance are the two main components that comprise the impact of the Islamic Shariah on the world of commerce. Halal produce, halal transactions, and we hope in the future to see the advent of halal currencies.
With increased success comes increased responsibility; we ask Allah for guidance and the strength to shoulder it.
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