Author: Tasnim Nazeer, Global Islamic Finance Magazine, Editorial Staff, United KingdomDavid Smith, Global Islamic Finance Magazine, Editorial Staff, United KingdomAbstract: The Islamic finance and banking industry is growing at an unprecedented rate and is expected to see flourishing progression in 2012 and beyond. There are many opportunities for career growth and investments within the industry and many young entrepreneurs are tapping into the lucrative sector and finding ways to create wealth in a Shariah compliant manner.It can often be difficult for entrepreneurs to find the best avenues for investments and business creation within the Islamic finance and banking industry. However due to the rise of various Islamic commodities and its successful framework there are more opportunities opening up for the budding entrepreneur wishing to tap into the industry.
There are a few specialised courses for young entrepreneurs which are run at various Islamic financial institutions around the world. Islamic finance is making unprecedented and rapid growth in the competitive financial world and Islamic financial entrepreneurs can further help to provide a sound platform for further lucrative profits and investments. The Islamic finance industry have a number of openings for advancements within various sectors of the industry including Sukuk Islamic bonds and Takaful in addition to more unique opportunities within the investment sector and Islamic microfinance. This article is a must read for all entrepreneurs wishing to tap into the lucrative sector.Keywords: Entrepreneurs, Islamic finance, Islamic Banking, Investments, Shariah CompliancyA Focused Approach to Excelling as a Young Entrepreneur in Islamic FinanceIf you do have a business idea or plan that you want to invest your time and money on within the Islamic finance and banking industry it is firstly important to be acquainted with the key Shariah financing principles governing Islamic finance before making any informed decisions on your business plan. If your potential investment or business is not considered Shariah complaint or goes against the principles of Islam then you would be less likely to succeed in this highly competitive industry. This is due to the fact that businesses and customers wishing to utilise Shariah compliant services want the confidence and trust that the business operates in a manner that adheres to the principles of Islamic finance. It is therefore beneficial to consider the key principles of Shariah compliancy as outlined in Figure 1. As outlined in Figure 1 the principles of Shariah compliant finance should form the basis of all marketing of your personal brand and will help you to stay focused on which investments and deals would be most suitable for you and your potential company at large. It is important to stay clear of investments which you feel doubtful of as this may hinder your chances of being recognised as a fully fledged Islamic financial institution. Once you have familiarised yourself with the principles of Islamic finance then you can look further a field at building your personal strategic plan in order to help your business grow and prosper in the highly competitive world of Islamic finance. There are many things to consider as a potential investor or business entrepreneur such as if you are thinking of introducing a new or innovative Islamic business you would need to ensure that all your marketing is done in a Shariah compliant manner. You would also need to think strategically about your next move and make plans in order to facilitate progression of your potential business, company or investment. Figure 2 outlines a checklist which you can use in the planning stages. Figure 2 created in order for you to put things in perspective. In order to implement strategic planning measures in building your personal brand you can use the checklist in Figure 2 to run through the processes of implementation and success of strategies which you or your team of entrepreneurs have thought up. Key Areas for Investments or Business Opportunities in Islamic FinanceThere are many key areas for investments and business opportunities that the young entrepreneur may want to consider tapping into. These areas are outlined in Figure 3.Figure 3: Key Areas in IF for Young Entrepreneurs to Explore There are a number of sectors within the Islamic finance industry as outlined in Figure 3 which can open up opportunities for the potential young business man or women. Sectors such as Sukuk and Takaful are becoming increasingly popular around the world in addition to tapping into the infrastructure arena by using Islamic financial methods which is also paving the way for Shariah compliant investments worldwide.
‘‘One aspect of Islamic banking services is its attraction to small and medium enterprises as it presents them with an attractive alternative of financing for their businesses’’
An entrepreneur has to consider what skills and unique ideas they have in order to further excel and enhance Islamic financial products or offerings and this can be the key to success in the Islamic finance industry. Entrepreneurs also have to consider the many advantages of starting up or joining small or medium enterprises to further excel their business plans and develop their dreams into reality. SME’s a Growing Market for Investments in Islamic Banking ServicesMany countries from around the world are opening up Islamic financial institutions and fully fledged Islamic banks which cater for the demand for Shariah compliant products and services. One aspect of Islamic banking services is its attraction to small and medium enterprises as it presents them with an attractive alternative of financing for their businesses. Many Muslims and Non Muslims around the world find Shariah compliant financing an ethical option in comparison to conventional financing which is why there is a growing market for Islamic banking services around the world. It is clearly apparent that in order for any investment or transaction to be made by Small or medium enterprises the company would have to adhere to the principles laid out by the Shariah. It is worthwhile for any potential business professional or investor to consider the importance of SME’s in the Islamic banking and finance industry. The Shariah compliant methods of financing for Small and Medium enterprises is not only confined to Muslims alone but also welcomes applications from Non Muslims wishing to adhere to Shariah financing rules in dealing with their wealth in their businesses. In all contracts it is important to familiarise yourself with the terminology used in Islamic Finance. Many investors around the world continue to praise Islamic financial methodsand often find that there are less risks associated with Islamic finance than if they were to take up financing options with a conventional bank. As Shariah compliant Islamic instruments such as Sukuk Islamic bonds become a universal and globally renowned method of financing many SMEs become familiarised with the terms and conditions and find the options increasingly attractive. Saudi Arabia and Malaysia have been actively encouraging the financing of SMEs by the banking sector in an effort to stimulate the private sector and to boost rural and inner city poverty alleviation policies.In Malaysia for example Bank Negara, the central bank has provided financing for SMEs as the Islamic banking sector continued to increase from RM3.5 billion. "The small business sector makes up 80 percent of the Saudi market", stressed Ibrahim Al-Buloushi, head of NCB’s small business group.” The bank’s aim was to expand the national economic structure which would consequently provide the support it needs to increase and generate income and activate the economy to create more jobs and investment opportunities worldwide.
The Islamic Banking industry is providing unprecedented unique services for both Muslims and Non Muslims around the world and the future for Small and Medium Enterprises looks promising if they were to choose an Islamic financial institution.
"The reasons why SME financing should be a natural niche for Islamic banking," stresses Dr. Adalet Djabiev, CEO of Badr-Forte Bank in Moscow, which is Russian sole Islamic bank, "is that it deals directly with the real economy; creates employment; involves the productive use of resources especially capital and finance; and contributes directly toward the alleviation of poverty.” The Islamic Banking industry is providing unprecedented unique services for both Muslims and Non Muslims around the world and the future for Small and Medium Enterprises looks promising if they were to choose an Islamic financial institution. If you are an Islamic financial institution wishing to target the SMEs in attracting your services then proper marketing and promotion of the various ranges of options available to SMEs for support with funding can further help to spur growth and profits. Education Paving the Way to Success for EntrepreneursEducation and having the necessary skills and experience can create a platform to be a successful young entrepreneur. This is especially the case when it comes to Islamic finance and banking investments or enterprises because Islamic finance is a niche field and there are relevant studies which may be needed to fully equip yourself with the key terminology and how the Islamic finance and banking industry operates as a whole. There are many Islamic financial institutions and courses worldwide which can give you the necessary skills to further progress in a career in Islamic finance. The Islamic Finance School of Entrepreneurship based in the Republic of South Africa in Zambia offers a one year program for young entrepreneurs with the relevant knowledge and skills to set them ahead of the game in business within the Islamic finance industry. In addition The Islamic Finance School of Entrepreneurship course addresses the modules of, thinking strategically, human resource management, innovation and entrepreneurship, marketing management, financial management. Ebi Patel, CEO of IslamicFinance said: "The concept of a business school where young people could benefit from advice and guidance from successful industry leaders developed from our belief in the importance of training and equipping future generations who will contribute significantly to future economic growth. What better way than to learn from esteemed captains of industry who have learned and fine-tuned successful skills and business strategies?"The need for educating young entrepreneurs was further discussed at the Jeddah Economic Forum in Saudi Arabia which was held in March 2012. Entrepreneurship experts, top governmental representatives, and young Saudi businessmen and women joined the forum to discuss key strategies for developing entrepreneurs in the industry. Professional industry experts such as influential investor and entrepreneur James Caan from the UK joined the discussion and believes that ‘Entrepreneurship mindsets, braveness in coming up with innovative ideas and decentralization of initiatives to encourage the setting up of successful private businesses can do more to the cause than any univocal governmental program."Saudi Arabia abounds in substantial family businesses. Joining forces between members of the successful and experienced private sector, by opening for instance a venture fund and developing a common strategy, can create numerous jobs and opportunities. The real point is what we can do for our government through our experience and/or ideas and not vice-versa," said Caan. In addition CEO-founder of Yamli.com and YallaStartup.org Habib Haddad said, "Start small and think big, work more and think less and don't give too much importance to immediate productivity." In entrepreneurship, events never follow a linear trend," said Habib. It is normal to face difficult moments. Unfortunately the culture in Saudi Arabia is not yet supportive and few people would dare leave a secure job to give form to an idea, he added.The major hub Saudi Arabia has also made many provisions for facilitating the training of young entrepreneurs in the country by creating funds such as the Centennial Fund to further nurture new and rising talent. Sheikh Ebrahim bin Khalifa Al Khalifa, chairman of the board of trustees of Arab Regional Centre for Entrepreneurship and Investment Training (ARCEIT) said, ‘"The MoU with the Centennial Fund will open a new era of co-operation and development for the Bahrain-Arab Model as it will focus on Saudi Arabia as well as the greater MENA region further enhancing the scope of this unique enterprise development model through intensive training and expert counselling," As you can see education and taking the relevant courses can further help young entrepreneurs to further excel in the growing industry.
If you are an investor considering investing in Islamic Microfinance then it would be a worthwhile and rewarding opportunity to contribute in a socially responsible and ethical project.
Investing Islamic micro finance in a Niche Sector and finding Services for Islamic Micro FinanceIslamic microfinance is becoming an increasingly popular option for investments and many investors from around the world are seeing the benefits of investing in this lucrative sector. As the micro finance sector is relatively new in establishing itself within the Islamic financial framework it has seen rapid demand from investors worldwide but needs to overcome challenges in order to further progress. Most Islamic Microfinance arrangements fall under the scheme of Mudaraba which is a contract whereby one participant provides capital and the other participant utilizes it for business purposes such as the ‘worker’. The profits acquired are then shared equally between the two parties involved. A Shariah advisor is normally consulted in a microfinance investment project and the proportion of profits are agreed at a term. There have been more and more opportunities and Islamic micro finance funds that have been established around the world to cater for opportunities for Islamic investments within the growing sector. Islamic Microfinance relies upon adherence to the principles of Islam and the Shariah as it is socially responsible form of investing and only involves itself in projects such as Zakat which is charity based projects or economic projects to develop an individual country’s economy. Islamic Microfinance gives the investor a chance to get involved in worthwhile projects which could essentially play a significant role in targeting poverty and alleviating it in many countries around the world. In 2010 Al Amal Bank in the Middle East, a leading provider of Islamic finance services was awarded the Islamic Micro Finance Project. Al Amal Bank then went on to implement an investment fund which could be utilised for Islamic Micro finance. This initiative introduced the ijarah leasing product in those wishing to purchase generated assets from the Islamic microfinance sector. Al-Amal Investment Funds enabled the private sector to cover the financing needs of microfinance programs. Therefore businesses no longer needed to donate, but instead they could save with microfinance institutions that provide a voluntary savings service. The bank will reserve one of these investment vehicles to finance the leasing product, enabling the product to become self-sufficient in a short time while maintaining its Islamic Shariah compliant system. If you are an investor considering investing in Islamic Microfinance then it would be a worthwhile and rewarding opportunity to contribute in a socially responsible and ethical project. This will not only benefit society at large but also deal with the economy and give an opportunity for investments in poverty stricken areas which have scope to be further developed.Investments for Young Entrepreneurs As a young entrepreneur there may be certain sectors of the Islamic finance industry which are more lucrative than others. Anypotential investor should start looking for ways in which you could utilise your wealth to make key investments in your preferred country of choice and subsequently you can balance out which country you feel has the most opportunities for your specific investment idea. Saudi Arabia has an oil-based economy with strong government controls over major economic activities. It possesses more than 20% of the world's proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC. High oil prices have boosted growth, government revenues, and Saudi ownership of foreign assets which makes it a reliable and lucrative source for investments. Malaysia with its rising real estate sector and its key developments in Islamic banking and Shariah compliant products also has a lot to offer in terms of profitable long term investments. Abu Dhabi and Dubai hold much scope especially in the Islamic equity markets for if you want to see significant returns. Many investors had been sceptical about investing in Dubai due to the Nakheel World case which tumbled the Dubai market however the market is recovering and picking up steadily making it yet again a place where investments could soar.With the sector being estimated to reach $2 trillion dollars by 2012 the market is spearheading ahead. Popular commodities such as Sukuk (Islamic bonds) and Takaful (insurance) is creating abundant opportunities for both Western and Muslim populated countries on a global scale. Many major Islamic financial hubs present various different ways of investing both for professional investors and people who want to tap into the market. There are many key areas for investing your wealth such as the sectors of real estate, Sukuk, Takaful, Shariah compliant equities, infrastructure and energy and resources.The Importance of Strategic Leadership for EntrepreneursStrategic leadership provides you with the vision for your company and gives you a direction for the growth and success of your organisation. All senior level executives or CEOs need to deal with levels of change and therefore will need to further develop the skills and vital tools.... To read more please subscribe here www.globalislamicfinancemagazine.com/freesubscriptions