Islamic finance is not fully understood by most people, while some groups still claim that Sharia-compliant finance is linked to terrorist financial activity, said Rushdi Siddiqui, Global Head of Islamic Finance at Thomson Reuters.
Mr. Siddiqui said that the $1 trillion sector, which he expects to reach $2 trillion within five years, has done a poor job of educating people and explaining how it differs to conventional finance.
“Certain prejudices and bigotry exist in many countries that still do not understand Islamic finance,” he said. “It’s a process that requires a lot of education. Christian Evangelists have said that Islamic finance is related to terrorism finance, while in parts of the United States [some] think the same.”
“It is an issue of education, and the industry has failed to promote what Islamic finance is, from a PR and a marketing point of view. The man on the street wants to know what the difference is between Islamic finance and conventional,” he added.
Mr. Siddiqui was speaking at the launch of the Thomson Reuters Islamic indices, which are geared toward investors around the world.
The new indices includes Sharia-compliant companies in more than 60 countries and covers the global equity markets in nine regions, including the Gulf Cooperation Council and Middle East and North Africa.
“I see Islamic finance as the beginning of a sunrise. It took 40 years to get to $1 trillion, from 1972 to 2010. To get to $2 trillion, it should happen in the next five years,” said Mr. Siddiqui.
He said that the industry would meet its target $2 trillion in value if it faces its three biggest challenges: transparency, the search for information and industry connectivity.
“Islamic finance has to be conventionally efficient in providing information, but it’s not,” he said. “If you Google information on products or structures, the information is stale and many parts are missing. Information means transparency.”
Mr. Siddiqui also said that the industry lacks a globally connected network.
“You have the Islamic bank of Thailand, the Islamic bank of Bosnia, Kenya, Britain, etc.; these banks don’t speak to each other,” he said.
“On the conventional side, all of these banks speak with one another because they are on one platform, they communicate electronically and then they transact. They are a financial community. In Islamic finance, there isn’t a globally linked community.”
(Eman El-Shenawi, a writer at Al Arabiya English, can be reached at: firstname.lastname@example.org.)