From Islamic finance to Muslim lifestyle

From Islamic finance to Muslim lifestyle

Rushdi Siddiqui Available at:

Rushdi believes that a change AGENT must tell the truth to a benevolent dictator, religious hardliner, and compassionately connect with youth and have nots.

Published: 7 July 2015

Only when you leave, can you arrive.

Colleagues have asked why I have “left” Islamic FINANCE after 15 years leading teams at DOW JONES INDEXES and Thomson Reuters?

It’s not about leaving, but about expanding my understanding about “have-not” Muslim needs.

Islamic FINANCE has reached only 38 million out of two billion million Muslims (Ernst & Young) in 40 years, and it’s more about the bankable and those with collateral.
Yes, Islamic finance is only the “grease” for the economy and not the economy.

In taking a step back and looking at the landscape, there was a light-bulb moment few years ago that something was missing in ACTION (MIA).

The original vision of the founders of Islamic banking, from Prince Faisal of DMI to Saleh Kamel of Albaraka to Saeed Lootah of Dubai Islamic Bank, was about FINANCIAL inclusion of the non-bankable. Otherwise, what’s the difference with conventional banking?

By non-bankable, I include the youth, say, under age of 30. They want ACCESS to risk capital to build a prototype of their idea, or finish building or start marketing their prototype.

So, the question becomes, what has Islamic BANKING AND FINANCE done for the poor versus the bankable, and what has it done for young entrepreneurs?

Today, sukuk and murabaha, alter ego of Islamic banking, are not FUNDING young people with ideas or poor people with Grameen bank like opportunities. (Note: Bangladesh’s Grameen bank is not an Islamic bank, as its imputed INTEREST RATES are above market rates.)

Furthermore, lets not confuse Islamic PRIVATE EQUITY (PE), linked to buyout of established companies via compliant structures, to Islamic venture capital, which exists more at conferences than in reality.

Finally, the sovereign wealth funds (SWFs) in the Muslim countries, like the largest in the Muslim world, ADIA in Abu Dhabi, have not yet invested in start-ups, even though the latter is an important ASSET class for a diversified portfolio.


The vision of Zilzar is about being a benefit-driven corporation, and not a for-profit only or non-profit only.

A benefit corporation is beyond CSR, SRI, and ESG, it’s about identifying the stakeholders in its entire ecosystem and establishing systemic linkages that provides synergistic benefits (connectivity).

There are other definitions, but we have customised it based upon how and where we see gaps in the Muslim lifestyle marketplace.

The gaps we have identified can be said to be the backbone of the Islamic digital economy.

The digital economy is the future needing blue-printing today, as the actual Muslim economies, mostly COMMODITY based, have not uplifted the lives, lifestyles or living of local people, ex outliers of select GCC countries.

Can we do more? Yes, we must do more, today!


The biggest problem in the Muslim world is not politics (democracy), religious differences (Shia and Sunni), or corruption (Transparency International’s low ranking), but the plight of micro-enterprises and SMEs.

These are the backbone of any country, emerging or developed, as they provide the majority of employment. Yet, access to FINANCING, be it conventional or risk-averse Islamic, is just not there or very difficult to tap.

Banks and SMEs do not fit seamlessly with each other today. The alleged challenges banks encounter include lack of interest, lack of customized interest rates for borrowers, underwriting costs are high, approval PROCESS time consuming, etc.

Thus, a matching opportunity has opened, called, ‘peer-to-peer’ (P2P) lending between borrowers and INVESTORS on-line.

From the website of Lending Club:

‘Lending Club is the world’s largest online marketplace connecting borrowers and investors. We’re transforming the banking system to make credit more affordable and investing more rewarding. We operate at a lower cost than traditional bank lending programs and pass the savings on to borrowers in the form of lower rates and to investors in the form of solid RETURNS.’

Islamic P2P lending does exist, for example “connects small businesses in need of capital with people who want to invest. Fast and inexpensive asset-financing for small businesses”.

But, to get greater traction, it’s a function of awareness, and we hope embed one of the P2P players we are having conversations with onto Zilzar platform for the benefit of our vendors. However, there are still regulatory issues to be addressed.

Equity crowd funding

From the website of

“Equity crowd-funding is the name given to the process whereby people (the ‘crowd’) invest in an unlisted company (a company that is not listed on a stock market) in exchange for shares in that company. A shareholder has partial ownership of a company and stands to profit should the company do well. The opposite is also true, so if the company fails investors can lose some, or all, of their investment.”

Thus, equity crowd funding is people’s capitalism with the essence of Islamic finance, risk sharing. For example, Cairo based was the world’s first (Islamic) crowd funding platform, and its has funded companies likes Nofoos, Minbetna, Optimizer, and others in Egypt.

(Full disclosure, I own small percent of Shekra and sit on the board of advisors. We have embedded Shekra onto Zilzar platform, but it has not received approval from Malaysia’s Securities Commission to do business as of yet.)

There are regulatory issues that need to be addressed to protect the interest of the small investors, but best in class regulations from the west exist and can be customised and adopted.

Thus, equity crowd FUNDING presents an interesting opportunity in the Muslim world to (1) provide risk taking capital (2) to young entrepreneurs for (3) building prototypes on ideas or finish building prototypes.

It may be just be the spark to bypass the non-cooperative banking sector, expand stakeholders in the CAPITAL MARKETS and grow an equity culture, a vital element in building a knowledge base economy.

Mobile to mobile (M2M)

Is M2M the electronic version of Hawala?

According to Investopedia website:

“Hawaladars, or Hawala dealers, arrange money transfers that are often backed only by trust, family connections or regional relationships. Hawala originated in South Asia during ancient times, and is used throughout the world today, particularly in the Islamic community as an alternative means of conducting FUNDS transfers. Hawala is frequently referred to as underground banking, which is a misnomer because Hawala services often operate openly and legitimately.”

According to the Thomson Reuters/Dinarstandard study on the Islamic economy, as of 2012, Muslims had 1.3 billion mobile phones or 21% of total, hence, massive opportunity for FINANCIAL inclusion via mobile phones.

For example, from the Economist magazine, Why does Kenya lead the world in mobile money? May 27, 2013:

“Paying for a taxi ride using your mobile phone is easier in Nairobi than it is in New York, thanks to Kenya’s world-leading mobile-money system, M-Pesa.

“Launched in 2007 by Safaricom, the country’s largest mobile-network operator, it is now used by over 17 million Kenyans, equivalent to more than two-thirds of the adult population; around 25% of the country’s gross national product flows through it. M-Pesa lets people transfer CASH using their phones, and is by far the most successful scheme of its type on earth.

“M-Pesa has since been extended to offer loans and SAVINGS products, and can also be used to disburse salaries or pay bills… One study found that in rural Kenyan households that adopted M-Pesa, incomes increased by 5-30%. In addition, the availability of a reliable mobile-payments platform has spawned a host of start-ups in Nairobi, whose business models build on M-Pesa’s foundations…’

M2M has been adopted by a number of Muslim countries, like Afghanistan, but there are a number of challenges, including MONEY laundering.

I would take it one step further, we have yet to see an Islamic payment gateway for e-commerce TRANSACTIONS for, say, halal products, hence, a major opportunity exists. The user would like to have an end-to-end halal solution.

Lessons from Etsy

From Linkedin influencer Bernard Marr:

“Etsy – the online marketplace which connects sellers of handmade goods and traditional craft products with buyers from around the world…

Over the past decade it has risen to become a leader in the market for peer-to-peer TRADING, enabling small-scale manufacturers and retailers make millions of sales each month.”

Now, imagine customer-to-customer (C2C) getting FINANCING via P2P or equity crowd funding and getting paid by M2M transfers. We are trying to do “etsy” with our Made in Penang and Made in Mindanao Powered By Zilzar campaign.


Financial inclusion is the tide that lifts all boats because of the network effect. Islamic FINANCE has yet been able to bring about financial inclusion to the Muslim masses.

A solution for inclusion is access to markets combined with innovative FINANCE, trusted platform, and technology.

What are you doing for inclusion for the masses? – July 7, 2015.

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