BLOGS

IFN Article by Marvin Cole, CEO of Ovamba Solutions Inc.


The coronavirus pandemic’s impact on remittances and tithes has been devastating. 2020 has seen sub-Saharan African remittances drop by more than 23% to US$37 billion. In light of this, we have been thinking about and admiring the power of Zakat and its seamless presence at the intersection of wealth and the concept of giving.


Having witnessed the impact of religion and charity in Central Africa, it makes for great conversation to stack Zakat against tithing or other forms of giving. Tithing requires 10% of your earnings and is paid to the church. Zakat Niba is 2.5% or 1/40 after your expenses are deducted and is administered via the bank.


Then there is the main difference, which appears to be the way in which liquidity is unleashed in a single wave from all corners of the Islamic community. It is not an option, it is a certainty. Zakat blends faith and finance in a pragmatic and highly effective way.


Since the onset of the coronavirus pandemic, concerns and questions regarding innovative finance and blended capital have been coming up on policy discussions via Zoom and online events quite regularly. Ultimately, it comes down to innovating finance for a functional society. Even though Zakat Maal is the obligatory form of giving reserved for Muslims only, it has a measurable impact throughout local business communities and is gaining respect for its impact and importance.


Despite the additional XAF500 billion (US$896.06 million) that the BEAC Monetary Policy Committee made available to the banking system in March, very little capital actually made its way to SMEs or the informal sector. Spending contracted almost immediately. Banks shored up capital to maintain liquidity limits and earmarked funds for large commercial customers. For merchants and traders, there was Zakat and there was post-Ramadan spending. During economic uncertainty, this is a welcome and reliable relief.


More Islamic non-governmental organizations are seen getting to work in the CEMAC region and blurring the lines between faith and work. You could say that this might even be a forerunner of the UN Sustainable Development Goals! It is highly expected that we will see additional innovation around Zakat as an economic driver and more policymakers will seek ways to compliantly leverage this powerful tool.


This article was first published in IFN Volume 17 Issue 41 dated the 14th October 2020.


Proshare Islamic Finance Weekly Article


Enhancing the skills of women, increasing investment opportunities for them through products and encouraging them to take up leadership positions are ways in which Islamic Fintech Firms can empower women in climes like Nigeria. Mrs. Wahida Mohamed the Founder of the Islamic Fintech Hub made this statement while speaking on the "Role of Women In The Islamic Fintech Ecosystem".


According to her, women in the Islamic Banking and Finance industry have pooled immense investments and assets into the industry, including the following;


- Rania Mahmoud Nasher of Saudi Arabia, Samba Financial Group CEO named twice in the Forbes 100 most powerful women in the world. Samba, formerly known as The Saudi American Bank has 66 branches,


- Lubna Suliman Olayan of Saudi Arabia, CEO of Olayan Financing Company that has earned US$ 10 billion. OFC is currently active in 40 countries,


- Raja Teh Maimuna is the managing director of Wholesale Banking for the AmBank Group. She has also been the CEO of AmInvestment Bank, Hong Leong Islamic Bank, Bank AlKhair Malaysia (previously Unicorn Investment Bank) and has helped set up the world's first Islamic commodity Murabahah (cost-plus deferred sale) platform,


- Raja Al Mazrouei is the Executive Vice President of FinTech Hive UAE that brings together leading financial institutions, government entities, technology partners and entrepreneurs to realize a common goal in driving forward the UAE's national innovation agenda and shaping the future of financial services,


- Fatime Qasimi CEO of Aseel Islamic Finance, an award-winning Islamic non-bank retail finance institution,


- Viola Llewellyn President & Co-Founder of Ovamba Solutions, Inc. used by partner banks to provide their customers with capital for trade, importation, manufacturing and business growth using non-interest-bearing risk-mitigated financial instruments,


- Mirna Slieman is the founder and CEO of Fintech Galaxy, MENA region's digital fintech community and crowdsourcing platform,


- Dr. Hayat Sindi Chief Adviser to the Islamic Development Bank (IsDB) President for Science, Technology and Innovation amongst others.


Speaking further Mohamed acknowledged the fact that women are doing a lot of work and making changes in the industry. She noted that about 10 startups in collaboration have worked to promote gender balance and develop skills and products for women.


Read full article here: https://www.proshareng.com/news/Islamic-Finance/How-Islamic-Finance-Firms-Are-Empowering/53320#




Impact Alpha article by Yasemin Saltuk Lamy & Diana Kolar


In a world where innovation is revered, it can be easy to forget the value of tried and tested tools. When Covid-19 revealed itself as a global pandemic, CDC turned to one of the oldest forms of international finance to support financial stability with systemic liquidity: Trade Finance. This age-old instrument has not attracted many modern impact investors, yet trade finance, and other forms of invoice or inventory-backed working capital financing, is exactly the type of support businesses need to maintain operations and jobs without jeopardizing financial health by taking on leverage or diluting ownership during a crisis.


Development Finance Institutions have announced more than $12 billion in trade-related COVID-response initiatives as of early July. For impact investors in need of lower risk opportunities that can absorb larger capital allocations, this is just the ticket. But we have yet to see impact investors active in this market. It could be that the multi-layered approach of partnership through banks that on-lend feels too removed from the impact for end beneficiaries. Or is the administrative burden too high for the thinner margin of these short-term transactions? 


Historically low default rates of ~0.08% should be compelling for lenders, and this has proven to be one our quickest, most scalable and most prudent tools for supporting systemic liquidity early in the crisis. Investors open to old-fashioned tools could have significant impact – reaching small business at scale – with low risk. Too good to be true? Or just tried and tested?


Read the full article at https://impactalpha.com/trade-finance-provides-systemic-liquidity-to-emerging-market-businesses-in-covid-crisis/

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