Interview: Adnan Ahmed Yousif

What can be done to improve the harmonisation of religious standards and regulations among countries on sharia-compliant products?

ADNAN AHMED YOUSIF: The Accounting and Auditing Organisation for Islamic Financial Institutions has been publishing standards for sharia-compliant financial institutions since 1993 and thus plays a vital role in harmonising financial and accounting standards applied by such banks. The standards it issues are mandatory for Islamic financial institutions in many Muslim countries. Individual countries also have their own sharia regulatory authorities. There is a need to find a unified Islamic reference, which can combine these efforts or better adapt existing institutions to play this role. It is worth mentioning the importance of fiqh (Islamic jurisprudence) and Islamic forums such as Al Baraka Forum for Islamic Economy, which has been held every year for the past 37 years, in issuing fatwa (sharia rulings) with regard to transactions as well as discussions of problems faced by Islamic banks while applying different modes of Islamic finance and exchanging views with scholars to solve them.

What role do sukuk (Islamic bonds) play in deepening the MENA region’s capital markets?

YOUSIF: Recent innovations in Islamic finance have changed the dynamics of the industry, especially in the area of securitisation. Sukuk have become popular as means of raising government finance through sovereign issues and as a way for companies to obtain funding. Beginning modestly in 2000 with three issues worth $336m, it reached a total issuance of $145bn in 2015. The primary market of sukuk grew between 2001 and 2014 at a compound annual growth rate of 57%, reaching 14.3% of global Islamic finance assets. It has developed as one of the most significant mechanisms for raising finance in the international capital markets through sharia-compliant structures. Today local and multinational corporations, sovereign bodies, governments and financial institutions are issuing sukuk as an alternative to syndicated financing, making it an essential subset of the international financial system. Well-developed sukuk markets would enhance access to financial services, deepen capital markets and create a sharia-compliant alternative for small and risk-averse investors.

What are the biggest hurdles a new banking investor must overcome when entering Algeria?

YOUSIF: We established our unit in 1991 as the first Islamic bank in Algeria. Al Baraka is considered one of the country’s biggest private banks and accounts for an important share of its export finance. The main challenge is that Algeria has a very large geographical area, and covering the large cities is a major challenge for all banks. At present Al Baraka has 32 branches in Algeria, but the plan is to have 50 by 2020.

What sort of potential do you see for the expansion of Islamic financial products in the corporate segment in North Africa?

YOUSIF: Based on the fact that Islamic banking is relatively new in this region, and given the size of North African markets (including Algeria, Egypt, Libya, Morocco, Sudan, Tunisia and Western Sahara), one can imagine the region’s vast potential for Islamic banking. The total population of this area has reached some 200m, with total GDP exceeding $1.2trn and per-capita income averaging $7000. The economies of Algeria, Libya and Sudan were transformed by the discovery of oil and natural gas. Morocco’s major exports are phosphates and agricultural produce, and, as in Egypt and Tunisia, the tourist industry is essential to the economy. Egypt has the most varied industrial base, importing technology to develop electronics and engineering industries. Such a climate creates huge potential for the corporate segment to benefit from Islamic products and services.