gif Interview


In February 2010 she founded the All-Party Parliamentary Group (APPG) for Business Development in Iraq and the Regions and currently serves as its Chair. She is also a member of the All-Party Parliamentary Group for Human Trafficking and speaks regularly on health care and education in the Middle East and Eastern Europe and business development in Iraq and its wider neighbourhood. She spoke with Global Is- lamic Finance Magazine about Islamic fi- nance and Middle East economy.


Baroness Nicholson, please can you tell us about your associations with the Middle East and other predominantly Islamic re- gions?


I have been heavily involved in the Middle East for more than twenty years. Amongst other responsibilities at present, I am Ex- ecutive Chairman of the AMAR Internation- al Charitable Foundation, which provides healthcare and education in fragile states in the region, Executive Chairman of the Iraq Britain Business Council (IBBC Limited), as a member of the Organising Committee of the New Arab Woman Forum; Prize Commit- tee Member of the Arab Gulf Programme for United Nations Development Organisations, a Board Member of the Foundation for Dia- logue between Civilisations; and Honorary Adviser to Prime Minister Nouri Al Maliki in the field of health.


At what rate is socioeconomic develop- ment taking place in these regions?


Socio-economic development can been seen across the whole Middle Eastern re- gion, but some countries have progressed further than others because of GDP growth, employment and life expectancy amongst other factors.


The factors that have contributed to the so- cio-economic changes across the region are: Transfer of technology and business know- how, changes in laws, and the influence of large International blue chip companies has accelerated the socioeconomic develop- ments in the region.


How can Islamic finance, and economic re- lationships in general, be used as tools for the promotion of understanding between European and Islamic civilisations?


Islamic finance is one of the fastest grow- ing segments of global finance. Within the EU, the UK in particular has opened up to the concept of Islamic finance. The UK has begun to turn itself into a hub for Islamic finance due to its developed finance and banking industry, strong regulatory frame- work and reputation as a world financial centre.


38 Global Islamic Finance October 2010


The UK government has wanted to give the UK’s relatively large Muslim community (around 3% of the population) access to financial services consistent with their reli- gious beliefs. The Bank of England and the Financial Services Authority (FSA) have been closely involved in the development of Sha- ria products and facilities.


How likely is it that more European finan- cial centres will follow London’s example and start actively promoting Islamic fi- nance through measures such as tax and legislative amendments?


Government policy has been increasingly supportive of the development of Islamic financial services in recent years because it has been seen to contribute to broader government objectives such as combating social exclusion and promoting London and the wider UK as a global financial centre. A key aspect of supportive government policy has been the establishment since 2003 of an enabling fiscal and regulatory framework in the UK for Islamic finance.


There have been a number of initiatives which are intended to form part of a con- tinuing process. In 2003 double tax on Is- lamic mortgages was removed and tax re- lief on Islamic mortgages was extended to companies, as well as individuals. Reforms were made to the arrangements for issues of bonds so that returns and income pay- ments can be treated ‘as if’ interest, which has made London a more attractive location for issuing and trading Sukuk. The Financial Service Authority has also sought to ensure that regulatory treatment of Islamic finance is consistent with its statutory objectives and principles.


There are also opportunities in the West- ern countries of Europe and North America. Countries such as the US, France, Germany and the UK each have indigenous Muslim populations of between one and five mil- lion. Moreover, the customer base in West- ern countries is not necessarily restricted to Moslems: other customers may be attracted by the ethical and environmental basis of Islamic finance. Historic providers of Islamic finance are facing competition from newly established providers and from conversion of conventional institutions.


Is the European Union a help or a hindrance in the promotion of alternative forms of fi- nance throughout the continent?


Positives:


• Interlinked framework builds confi- dence • Development and implementation of common standards and practices


• Transfer of knowledge and expertise • Wider product offering and competition base


Negatives:


• The EU can be slow to get common standards and legislation in place • Costly exercise • The EU block can act as a barrier to en- try to outsiders


If Muslim women are indeed becoming more economically empowered, how does this affect their overall empowerment in society?


Women in Islamic society are very hard working, very well educated with enormous talent. I believe that women will end up be- ing a strong driving force and play an equally important a role in the future growth of Is- lamic society.


Microfinance is increasingly being used by the Islamic finance industry to empower certain sections of society. How can mi- crofinance be used to empower women worldwide?


Microfinance can kick start women entre- preneurs who need resources and advice to optimise their abilities and achieve prosper- ity. The way to implement this is for govern- ments to encourage groups in remote villag- es to set up one stop shops that fund, assist and guide women on how to maximise their abilities and earnings.


You are founder and Chair of the APPG for Business Development in Iraq and the Re- gions. To what extent is business develop- ment important to Iraq’s reconstruction?


The APPG has been recreated since the general election and is the All-Party Parlia- mentary Group for Economic Development in Iraq and the Region. Economic develop- ment and external finance are crucial to the redevelopment of Iraq.


Obviously there is huge potential wealth tied up in the country’s vast oil and gas reserves, however for Iraq to develop into a fully diver- sified, stable and prosperous country, Iraq needs to attract a diverse range of business- es so the economy is not so reliant on one predominate industry.


International businesses operating in Iraq, as well as the growth of domestic business will stabilise and diversify the country’s economy, providing multiple sources of wealth, employment, infrastructure and ulti- mately development. gif


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