Our series: Ethics in Business – Are we aware of the ‘Iagos’ in our midst?

Reading Time: 12 minutes

Firoz1
By Firoz Abdul Hamid

Emir Abdul Qadir al-Jazairi was an Algerian Islamic scholar, political and military leader and a successful merchant in the 19th century. When the French invaded Algeria in 1830, Abdul Qadir fought the French colonialism. It was reported on one occasion he released his French captives because he had insufficient food to feed them. Jazairi was forced to surrender in 1847 to the French and went into exile to France until 1852 with his family. This is when he devoted himself to theology and philosophy and also wrote a book on the Arab horse.

The French as well as Abraham Lincoln honoured him for saving the lives of many Christians in his own home in 1860 when the Druze attacked Christians in Syria. Amongst the people he defended was the French counsel; the people who colonised his country. There were also reports that when he was in prison many of the prison guards in France became Muslims, just witnessing the nobility of his character. In 1865 he was invited to Paris by Napoleon III and was greeted with respect. His green and white standard became the flag of independent Algeria. The town of Elkader, USA was named after him, and it is said that there are a total of 3 cities named after him in the USA.

Abdul Qadir al-Jaiziri’s struggles were founded on sound ethics that brought forgiveness and justice to the fore even in the face of betrayal and persecution. Many writers quote Jaiziri as one of the many true faces of the Muslim faith. Some have even called him “The Last Muslim”.

In the face of so many challenges that Muslim nations face around the world today, organisations like OIC (Organisation of Islamic Cooperation) not only face practical questions like what are priority issues, but more importantly what should the most apt response be to these issues for these times?

One of the chief successes of the Ottoman Empire was its expansion of business across the globe. Historians have commented that the ethics of trade and commerce in the Grand Bazaar in Constantinople was one of the reasons to the success. It operated differently from our modern trade. Indifference to profit, absence of envy over the successes of other traders and a single and correct price were peculiar traits of the Ottoman bazaar during its golden age. The reason for this ethics lied partly in the ethics of Islam, and partly in the guild system which was first introduced by the Ottomans. The guild system provided a strong social security net to the merchants.  The Bazaar’s merchant guilds prevented monopoly and promoted development of traders of the same good. One English traveller wrote that despite the immense wealth in the Bazaar during centuries thievery occurred extremely seldom. This was in the 19th century during the Tanzimat age.

Today, with 57 member state countries, the OIC holds just under 7 per cent of the world’s GDP. That said, many of the member countries have been blessed with abundance and possibly the highest natural resource capacity in the world. Have these countries reached its optimal potential in its competitiveness and if not – why not?  Why haven’t the traits of the Ottoman golden era recurred here? What exactly are the priorities of the OIC in promoting business competitiveness among its member states? The following conversation with the Secretary General of the OIC, His Excellency  Professor Dr. Ekmeleddin Ihsanoglu, discusses the OIC’s priorities on business ethics.

For theatre and Shakespeare lovers, the play Othello the Moor of Venice reminds us of how vile non-fact based whispers can be on the closest of relationships. In Othello, the character Iago plays the role of the archetypal villain where he would manipulate all other characters, controlling their “wills” by ensnaring them into an intricate web of lies. He does this by getting into the fold of confidence of all characters and playing on their weaknesses while they see him as “honest” Iago. Herein lie many of the predicaments of business and ethics in our own reality today. Too often we know not or are oblivious of the “Iagos” in our midst; sacrificing the very thing we may have worked to build within moments. Perhaps the global markets today stand at the junction of the ethics of Abdul Qadir al-Jaiziri and the whispers of Iago. If we truly are students of history, we will search our conscience for the right route to take for our markets and businesses.

OIC
“…the OIC has also become an indispensable player at the international level in many domains, notably in the realms of dialogue among civilizations, defending the image of Islam and combating the phenomenon of Islamophobia.”

His Excellency Professor Dr Ekmeleddin Ihsanoglu

Organisation of Islamic Cooperation (OIC) Secretary-General

1) Ethics in Business- What is your understanding of Ethics in Business? What is its role in the world today? How is OIC addressing this?

Islam places the highest emphasis on ethical values in all aspects of human life including business. From the Islamic point of view, the ethical business drives its principle from the Islamic law based on the Holy Quran. It relies on a set of values, ideals and morals, such as honesty, credibility, transparency, clear evidence, facilitation, cooperation, complementarity and solidarity, which are fundamental in ensuring stability, security and safety for all those involved in business and financial transactions. In fact, all of these factors basically serve one of the most important objectives of Islam: Ensuring and maintaining socio-economic justice in human society. The reflection of this objective on economic and financial aspects of life has been formulated with some principles of the Islamic law.

Given the fact that the current crisis has clearly shown the weakness of the conventional banking and financial system, the resilience of Islamic institutions to the current financial turmoil has led many analysts, particularly in the developing countries,  to come to a conclusion that Islamic finance and the Islamic banking system could provide the solution to the weakness of the conventional financial system and could be a feasible alternative. In this regard, Islamic finance is expected to spread increasingly at the international level and the number of customers is also expected to grow as people search for an alternative banking system.

Islamic finance is well endowed to deliver noteworthy contributions towards a healthier and more stable international economy. Similarly, the honest implementation of Islamic business and finance is potentially capable of solving, and in all, probability averting such crisis from happening, simply because most, if not all of the factors that have caused or contributed to the development and the spread of the crisis are not allowed under the rules and guidance of Shariah. Opportunities for Islamic business and finance are enormous, and so are the challenges.

One of the major initiatives of the OIC towards addressing challenges arising from the global financial crisis is the progressive development of Islamic financial products. The OIC, through its relevant institutions such as IDB Group and SESRIC, is promoting the increased popularisation of Islamic financial products in OIC member states.

2) Global ethics – What are the OIC’s initiatives in leading global ethics? How do you reconcile faith and creed when it comes to ethics?

Being aware of the importance of providing the emerging enterprises among the OIC member states with a wide range of alternative financial products and solutions, the OIC has sought to popularise Islamic economics and finance and promote Islamic financing and social finance products such as Zakat and Awqaf. It has also sought to create different fora for the key players in the management of the economies and finance in member states for exchange of views and experiences as well as policy harmonisation. The measures taken in this regard include interfacing with its institutions and other partners with a view of devising ways and means of mainstreaming the cooperation in the financial sector among member states. In this connection, OIC institutions  are developing modalities for sharing best practices among OIC member states for promotion of traditional social finance, namely the institutions of Zakat and Awqaf, thereby making them part of the broader framework of  financial sector reforms in OIC member states.

The performance of the Awqaf Properties Investment Fund (APIF) under the IDB Group over the recent years has demonstrated the potential of institutions like Awqaf in contributing to the socio-economic development of the communities in OIC member and non-member states with significant Muslim populations. The fund that started with 9 shareholders contributing $51 million to its capital, and had, by the end of 2011, grown to 15 shareholders. During that financial year the fund approved funding of projects worth $178.8 million.

Similarly, the Islamic Solidarity Fund, another Waqf-based OIC institution, has since its establishment in the year 1976 till December 31, 2012 funded a number of social, cultural, educational and health projects throughout the Muslim world with a total sum of $201 million covering 2,349 projects, for the purpose of uplifting their educational, cultural, religious and social standards.

In the same vein, a series of international conferences on Zakat organised by the Islamic Research and Training Institute (IRTI) of IDB Group in collaboration with the governments of Jordan and Kuwait and the International Islamic Fiqh Academy (IIFA) have made significant recommendations aimed at improving the institutions of Zakat and Waqf. The relevant OIC institutions are collaborating to ensure the operationalisation of these recommendations especially concerning the establishment a forum among Zakat institutions for the purpose of the coordination of Zakat on this important matter.

Similarly, the widening of national stakeholders and institutions for the implementation of this cooperation framework has become evident in organising the 8th International Conference on Islamic Economics and Finance (ICIEF). The 9th edition of ICIEF is scheduled to take place on September 9-11, 2013,  in Istanbul, Turkey, under the theme “Growth, Equity and Stability: An Islamic Perspective” where Turkey is a co-organiser with both IDB and SESRIC.

Furthermore, OIC member states and institutions continue to attend and follow-up on the outcome of the OIC  Annual Meetings of Central Banks and Monetary Authorities of the OIC member states whose sessions for 2013 and 2014 will be held in Saudi Arabia and Indonesia, respectively. It is worth giving due visibility to the activities of the OIC Stock-Exchange Forum in coverage of OIC events.

islamic finance13) OIC economies – Why haven’t the principles of Islamic economy been adopted by global institutions? What is the role of the OIC in this field?

As one of the fastest growing segments in the global financial services industry, Islamic finance has become systemically important in many OIC countries and too big to ignore in some others. The global market for Islamic financial services, as measured by the total volume of Shariah compliant assets, is estimated to have reached $1.1 trillion at the end of 2011. OIC countries, with a collective share of 98 per cent in these assets, continue to be the main actors in the industry’s impressive growth story.

While conventional intermediation is to a large extent debt-based and allows for the transfer of risk, Islamic intermediation, in contrast, is asset-based and centers on the sharing of risk between the depositor, bank and the entrepreneur. Although these characteristics leave Islamic financial institutions with additional operational burdens, these features make their activities more closely related to the real economic activity and tend to reduce their contribution to financial anomalies, such as excessive risk-taking and speculation on prices.

With challenges ahead, the global growth of the Islamic economy and finance, which is free from interest and speculation, is subject to an ethical code, which would be gradual in the long term. Given the financial turmoil which has recently hit the global economy, Islamic banking that is free from speculation has proven to be a sound financial system alternative, and it deserves to be looked into. However, the wealth created would be real, more equitably and profitably distributed, and would encourage spin-offs into real economy, creating jobs and increasing trade both domestically and internationally.

The role of the OIC in this field is on the national, inter-OIC and the global level.

While a number of OIC member states and institutions continue the popularisation of Islamic economy and finance, we need to address the following issues at all levels:

  • Building a well-functioning Islamic finance infrastructure which is imperative for providing the industry with a level playing field.
  •  Transforming the Islamic finance model into working policies and building enabling institutions to overcome the challenges of implementing Islamic finance at global stage.
  • Ensuring that the supervisory and legal infrastructure for Islamic finance remain relevant to the rapidly changing Islamic financial landscape and global developments. Infrastructure development efforts should interface with the global financial reform agenda.
  • Providing greater convergence and harmonisation of regulations and products among the member countries which is needed to facilitate an efficient and sustainable growth of the industry. Synchronisation of policies and actions across different jurisdictions and markets in the group of OIC countries is a major task and therefore, a broad-based and constructive strategic platform to build cross-border consensus is necessary. This is also important for the promotion of financial stability within the Islamic financial system.
  • Focusing on the opportunities in the field of infrastructure by promoting appropriate Islamic instruments, such as Sukuk, innovating new products, and cooperating with the regional and international development organisations in this area.
  • Developing the industry and improving its competition skills needed for the establishment of large, well-managed and operationally efficient Islamic financial institutions that can compete in the global arena; better accounting, auditing and disclosure standards; developing of a macro-prudential surveillance framework; improving the rating process and transparency, as well as capacity building.
  • Above all, addressing these challenges will require that the stakeholders of Islamic finance in the OIC countries conjoin their efforts in developing the needed human capital and broadening the skills base of the industry.

4) Food and nutritional security – There is growing disparity in access to food and security for food. The rate of consumption varies across the globe, and 1 billion of the global population still go to sleep hungry.  What role can OIC play in such an environment?

Agriculture is considered to be the primary economic activity in the majority of the 57 OIC member states and more than 52 per cent of the OIC population lives in rural areas and depends on this sector. A significant number of OIC member states figure among the top 20 producers of major agricultural commodities.

With a total land area of more than 3 billion hectares and a total population of more than 1.5 billion, the OIC member states accounted for 24 per cent of the world total land area and 22.45 per cent of its total population. With a total agriculture area of more than 1.4 billion hectares, the OIC member states account for 28.59 per cent of the world’s agricultural area where 38 per cent of its total population is employed.

Undoubtedly, the agriculture sector is extremely vulnerable to climate change mainly due to its higher dependence on climate and weather conditions. The impact of climate change on some important indicators like temperature, rainfall, soil moisture and carbon dioxide are very crucial for the agriculture sector and food production across the globe. Being a substantial part of the developing world, OIC member states are no exception and most of them are expected to experience high losses in their agriculture production due to the negative impact of climate change.

Recognising the importance of developing strategic agricultural commodities and competitive agro-industries for generating employment and income opportunities in the majority of OIC member states, the OIC developed a number of programmes on the development of strategic agricultural commodities. In this vein, the OIC’s renewed emphasis on agriculture and rural development is aimed at attaining food security and eradicating the pervasive poverty among the rural poor, especially women and children. In this regard, OIC has resorted to enhancing multi-stakeholder’s partnership on food security with regional and international organiszations, even as it seeks to support national processes to achieve sustainable food self-sufficiency. To this end, the Islamic Development Bank (IDB) launched the landmark $1.5 billion Jeddah Food Initiative in 2008. This programme is aimed at assisting the least developed countries of the OIC to increase their agricultural production and create adequate stock of food grains. Under this initiative, 27 projects are being executed to date. This arrangement has established counterpart funding mechanisms with the Food and Agricultural Organisation (FAO) and the International Fund for Agricultural Development (IFAD), respectively.

Islamic ethics5) Role of media – What, in your view, is the role media and citizen journalism can play in instituting ethics in business?

Media can play an important role in boosting businesses transactions and creating new partnerships through advertising, marketing and by shaping the minds of the target audience. Hence, media in their various forms – print, broadcast and electronic – are potential tools in imparting ethical values and morals among businesses. However, such move rests within the hands of media owners and media professionals whether or not they care much about infusing ethical values in business companies and among entrepreneurs.

The OIC, through its various agreements in the fields of economy and business and through its various organisations operating in business domains including the Standing Committee for Economic and Commercial Cooperation (COMCEC), the Islamic Development Bank, the Islamic Center for the Development of Trade (ICDT), the Science, Technology and Innovation Organisation (STIO) and other similar affiliated OIC institutions, does vitally consider Islamic values as an essential amalgam in trade and business partnerships within and among OIC member states. It is, after all, up to individuals themselves directly involved in business transactions to adhere or not to ethical principles and noble values when executing any particular business dealings, an endeavor which remains of challenge not only to the OIC and its member states, but to every businessman and businesswoman.

Prof. Dr. Ekmeleddin Ihsanoglu is a Turkish academic, diplomat and currently the Secretary-General of the Organisation of Islamic Cooperation (OIC), the second largest intergovernmental organisation after the United Nations. He is known in particular for his qualities as diplomat, international officer, academician, intellectual, founder and member of academic institutions, author and editor of numerous publications and advocate of intercultural dialogue. He is the first ‘democratically elected’ Secretary-General of the OIC. Being at the helm of the sole intergovernmental international organisation representing the whole Muslim world, Ihsanoglu took major steps bringing about a significant paradigm shift in the OIC which included, among others, such essential instruments as the ‘Ten-Year Programme of Action to Face the Challenges of the Twenty-first Century’, the new ‘OIC Charter’, changing the name and the logo of the organisation, establishing of the ‘Executive Committee’, adopting the criteria for membership and observer members, establishing new departments in the General Secretariat such as the humanitarian and family affairs departments, establishing new institutions within the OIC system, e.g. the ‘OIC Independent Permanent Human Rights Commission’ (IPHRC), the ‘Science, Technology and Innovation Organisation’ (STIO) and the ‘Special Organ for the Development of Women’. Ihsanoglu has gained international recognition for his major contribution to the rapprochement between cultures, particularly between the Muslim world and the West. He is one of the signatories of ‘A Common Word’, an open letter by Islamic scholars to Christian leaders, calling for peace and understanding. Within the framework of his mission as Secretary-General of the OIC, Ihsanoglu took several initiatives to reform the OIC’s agenda and strategies in various fields under the motto ”modernisation and moderation”. Ihsanoglu attached importance to increasing the role and effectiveness of the OIC in solving problems and contributing to progress and cooperation among the OIC member states in various areas of development, including science and technology, transport and communications, tourism, as well as fostering trade among the member states, with particular attention to the least developed countries among them. The achievements realised during his tenure in the field of economic and commercial cooperation is of particular significance. Ihsanoglu has written books, articles and papers in different languages on science, history of science, relations between the Muslim world and the Western world. The ’Ihsanoglu Gold Medal’ award was initiated by the International Union of History and Philosophy of Science (IUHPS) in the name of Ihsanoglu; the first of which was awarded to Barcelona University faculty member Dr. Jose Bellver Martinez for his work in the field of the history of astronomy. It was presented at a ceremony in Budapest on August 1, 2009, in which Ihsanoglu himself participated.

 

See other posts on Ethics in Business:

Ethics in Business: Perception of sleepwalking

Ethics in Business: Facing medical ethics head on in Malaysia

Ethics in Business: A take on business ethics in the US

Ethics in Business: Moving Islamic finance from conference rooms to humanity

Ethics in Business: Walking the ethical track in Malaysia a perspective

Ethics in Business: Soul of ethics in the new Dubai

Ethics in Business: A conversation with Professor Tariq Ramadan

Ethics in Business: Where is the education for narcissistic leaders

Ethics in Business. With whom does the heartbeat of a nation lie, Part 1

Ethics in Business: With whom does the heartbeat of a nation lie, Part 2

Ethics in Business: Fair trade or fair game, who benefits really

Ethics in business: What moves the conscience when mortality is at stake

Please: CSR is not Ethics in Business

Panel discussion: Medical ethics (plus video)

 

(Firoz Abdul Hamid is an Inside Investor contributor. The opinions expressed are her own.)

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Reading Time: 12 minutes

Reading Time: 12 minutes

Firoz1
By Firoz Abdul Hamid

Emir Abdul Qadir al-Jazairi was an Algerian Islamic scholar, political and military leader and a successful merchant in the 19th century. When the French invaded Algeria in 1830, Abdul Qadir fought the French colonialism. It was reported on one occasion he released his French captives because he had insufficient food to feed them. Jazairi was forced to surrender in 1847 to the French and went into exile to France until 1852 with his family. This is when he devoted himself to theology and philosophy and also wrote a book on the Arab horse.

The French as well as Abraham Lincoln honoured him for saving the lives of many Christians in his own home in 1860 when the Druze attacked Christians in Syria. Amongst the people he defended was the French counsel; the people who colonised his country. There were also reports that when he was in prison many of the prison guards in France became Muslims, just witnessing the nobility of his character. In 1865 he was invited to Paris by Napoleon III and was greeted with respect. His green and white standard became the flag of independent Algeria. The town of Elkader, USA was named after him, and it is said that there are a total of 3 cities named after him in the USA.

Abdul Qadir al-Jaiziri’s struggles were founded on sound ethics that brought forgiveness and justice to the fore even in the face of betrayal and persecution. Many writers quote Jaiziri as one of the many true faces of the Muslim faith. Some have even called him “The Last Muslim”.

In the face of so many challenges that Muslim nations face around the world today, organisations like OIC (Organisation of Islamic Cooperation) not only face practical questions like what are priority issues, but more importantly what should the most apt response be to these issues for these times?

One of the chief successes of the Ottoman Empire was its expansion of business across the globe. Historians have commented that the ethics of trade and commerce in the Grand Bazaar in Constantinople was one of the reasons to the success. It operated differently from our modern trade. Indifference to profit, absence of envy over the successes of other traders and a single and correct price were peculiar traits of the Ottoman bazaar during its golden age. The reason for this ethics lied partly in the ethics of Islam, and partly in the guild system which was first introduced by the Ottomans. The guild system provided a strong social security net to the merchants.  The Bazaar’s merchant guilds prevented monopoly and promoted development of traders of the same good. One English traveller wrote that despite the immense wealth in the Bazaar during centuries thievery occurred extremely seldom. This was in the 19th century during the Tanzimat age.

Today, with 57 member state countries, the OIC holds just under 7 per cent of the world’s GDP. That said, many of the member countries have been blessed with abundance and possibly the highest natural resource capacity in the world. Have these countries reached its optimal potential in its competitiveness and if not – why not?  Why haven’t the traits of the Ottoman golden era recurred here? What exactly are the priorities of the OIC in promoting business competitiveness among its member states? The following conversation with the Secretary General of the OIC, His Excellency  Professor Dr. Ekmeleddin Ihsanoglu, discusses the OIC’s priorities on business ethics.

For theatre and Shakespeare lovers, the play Othello the Moor of Venice reminds us of how vile non-fact based whispers can be on the closest of relationships. In Othello, the character Iago plays the role of the archetypal villain where he would manipulate all other characters, controlling their “wills” by ensnaring them into an intricate web of lies. He does this by getting into the fold of confidence of all characters and playing on their weaknesses while they see him as “honest” Iago. Herein lie many of the predicaments of business and ethics in our own reality today. Too often we know not or are oblivious of the “Iagos” in our midst; sacrificing the very thing we may have worked to build within moments. Perhaps the global markets today stand at the junction of the ethics of Abdul Qadir al-Jaiziri and the whispers of Iago. If we truly are students of history, we will search our conscience for the right route to take for our markets and businesses.

OIC
“…the OIC has also become an indispensable player at the international level in many domains, notably in the realms of dialogue among civilizations, defending the image of Islam and combating the phenomenon of Islamophobia.”

His Excellency Professor Dr Ekmeleddin Ihsanoglu

Organisation of Islamic Cooperation (OIC) Secretary-General

1) Ethics in Business- What is your understanding of Ethics in Business? What is its role in the world today? How is OIC addressing this?

Islam places the highest emphasis on ethical values in all aspects of human life including business. From the Islamic point of view, the ethical business drives its principle from the Islamic law based on the Holy Quran. It relies on a set of values, ideals and morals, such as honesty, credibility, transparency, clear evidence, facilitation, cooperation, complementarity and solidarity, which are fundamental in ensuring stability, security and safety for all those involved in business and financial transactions. In fact, all of these factors basically serve one of the most important objectives of Islam: Ensuring and maintaining socio-economic justice in human society. The reflection of this objective on economic and financial aspects of life has been formulated with some principles of the Islamic law.

Given the fact that the current crisis has clearly shown the weakness of the conventional banking and financial system, the resilience of Islamic institutions to the current financial turmoil has led many analysts, particularly in the developing countries,  to come to a conclusion that Islamic finance and the Islamic banking system could provide the solution to the weakness of the conventional financial system and could be a feasible alternative. In this regard, Islamic finance is expected to spread increasingly at the international level and the number of customers is also expected to grow as people search for an alternative banking system.

Islamic finance is well endowed to deliver noteworthy contributions towards a healthier and more stable international economy. Similarly, the honest implementation of Islamic business and finance is potentially capable of solving, and in all, probability averting such crisis from happening, simply because most, if not all of the factors that have caused or contributed to the development and the spread of the crisis are not allowed under the rules and guidance of Shariah. Opportunities for Islamic business and finance are enormous, and so are the challenges.

One of the major initiatives of the OIC towards addressing challenges arising from the global financial crisis is the progressive development of Islamic financial products. The OIC, through its relevant institutions such as IDB Group and SESRIC, is promoting the increased popularisation of Islamic financial products in OIC member states.

2) Global ethics – What are the OIC’s initiatives in leading global ethics? How do you reconcile faith and creed when it comes to ethics?

Being aware of the importance of providing the emerging enterprises among the OIC member states with a wide range of alternative financial products and solutions, the OIC has sought to popularise Islamic economics and finance and promote Islamic financing and social finance products such as Zakat and Awqaf. It has also sought to create different fora for the key players in the management of the economies and finance in member states for exchange of views and experiences as well as policy harmonisation. The measures taken in this regard include interfacing with its institutions and other partners with a view of devising ways and means of mainstreaming the cooperation in the financial sector among member states. In this connection, OIC institutions  are developing modalities for sharing best practices among OIC member states for promotion of traditional social finance, namely the institutions of Zakat and Awqaf, thereby making them part of the broader framework of  financial sector reforms in OIC member states.

The performance of the Awqaf Properties Investment Fund (APIF) under the IDB Group over the recent years has demonstrated the potential of institutions like Awqaf in contributing to the socio-economic development of the communities in OIC member and non-member states with significant Muslim populations. The fund that started with 9 shareholders contributing $51 million to its capital, and had, by the end of 2011, grown to 15 shareholders. During that financial year the fund approved funding of projects worth $178.8 million.

Similarly, the Islamic Solidarity Fund, another Waqf-based OIC institution, has since its establishment in the year 1976 till December 31, 2012 funded a number of social, cultural, educational and health projects throughout the Muslim world with a total sum of $201 million covering 2,349 projects, for the purpose of uplifting their educational, cultural, religious and social standards.

In the same vein, a series of international conferences on Zakat organised by the Islamic Research and Training Institute (IRTI) of IDB Group in collaboration with the governments of Jordan and Kuwait and the International Islamic Fiqh Academy (IIFA) have made significant recommendations aimed at improving the institutions of Zakat and Waqf. The relevant OIC institutions are collaborating to ensure the operationalisation of these recommendations especially concerning the establishment a forum among Zakat institutions for the purpose of the coordination of Zakat on this important matter.

Similarly, the widening of national stakeholders and institutions for the implementation of this cooperation framework has become evident in organising the 8th International Conference on Islamic Economics and Finance (ICIEF). The 9th edition of ICIEF is scheduled to take place on September 9-11, 2013,  in Istanbul, Turkey, under the theme “Growth, Equity and Stability: An Islamic Perspective” where Turkey is a co-organiser with both IDB and SESRIC.

Furthermore, OIC member states and institutions continue to attend and follow-up on the outcome of the OIC  Annual Meetings of Central Banks and Monetary Authorities of the OIC member states whose sessions for 2013 and 2014 will be held in Saudi Arabia and Indonesia, respectively. It is worth giving due visibility to the activities of the OIC Stock-Exchange Forum in coverage of OIC events.

islamic finance13) OIC economies – Why haven’t the principles of Islamic economy been adopted by global institutions? What is the role of the OIC in this field?

As one of the fastest growing segments in the global financial services industry, Islamic finance has become systemically important in many OIC countries and too big to ignore in some others. The global market for Islamic financial services, as measured by the total volume of Shariah compliant assets, is estimated to have reached $1.1 trillion at the end of 2011. OIC countries, with a collective share of 98 per cent in these assets, continue to be the main actors in the industry’s impressive growth story.

While conventional intermediation is to a large extent debt-based and allows for the transfer of risk, Islamic intermediation, in contrast, is asset-based and centers on the sharing of risk between the depositor, bank and the entrepreneur. Although these characteristics leave Islamic financial institutions with additional operational burdens, these features make their activities more closely related to the real economic activity and tend to reduce their contribution to financial anomalies, such as excessive risk-taking and speculation on prices.

With challenges ahead, the global growth of the Islamic economy and finance, which is free from interest and speculation, is subject to an ethical code, which would be gradual in the long term. Given the financial turmoil which has recently hit the global economy, Islamic banking that is free from speculation has proven to be a sound financial system alternative, and it deserves to be looked into. However, the wealth created would be real, more equitably and profitably distributed, and would encourage spin-offs into real economy, creating jobs and increasing trade both domestically and internationally.

The role of the OIC in this field is on the national, inter-OIC and the global level.

While a number of OIC member states and institutions continue the popularisation of Islamic economy and finance, we need to address the following issues at all levels:

  • Building a well-functioning Islamic finance infrastructure which is imperative for providing the industry with a level playing field.
  •  Transforming the Islamic finance model into working policies and building enabling institutions to overcome the challenges of implementing Islamic finance at global stage.
  • Ensuring that the supervisory and legal infrastructure for Islamic finance remain relevant to the rapidly changing Islamic financial landscape and global developments. Infrastructure development efforts should interface with the global financial reform agenda.
  • Providing greater convergence and harmonisation of regulations and products among the member countries which is needed to facilitate an efficient and sustainable growth of the industry. Synchronisation of policies and actions across different jurisdictions and markets in the group of OIC countries is a major task and therefore, a broad-based and constructive strategic platform to build cross-border consensus is necessary. This is also important for the promotion of financial stability within the Islamic financial system.
  • Focusing on the opportunities in the field of infrastructure by promoting appropriate Islamic instruments, such as Sukuk, innovating new products, and cooperating with the regional and international development organisations in this area.
  • Developing the industry and improving its competition skills needed for the establishment of large, well-managed and operationally efficient Islamic financial institutions that can compete in the global arena; better accounting, auditing and disclosure standards; developing of a macro-prudential surveillance framework; improving the rating process and transparency, as well as capacity building.
  • Above all, addressing these challenges will require that the stakeholders of Islamic finance in the OIC countries conjoin their efforts in developing the needed human capital and broadening the skills base of the industry.

4) Food and nutritional security – There is growing disparity in access to food and security for food. The rate of consumption varies across the globe, and 1 billion of the global population still go to sleep hungry.  What role can OIC play in such an environment?

Agriculture is considered to be the primary economic activity in the majority of the 57 OIC member states and more than 52 per cent of the OIC population lives in rural areas and depends on this sector. A significant number of OIC member states figure among the top 20 producers of major agricultural commodities.

With a total land area of more than 3 billion hectares and a total population of more than 1.5 billion, the OIC member states accounted for 24 per cent of the world total land area and 22.45 per cent of its total population. With a total agriculture area of more than 1.4 billion hectares, the OIC member states account for 28.59 per cent of the world’s agricultural area where 38 per cent of its total population is employed.

Undoubtedly, the agriculture sector is extremely vulnerable to climate change mainly due to its higher dependence on climate and weather conditions. The impact of climate change on some important indicators like temperature, rainfall, soil moisture and carbon dioxide are very crucial for the agriculture sector and food production across the globe. Being a substantial part of the developing world, OIC member states are no exception and most of them are expected to experience high losses in their agriculture production due to the negative impact of climate change.

Recognising the importance of developing strategic agricultural commodities and competitive agro-industries for generating employment and income opportunities in the majority of OIC member states, the OIC developed a number of programmes on the development of strategic agricultural commodities. In this vein, the OIC’s renewed emphasis on agriculture and rural development is aimed at attaining food security and eradicating the pervasive poverty among the rural poor, especially women and children. In this regard, OIC has resorted to enhancing multi-stakeholder’s partnership on food security with regional and international organiszations, even as it seeks to support national processes to achieve sustainable food self-sufficiency. To this end, the Islamic Development Bank (IDB) launched the landmark $1.5 billion Jeddah Food Initiative in 2008. This programme is aimed at assisting the least developed countries of the OIC to increase their agricultural production and create adequate stock of food grains. Under this initiative, 27 projects are being executed to date. This arrangement has established counterpart funding mechanisms with the Food and Agricultural Organisation (FAO) and the International Fund for Agricultural Development (IFAD), respectively.

Islamic ethics5) Role of media – What, in your view, is the role media and citizen journalism can play in instituting ethics in business?

Media can play an important role in boosting businesses transactions and creating new partnerships through advertising, marketing and by shaping the minds of the target audience. Hence, media in their various forms – print, broadcast and electronic – are potential tools in imparting ethical values and morals among businesses. However, such move rests within the hands of media owners and media professionals whether or not they care much about infusing ethical values in business companies and among entrepreneurs.

The OIC, through its various agreements in the fields of economy and business and through its various organisations operating in business domains including the Standing Committee for Economic and Commercial Cooperation (COMCEC), the Islamic Development Bank, the Islamic Center for the Development of Trade (ICDT), the Science, Technology and Innovation Organisation (STIO) and other similar affiliated OIC institutions, does vitally consider Islamic values as an essential amalgam in trade and business partnerships within and among OIC member states. It is, after all, up to individuals themselves directly involved in business transactions to adhere or not to ethical principles and noble values when executing any particular business dealings, an endeavor which remains of challenge not only to the OIC and its member states, but to every businessman and businesswoman.

Prof. Dr. Ekmeleddin Ihsanoglu is a Turkish academic, diplomat and currently the Secretary-General of the Organisation of Islamic Cooperation (OIC), the second largest intergovernmental organisation after the United Nations. He is known in particular for his qualities as diplomat, international officer, academician, intellectual, founder and member of academic institutions, author and editor of numerous publications and advocate of intercultural dialogue. He is the first ‘democratically elected’ Secretary-General of the OIC. Being at the helm of the sole intergovernmental international organisation representing the whole Muslim world, Ihsanoglu took major steps bringing about a significant paradigm shift in the OIC which included, among others, such essential instruments as the ‘Ten-Year Programme of Action to Face the Challenges of the Twenty-first Century’, the new ‘OIC Charter’, changing the name and the logo of the organisation, establishing of the ‘Executive Committee’, adopting the criteria for membership and observer members, establishing new departments in the General Secretariat such as the humanitarian and family affairs departments, establishing new institutions within the OIC system, e.g. the ‘OIC Independent Permanent Human Rights Commission’ (IPHRC), the ‘Science, Technology and Innovation Organisation’ (STIO) and the ‘Special Organ for the Development of Women’. Ihsanoglu has gained international recognition for his major contribution to the rapprochement between cultures, particularly between the Muslim world and the West. He is one of the signatories of ‘A Common Word’, an open letter by Islamic scholars to Christian leaders, calling for peace and understanding. Within the framework of his mission as Secretary-General of the OIC, Ihsanoglu took several initiatives to reform the OIC’s agenda and strategies in various fields under the motto ”modernisation and moderation”. Ihsanoglu attached importance to increasing the role and effectiveness of the OIC in solving problems and contributing to progress and cooperation among the OIC member states in various areas of development, including science and technology, transport and communications, tourism, as well as fostering trade among the member states, with particular attention to the least developed countries among them. The achievements realised during his tenure in the field of economic and commercial cooperation is of particular significance. Ihsanoglu has written books, articles and papers in different languages on science, history of science, relations between the Muslim world and the Western world. The ’Ihsanoglu Gold Medal’ award was initiated by the International Union of History and Philosophy of Science (IUHPS) in the name of Ihsanoglu; the first of which was awarded to Barcelona University faculty member Dr. Jose Bellver Martinez for his work in the field of the history of astronomy. It was presented at a ceremony in Budapest on August 1, 2009, in which Ihsanoglu himself participated.

 

See other posts on Ethics in Business:

Ethics in Business: Perception of sleepwalking

Ethics in Business: Facing medical ethics head on in Malaysia

Ethics in Business: A take on business ethics in the US

Ethics in Business: Moving Islamic finance from conference rooms to humanity

Ethics in Business: Walking the ethical track in Malaysia a perspective

Ethics in Business: Soul of ethics in the new Dubai

Ethics in Business: A conversation with Professor Tariq Ramadan

Ethics in Business: Where is the education for narcissistic leaders

Ethics in Business. With whom does the heartbeat of a nation lie, Part 1

Ethics in Business: With whom does the heartbeat of a nation lie, Part 2

Ethics in Business: Fair trade or fair game, who benefits really

Ethics in business: What moves the conscience when mortality is at stake

Please: CSR is not Ethics in Business

Panel discussion: Medical ethics (plus video)

 

(Firoz Abdul Hamid is an Inside Investor contributor. The opinions expressed are her own.)

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