Role of Islamic Banking in Pakistan
roTHE ROLE OF ISLAMIC BANKING IN ECONOMIC DEVELOPMENT IN EMERGING MARKETS
BY HAJARA ADEOLA MD/CEO LOTUS CAPITAL LIMITED A PRESENTATION AT THE ISLAMIC FORUM BUSINESS LUNCHEON LA SCALA, LAGOS NOVEMBER 2007
1
OUTLINE
• • • • • • • • • • • • • • Introduction Effects of the Interest Based system The Islamic Solution The Framework Shari’ah Objectives and Effects Islamic Tools for Prosperity Macroeconomic Efficiency Islamic Banks – An Alternative? Effects on the Economy Financial Institutions Global Islamic Finance Industry Conclusion Our Contact
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The Debt Burden
• • War has been declared on our economies and the weapon is debt ‘relieved of their annual debt repayments, severely indebted countries in Africa could use the funds to save the lives of 21m children in 3yrs and provide 90m girls with basic education’- (UNDP Human Dev Report 1997) Poor nations are told that if they borrow and invest wisely, the will be able to repay their debts and more. In 50yrs the debt has just kept growing:
1980 Developing country debt ($bn) Actual payments of interest + principal ($bn)
Source: IMF World Economic Outlook 2001
•
1990 1259.8 140.6
2000 2140.6 337.8
525.4 73.4
3
Real Consequences of Debt
• • The physical consequences of debt through basic indicators of wellbeing: In 1995, industrialized countries child mortality (no of deaths before age 5 per 1000 live births) = 16 South Asia figure = 109; sub Saharan Africa = 169 (UNDP Human Dev Report 1998) Not surprising given that: In Tanzania debt repayment = 6 times spending on healthcare In Uganda, annual healthcare spending = $2 per person whilst debt repayment = $11.5 per person (Jubilee 2000)
• • • • •
4
Contradictions
• The multilateral banks promote the borrow/invest/export/repay development model Yet, not one developing country has gone into debt with the IMF and World Bank and subsequently paid it off The typical response to budget and trade deficits in the developing world is an
BY HAJARA ADEOLA MD/CEO LOTUS CAPITAL LIMITED A PRESENTATION AT THE ISLAMIC FORUM BUSINESS LUNCHEON LA SCALA, LAGOS NOVEMBER 2007
1
OUTLINE
• • • • • • • • • • • • • • Introduction Effects of the Interest Based system The Islamic Solution The Framework Shari’ah Objectives and Effects Islamic Tools for Prosperity Macroeconomic Efficiency Islamic Banks – An Alternative? Effects on the Economy Financial Institutions Global Islamic Finance Industry Conclusion Our Contact
2
The Debt Burden
• • War has been declared on our economies and the weapon is debt ‘relieved of their annual debt repayments, severely indebted countries in Africa could use the funds to save the lives of 21m children in 3yrs and provide 90m girls with basic education’- (UNDP Human Dev Report 1997) Poor nations are told that if they borrow and invest wisely, the will be able to repay their debts and more. In 50yrs the debt has just kept growing:
1980 Developing country debt ($bn) Actual payments of interest + principal ($bn)
Source: IMF World Economic Outlook 2001
•
1990 1259.8 140.6
2000 2140.6 337.8
525.4 73.4
3
Real Consequences of Debt
• • The physical consequences of debt through basic indicators of wellbeing: In 1995, industrialized countries child mortality (no of deaths before age 5 per 1000 live births) = 16 South Asia figure = 109; sub Saharan Africa = 169 (UNDP Human Dev Report 1998) Not surprising given that: In Tanzania debt repayment = 6 times spending on healthcare In Uganda, annual healthcare spending = $2 per person whilst debt repayment = $11.5 per person (Jubilee 2000)
• • • • •
4
Contradictions
• The multilateral banks promote the borrow/invest/export/repay development model Yet, not one developing country has gone into debt with the IMF and World Bank and subsequently paid it off The typical response to budget and trade deficits in the developing world is an
Bibliography: • • • • • • Sayyid Tahir Dr. Kabbara Tarek El Diwany Lotus Capital Research Hannover Re Sh. Taqi Usmani 25