The UK must grow its Islamic finance sector to tap new markets in the aftermath of ‘Brexit’, according to British politician Baroness Sayeeda Warsi.
Baroness Warsi was the UK’s first Muslim minister, holding the post of Conservative minister for faith and communities between 2012 and 2014.
While in post, she established and co-chaired the government’s first Ministerial Task Force on Islamic Finance, which led to the issuance of the country’s £2 billion ($2.4 billion) Islamic bond, or ‘sukuk’, in 2014.
In an interview with Arabian Business in Dubai, Baroness Warsi said there was rising demand for Islamic finance in the UK but the range of products “is not up to standard” – preventing Islamic banks from competing with conventional rivals.
She also said that developing the UK’s Islamic finance offer was increasingly important in the aftermath of its vote to leave the European Union (EU), in order for the country to “genuinely feel it is part of a global community”.
Baroness Warsi, who suffered Islamophobic abuse from the British public after she switched from the ‘Remain’ to ‘Leave’ camp in the run-up to the EU referendum in June, said: “I felt that Brexit was a real opportunity for Britain to set out its store, as an international player. We’re a member of the United National Security Council, head of the Commonwealth, part of NATO and of forums all across the world where we sit on the top table, and I felt it was a moment to say ‘Hello World’.
“What I found, unfortunately, as the Brexit campaign progressed, was that those of us who were Hello World-ers were sidelined and the overwhelming Brexit message came instead from the ‘Little Islanders’ – who resonated a xenophobic message pushed by political parties such as UKIP [the UK Independence Party].
“It’s important now that we’re going to leave the EU that we genuinely feel we are part of a global community, because a Britain on its own, without Europe, is not going to be as successful as one that reaches out and is welcoming of the world.”
She added: “I think Islamic finance can be a way of leveraging this sense of community.”
However, the sector, which she has previously estimated to be worth at least $1.85 trillion globally, is being held back by a limited range of products and lower quality service provision.
“Demand [for Islamic financing] is gathering momentum in the UK,” she said. “But the problem is the range, or diversity, of products is not there or products are not up to standard.
“The kind of service that you will get from an Islamic bank in the UK will not be of the same quality as that from a conventional bank because they simply do not have a wide enough customer base to justify the same scale of high street presence.
“So it’s that ‘but’ we need to get over. We mustn’t have a situation where you have a great principle [ethical finance] but great products do not come out of it.
“We can’t have a lesser product just because it’s got better principles, we’ve got to have both.”
Baroness Warsi was preparing to speak publically at the fourth annual Ethical Finance and Innovation Challenge and Awards (EFICA), administered by Abu Dhabi Islamic Bank (ADIB) and Thomson Reuters.
The awards are designed to reward innovations that promote ethical practice in the financial services industry, and this year the shortlist included a sharia-compliant real estate crowdfunding platform.
Baroness Warsi said she hoped Islamic finance could eventually play a greater role in funding international development and other charitable aims.
Recently appointed as pro vice-chancellor of the University of Bolton, supporting its Islamic finance department, Baroness Warsi said her “hands were too full” at present to continue advising the UK government on ethical finance in any formal capacity. However, she said: “Certainly, Islamic finance is one of those areas I will continue to push, and I believe it’s something the Treasury, Foreign Office and [new UK prime minister] Theresa May need to take on again very seriously.”For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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