Tapping Funds for Development: A Case for Sukuk...

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Tapping Funds for Development: A Case for Sukuk Financing

Dr. Abdelaziz Chazi 1

Narendar V. Rao2

Lateef A.M.Syed3

Abstract

It is a well-known fact that the infrastructure in many African countries is woefully inadequate. This has persisted for many decades despite the fact that these countries are rich in natural resources. We argue that Islamic bonds may provide a panacea for this chronic problem. This paper presents alternative Sukuk structures that can be considered for this purpose. It is our firm belief that if properly structured, Sukuk can be used as a catalyst for the development of infrastructure projects in African countries.

Background

Infrastructure development in any country requires huge capital investment. Previously this task was the responsibility of governments, particularly in a socialistic economic system. Due to paucity of resources, many of these development projects were not undertaken leaving millions of people in Africa and Asia mired in abject poverty. With the growth of the market-based economic system, which has been adopted by much of the developing world in the last two decades, was a growing demand for these projects to be handled differently. Thus, it was felt that these projects should not only go through the tests of accountability and transparency, but also prove to be financially viable ventures. These projects, when properly structured, had the potential of becoming revenue generating entities thus making them attractive to investors.

1 Associate Professor of Finance, School of Business Administration American University of

Sharjah, P.O. Box 26666, Sharjah, U.A.E. Tel: +97165152329 [email protected] Professor of Finance, College of Business and Management Northeastern llinois University,

5500 N St Louis Ave, Chicago, IL 60625, United States Tel: 7734426158 [email protected]

3 Professor of Finance, Morris Graduate School of Management Robert Morris University, 1000 E Woodfield Rd #100, Schaumburg, IL 60173, United States, Tel: 13129356241 [email protected]

172 Journal of Islamic Economics, Banking and Finance, Vol. 10 No. 3, July - Sep 2014

The major advantage of this change in philosophy is the fact that governments can now have entrepreneurs as financing partners. With the involvement of the private sector, it becomes much easier not only to achieve accountability and transparency but also economic viability of the projects. One such structure that involves investments from both institutions and individuals is a public-private partnership (PPP). There are large development institutions, such as The World Bank (WB), The Islamic Development Bank (IDB), and The African Development Bank (AfDB) that can become partners for economic progress. In addition, a revamped secondary market can attract individuals from oil-rich countries, such as the Middle East, to invest in the infrastructure development projects especially if these were consistent with the Islamic faith.

A 2007 report by Saudi Arabia based Samba Financial Group suggests that the oil producing countries of the Gulf may generate up to $24 trillion in exports of crude oil and gas over the following 20 years. This report also suggests that these cash surplus countries look traditionally to the United States and Europe for investment

opportunities. However, the trend seems to be changing lately as they start looking

for investment opportunities near home. In other words, massive investments could be coming to Middle Eastern and some African countries (Smith, 2007).

This paper presents a case for Islamic securities (Sukuk) as an investment vehicle to tap development funds for growth. Despite the rapid growth of Islamic financial instruments and a growing awareness about Islamic finance, the world has yet to take a robust initiative to fully utilize this largely untapped resource. Sukuk can serve as an excellent alternative to conventional financing and investment tools (Hussin et al. (2012)). In this context, it is worth noting that the sovereign wealth funds (SWFs) of the Gulf Cooperation Council (GCC) countries were estimated at $1.6 trillion at the end of 2012. This represented about 35% of the World Sovereign Wealth Funds. A study by Ignitebiz has noted that the SWFs would likely reach $8 trillion by 2015. If the GCC SWFs maintain their 35 percent share, these funds will potentially be worth $2.8 trillion by 2015.

Attracting funds from GCC or other oil-rich countries requires understanding the investment aspirations of the local populous. Since the majority of the population in this region follows the Islamic faith and would prefer to make their investments compatible with their faith, it is important to tap the resources of the GCC, or oil-rich countries, by issuing long-term securities that comply with Islamic Shari’ah principles. One such financial instrument could be “Sukuk”; a long-term security

173Tapping Funds for Development: A Case for Sukuk Financing

that is framed like a traditional debt security but that does not pay interest in order to meet the requirements of Islamic finance. This is a secondary market instrument in which Western banks are heavily involved through its development and issuance. An instrument such as Sukuk would satisfy the investment aspirations of almost a quarter of the world population, which follows the Islamic faith. In fact, Sukuk have been issued in the past not only by Muslim countries, but had become a source of financing for some Western countries as well. Islamic finance should not be discarded as a faith-based model but should be evaluated purely as an economic model keeping in mind the market realities.

Introduction

Islamic finance is based on two core beliefs of Islam, namely, a no-interest decree and conscientious investing. As a result, traditional Western-style financial markets are, for the most part, inconsistent with Islamic principles. Consequently, Muslims have developed techniques and approaches to incorporate their beliefs into a “socially responsible” Islamic financial system. For instance, Islamic banks provide home financing through intermediary equity positions, charge mark-ups rather than interest, participate in profit/loss sharing plans to supply venture financing, and partake in leasing plans to offer their clients several competitive financial instruments.

Today, Islamic finance has become a US$1 trillion industry and is growing at an estimated annual rate of 10-15%. Conventional multinational banks have realized that Islamic banking provides opportunities to tap into new markets and many like Barclays, Citibank, HSBC and ANZ have started offering Islamic financial

services.

Islamic finance is not only popular among Muslims; rather there is a growing degree of acceptance in Western countries for Islamic financial instruments and the Islamic banking system. The credibility of Islamic finance was enhanced after the recent global financial crisis when it received a complimentary note from none other than the official newspaper of the Vatican. Osservatore Romano wrote that the ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service (Bloomberg, March 2009). However, as noted by Adebayo and Hassan (2013):”for Islamic financial institutions to be viable alternative to the current economic system, the ethical values guiding them should be upheld.”


Literature Review

Even though the concepts of Islamic finance are as old as the establishment of Islamic religion in the Arabian Peninsula, the history of contemporary Islamic finance is hardly 35 years old. Its origins can be traced to the establishment of Dubai Islamic Bank in 1975 (El-Gamal, 2005). Although many books and articles can be found on the general subject of Islamic finance, the development of Sukuk is relatively a more recent phenomenon (Rao & Syed, 2007).

The subject of Islamic finance has not been given as much attention as it should. The two books that serve as roadmap are viz., Vogel and Hayes (1998) and Mallat (edited 1988) and provide clear understanding of Islamic law and finance. The articles by Mahmoud El-Gamal (2001 and 2005) are of significant importance in understanding the prohibition of interest (Riba), while T. Kuran’s article (2005) is thought provoking. A research paper by Dar and Presley (1999) provides a reconciliation of Western literature and the Islamic economic paradigm.

The most comprehensive work on the subject of Sukuk to date is found in a book on Islamic Bonds by Adam and Thomas, Published in 2004 by Euromoney Books, UK. It provides detailed account of origin, structure, and application of Sukuk in the Islamic economy. On the other hand, a paper by Andreas Jobst (2009) summarizes unique elements of sukuk financing and provides perspectives on the regulatory changes that have happened lately.

There has been substantial growth in the area of Sukuk, as evidenced by the issuance of $500 million GE Sukuk in November 2010. This has become an area with opportunities for lawyers, analysts and other knowledgeable Islamic Finance (IF) professionals in the field (Taylor, 2010). Specifically, Islamic scholars play critical and authoritative role in Islamic Finance. Rosly (2010) proposes that, in the Islamic Financial System, the higher authoritative power and role of scholars should be recognized and acknowledged. Their role is as predominant as the legislations they approve can significantly affect the growth of Islamic financial instruments such as Sukuk.

Islamic Financial Instruments

Sukuk

Sukuk is a Shari’ah-compliant financial instrument that is gaining wide acceptance not only in Muslim states, but also in largely non-Muslim countries where it is seen as a very promising instrument to mobilize funds for economic development by


government as well as public-related institutions. Sukuk have specific characteristics that are different from the conventional bonds (Siswantoro, 2013)

Sukuk is an Arabic term and is the plural of “Sakk”, which means “a certificate”. This mode of financing involves the securitization of a tangible asset so that investors could share in its profits and risks. A certificate vesting ownership is issued for this purpose. This would entitle investors to a portion of the income in proportion to their investment. Although often termed ‘Islamic bonds,’ Sukuk differs from a conventional bond in that there should be a true sale where the asset that has been sold should not remain in the books of the seller and should be transferred to the purchaser.

Although a study by Amir Kordvani (2009) argues that the then-proposed (for 2009) Sukuk Al-Ijara structure in Iran was not going to improve the level of efficiency of the banking and financial sector, there are several compelling reasons to suggest the use of Sukuk as a vehicle for development and growth in Africa:

1. Sukuk issuance has reached the level of $131 billion in the year 2012, according to KFH Research, which represents an increase of 54% over 2011.

2. Bond investors are looking for an alternative to the conventional bonds that offers higher returns and longer time maturities, which can be provided by Sukuk.

3. Conventional bond investors are also attracted to Islamic finance because of the premise that Islamic financial institutions are less exposed to highly leveraged organizations.

The Malaysian Model

After becoming an independent sovereign nation in 1957, Malaysia has now become a success story for the countries who are striving for development and growth. Hence, the Malaysian experience can be used as a model for development for African nations. Malaysia has been able to diversify its economy to record development and growth in manufacturing, service sector, as well as in tourism. Islamic finance, which accounts for 23.7 percent of Malaysia’s total banking assets, plays a major role in the economic development of the country. A robust Islamic bond market has been established in the Country wherein 70 percent

of Malaysian domestic debt issuance is in the form of Islamic securities (Sukuk). (i)

In addition, 68.3 percent of the World Sukuk, as of the second quarter of 2011, were issued in Malaysia. The latter also accounted for 62.7 percent of the World

outstanding Sukuk. (ii)


There has been a steady increase in the Sukuk issuance in Malaysia in 2012 as well. In the third quarter of 2012, Malaysia issued USD 31.91 billion of Sukuk. (Zawya Sukuk, Quarterly Bulletin 3Q2012). This was more than all other countries combined. Similarly, The Sukuk issues in Malaysian Ringgit were more than in all other currencies.

i. Text-S&P Report: Malaysia Developing into a major Islamic Bond Market, Reuters February 6, 2012.

ii. Shaping Islamic Finance Together – Malaysia, August 1, 2011.

The above facts clearly establish that Malaysia is the dominant player in the global Sukuk market, and thanks to its history of successful Sukuk issues, it can clearly serve as a model for those countries that aspire to raise money through Sukuk issues. Notwithstanding, this success story it is necessary to examine some of the differences between the Malaysian economy and the current state of economies in African countries. One difference that would be a major hurdle to cross-over is the credit rating. Therefore, we offer at the end of this paper few suggestions to improve the credit rating of Sukuk issues in African countries, which would make these securities more marketable to global investors. It is also interesting to note that 248 issues of Sukuk in Malaysia were oversubscribed, some of them more than 10 times. The following chart shows the overwhelming demand for this type of securities by investors

Source: Zawya database

The two Sukuk models that have been used in Malaysia are as follows:


Figure 1

Malaysia Global Sukuk

Source: Zawya database.

Based on the Malaysia Global Sukuk Model presented above, a corporate (which could be an international company) with a high credit rating can set up a project and issue Sukuk to raise funds. Since credit rating of Sukuk in an African nation would be a challenge, the issuance of Sukuk by an international company would boost the credit rating that may correspond to the credit rating of the international company itself. The government of the country can become an equity holder by selling land in lieu of equity share in the project. Alternatively, the government can collect money by sale of land if it decides not to hold any equity stake in the project. In this case, the international company (issuer of Sukuk) can pay for land out of the proceeds from sale of Sukuk. An international company with a strong credit rating would have better prospects for marketing their Sukuk to Gulf investors. These could be for long-term projects where the international company would have the opportunity to operate the project for a reasonable time beforeselling it to a third party or to the government of the country.


Figure 2

Malaysia Airports project

Source: Zawya database

Following the Malaysian Airports Sukuk model, an African nation can also create a Special Purpose Vehicle ( SPV) as the issuer of Sukuk. The Government can invest in this project by providing land. Alternatively, the Government can collect money from the SPV for selling land, and the SPV can make the payment out of the proceeds from the sale of Sukuk (bond certificates to international investors). Once the project is completed, the SPV can lease it to third parties to operate it. In this case, the SPV will collect the lease rentals from the third parties and use that revenue to make periodic distribution to Sukuk holders. This model is suitable for projects that are set up on a BO T (Build-Operate-Transfer) format. At the end of the term, the project can be sold and proceeds can be used to make the dissolution distribution to the Sukuk holders. If the Government remains as an equity investor in the project by providing land, it would also receive a share in the dissolution distribution.

The Gambia

The Gambia is one of the smallest countries in Africa. It is surrounded by Senegal on all sides except a 60-kilometer stretch next to the Atlantic Ocean. It has a population of approximately 1.7 million. Despite its small size, its economy has been performing very well with a real GDP growth rate averaging between 5 and 6


percent in the past few years. However, one cause for concern is the raising public domestic debt. The fiscal deficit, which was 2.8% of GDP in 2009 rose to 4.9% in 2010. Domestic public debt rose from 19.7% in 2009 to 26.9 % in 2010. In November 2007, and in order to effectively conduct i t s monetary policy, the government of The Gambia issued a new Shari’ah compliant financial instrument called Sukuk-Al-Salam (SAS). This instrument has been issued since then on a weekly basis and usually has a three month tenor. It has been issued primarily as a liquidity management tool. The Gambia's shift to Sukuk was a wise decision to diversify its sources of funding by tapping the wealth of Muslim investors and those who want to invest their money in Shari’ah compliant instruments. Given its prior experience in issuing Sukuk, the government of The Gambia is well positioned to issue Shari’ah-compliant securities for the funding of development projects that can raise living standards and improve the lives of people in this impoverished African nation.

We strongly believe that Islamic finance can be used as a catalyst for development of African countries. Hence, in order to undertake infrastructure projects in Africa, and besides the two Malaysian Sukuk models presented above, we present below three other models that use Sukuk as an instrument to raise funds.

1. Sukuk issued by African Development Bank (AfDB):

No African country enjoys an AAA credit rating. As a result, any security issued by an African country may not receive the intended positive response from investors. Therefore, we suggest that the African Development Bank could issue Sukuk under the following operational details:

1. Initially, as the majority project owner, the AfDB would raise the funds by issuing Sukuk. Once the project is completed, AfDB would transfer the project to the highest bidder either from the public or private sector in the country where the project is located. This would also be the maturity value that would eventually be distributed among the Sukuk holders based on the participation agreement. This can be implemented in the light of economic policies adopted by the country.

2. AfDB would create a pool of assets that come from or are identified by different African countries as underlying assets for the Sukuk issuance. These could include untapped oil and gas reserves and other mineral resources of African nations.


3. AfDB would create project companies in different countries where there is a need and possibility of initiating a feasible infrastructure project. Since AfDB would be initiating the project, it would probably prefer to Build and Transfer to the host country or private investors. The purpose, under this first model, is to recycle the long-term funds raised by AfDB.

4. The country in which the project is initiated would have 25 percent stake in the project, another 24 percent would come from private sources in the same country, and AfDB would hold the remaining 51% ownership. The host government will contribute land and other material assets as their 25 percent share in the project as a substitute to cash. Initially, the 24% stake that is meant for private investors’ could be offered to citizens of the host country. In the event that the latter could not avail themselves of such an investment opportunity, this stake could be contributed by investors from other regions, otherwise AfDB could increase its share of ownership.

5. The project company – such as a special purpose vehicle (SPV) – would be created only for the purpose of the project and would be dissolved once the project has been completed.

6. The AfDB would initiate the project. It would do so at the invitation of the host country. Alternatively, AfDB could also recommend to the host country to join AfDB in a potentially good project with an offer that AfDB would be willing to invest in that particular project.

7. The oil and gas reserves and mineral resources could be used as collateral for the Sukuk issue. However, this would not be mandatory as the Sukuk structure requires investors to take some risk. Risk-taking is an important element of Islamic Finance. However, the collateral would enhance the marketability of Sukuk and broaden its appeal to non-Muslim investors.

8. To make the bond issue more attractive, the Sukuk should offer a competitive yield. This may be based on LIBOR plus a certain percentage. The potential investors could be from any part of the world. An obvious target market for this security would be investors from the oil-rich Middle Eastern countries due to their financial resources. Investors could also be sovereign funds, private equity groups or individuals in non-Islamic countries as well.

9. Different investment banks have their own Shari'ah boards. These boards would certify the Shari'ah compliance of the Sukuk. These investment banks would also work closely with AfDB to market the Sukuk.


Figure 4

Model II

3. Sukuk issued by a private company (SPV)

The third model suggests that the Project Company (SPV) would issue the Sukuk. The host country’s sovereign government would have a minority (24%) equity stake in the project. Another 25% would come from private investments. The SPV could also be created by a multinational company through its 51% contribution stake in the issue of Sukuk.

A few distinct features of the third model are as follows:

the host country may be difficult, the model suggests a split of 49% equity stake between domestic and foreign investors in the ratio of 25% and 24% respectively.

2. The project could follow the model of Build, Operate, and Transfer (BOT) or simply, a model of Build and Transfer (BT).

3. There would still be a need to create a Special Purpose Vehicle (SPV) to build and operate the project.

4. Other operational modalities would remain the same as in Model I.


i. There would be a minority stake of the sovereign government, thus reducing hurdles in the decision making process. Since the project company would be created by a multinational company, it would bring its own professional expertise to build and manage the project.

ii. This could be implemented on the Build and Operate (BO) model.

iii. Other operational modalities would remain the same as in Model I.

Figure 5

Model III

Some Key Issues in Sukuk Financing

Currency

It may not be prudent to issue Sukuk in the currency of the country where the project company is located unless that country has a fixed rate of exchange with the U.S. dollar such as Malaysia. For instance, if the project company was


based in Egypt and the Sukuk were denominated in Egyptian pounds, the returns to the investor would be reduced if the Egyptian currency depreciated against the U.S. dollar. This would make the Sukuk less attractive to foreign investors. Therefore, project companies in African countries that aspire to tap the Islamic Finance market to raise funds for infrastructure projects should ensure that the Sukuk are denominated in U.S. dollars which is still the dominant global currency.

Credit Rating

The uncertain current global economic climate has made investors risk-averse especially with regard to securities issued in emerging markets in Asia and Africa. Therefore, any Sukuk issue below Investment Grade may not evoke a favorable response from investors. The key issue here is to structure the Sukuk in such a way that it meets the requirements for being assigned the minimum investment grade rating of BBB-/Baa3. Most African countries do not qualify for investment grade rating. So the challenge for Africa-based project companies that issue Sukuk will be to penetrate the sovereign rating barrier. Therefore, these countries need to explore ways in which a project Sukuk could get an investment grade rating even if the country, in which the project company is based, does not enjoy such a rating. We argue that it is possible to do so as evidenced by the Oceansa Oil Pipeline project in Columbia, which was able to maintain an investment grade rating even after the credit rating of Columbia was downgraded to below investment grade status.

Revenue Contracts

The credit worthiness of a project is based to a large extent on the stability of its revenue stream. The more stable the revenue stream, the more likely the bond issue is to get a good rating. The manner in which the contracts issued by the project company are structured, as well as the rating of the counter parties will play a key role in the rating decision. For example, denominating the Sukuk issue in some internationally accepted currency such as U.S. dollars, may give the issue greater credibility and help the project company achieve an investment grade rating for its Sukuk issue.

Economics of the Project

The financial viability of the project will be critical in gaining regulatory and political support. The rating decision will be influenced by the support received by the project company.


Risk Mitigation and Debt Service Coverage

The steps taken by the project company to mitigate technology risk as well as the quality and stability of debt service coverage will be important factors in the rating decision.

Government Support

Support from the host government in some form will help the Sukuk issue achieve an investment grade rating. The rating agency is likely to examine the track record of the government and its financial flexibility before it makes its rating decision. The rating agency would like the host government to give a firm commitment to secure the debt servicing obligation in case the project company is delinquent with respect to its obligation to investors. However, given the precarious financial condition of many African governments, it is a moot point whether they would grant the kind of financial support that would constitute a contingent liability.

Credit Enhancement

In order for the Sukuk to secure an investment grade rating, the project company should consider some form of credit enhancement such as a provision of cash collateral or obtaining a guarantee by an insurance company and/or the project sponsor (state or provincial government). Other options include issuance of subordinate securities by the project company and issuing senior debt with a put option attached. The project sponsor, namely the host government, could invest in a portion of this debt. This is likely to provide support to the senior debt and would be useful for risk mitigation purposes. The put option would allow the investors to put or sell back their bonds to the project company or to an alternate guarantor.

Summary and Conclusion

It is a well-known fact that the infrastructure in many African countries is woefully inadequate. This has persisted for many decades despite the fact that these countries are rich in natural resources. We argue that Islamic bonds may provide a panacea for this chronic problem.

There is tremendous surplus wealth in Middle Eastern countries brought about by the sharp rise in oil and gas prices in recent years. The amount of assets under management by sovereign wealth funds such as that of Abu Dhabi is truly staggering. There is also a very large number of HNIs (High Net worth Individuals) in these countries. These investors would be particularly interested in financial instruments


that are consistent with their Islamic faith. They would also be inclined to invest in these instruments if they know that the money raised would be used to fund infrastructure projects in impoverished African countries and make a positive impact on the lives of millions of people. These Shari’ah compliant instruments would also appeal to non- Muslim investors provided that these instruments offer an attractive rate of return and are collateralized.

This paper has presented alternative Sukuk structures that can be considered for this purpose. It is our firm belief that if properly structured, Sukuk can be used as a catalyst for the development of infrastructure projects in African countries.

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Authors’ Biography

Professor Houssem Rachdi

Professor Houssem Rachdi holds a Ph.D. as well as a M.Sc and a B.Sc in Financial and Banking Economics. Dr. Rachdi is a financial economist with consulting, research and teaching experiences in financial development, economic growth, corporate and banking performance, bank risk taking, institutions quality, banking and financial crises, prudential and banking supervision, corporate governance. Dr.Rachdi teaches in the areas of Microeconomics, Macroeconomics, Financial Engineering, Corporate Finance, Financial Accounting, Cash Management, Management Performance, Management Quantitative Techniques, Statistics and Probability his publications appeared in many international referred journals such as in the Journal of Islamic Economics, Banking and Finance, Procedia Social and Behavioral Sciences Journal, International Journal of Islamic and Middle Eastern Finance and Management, Journal of Islamic Accounting and Business Research, Review of Economic Perspectives, Journal of Empirical Economics, International Journal of Financial Economics, International Journal of Economics, Finance and Management, International Journal of Business and Social Research, Interdisciplinary Journal of Research in Business, Journal of Business Studies Quarterly, International Journal of Business and Management, International Journal of Economics and Finance and Panoeconomicus. Dr. Rachdi is the director of the MBA in Banks and Insurance at the Faculty of Law, Economic and Management of Jendouba and Senior Consultant in Corporate Governance at the French Corporate Governance Association.

Ben Jedidia khoutem

Ben Jedidia khoutem is a Tunisian Assistant Professor of economics at The High Institute of Accounting (ISCAE) (Tunisia) and a Research associate in the research unit in Development Economics (URED, Faculty of economics and management in Sfax, Tunisia). She received a Master's Degree of Advanced Studies in Money, Finance and Banks from Université Lumière Lyon II (France) in 1994, and completed a Ph.D in Economics at Université Lumière Lyon II (France) in 1998. Her first academic job was as an Assistant Professor at the Faculty of economics and


management in Sfax from 1999-2004. Dr. Ben Jedidia’s research focuses on financial intermediation, monetary economics and Islamic finance.

Hichem Hamza

Hichem Hamza holds a “Doctorat in Sciences Economiques” from the University of Clermont-Ferrand, France. He is an Assistant Professor at the University of Manouba and a researcher in monetary policy, Islamic banking and finance at the Laboratoire d’Economie et Finance (ECSTRA). He was a consultant-trainer in banking project management at BBVA Bank, Spain. His research interests include Islamic finance and banking, monetary policy and financial crisis.

Dr Hussein Abdou

Dr Hussein Abdou is currently a Professor of Finance & Banking at The University of Huddersfield Business School, THE (Times Higher Education) University of the Year, 2013. He held various positions and most recently Reader at The University of Salford Business School. He previously worked at The University of Plymouth Management School where He completed his PhD and Mansoura University, Egypt. His academic background is in Finance & Banking, including credit risk management, Islamic banking & finance, and applications of non-parametric modelling techniques such as neural networks and genetic programming in Finance and Banking; whilst his professional background is in building scoring models for banks in a number of developing countries. Also, he developed MSc and PG Cert. Islamic Banking & Finance, The University of Salford Business School, UK, 2010/2012. Professor Abdou is a member of The Islamic Studies Network, UK; External reviewer and marker for CIMA Certificate in Islamic Finance in the UK; and a member of the RMA (Risk Management Association) Serving the Financial Services Industry (USA). Also he is affiliated with The Centre for Maritime Logistics, Economics and Finance (CEMLEF) at The University of Plymouth School of Management, UK. As an expert in Islamic Banking & Finance, Professor Abdou is a member of the Editorial board of a number of International Peer Reviewed Journals including International Journal of Islamic and Middle Eastern Finance and Management and Global Islamic Finance Magazine. As an active researcher in Finance, Professor Abdou has widely published in international peer reviewed journals including International Financial Markets, Institutions and Money, Expert Systems with Applications, International Business Review, Intelligent Systems in Accounting, Finance and Management, Journal of Risk Finance, International Journal of Managerial Finance, and International Journal of Islamic and Middle Eastern Finance and Management.


Omar A. Muslem

Omar A. Muslem comes from Republic of Yemen, and attended the University of Salford, Manchester, UK, where he received his master degree in International Banking and Finance in 2010. During his years at Salford University, Mr. Omar has pursued studies related on Islamic Banking, international banking, Islamic Finance, investments, monetary economics and risk management. His senior essay ‘’Risk Management Practices in republic of Yemen: Are Islamic banks different?’’. He is currently working in private sector in financial department.

Rifki Ismal

Rifki Ismal is both a central banker and associate professor at the Economics Department, University of Indonesia, Jakarta Timur, Jakarta, Indonesia, He earned bachelor degree in economics from University of Indonesia, master in economics from University of Michigan, ann arbor (USA) and PhD in Islamic economics and Finance from Durham University (England). An Associate Professor in Islamic Banking and Finance is from the Australian Government (Australian Center for Islamic Financial Studies). Besides lecturing in some universities in Indonesia such as University of Indonesia, IPB, ITB, he ever lectured at Strasbourg University (France). Last year, he published a book titling: Islamic Bank in Indonesia (John Wiley and Sons) and this year (2014) he contributes a chapter on Indonesian Islamic finance in another John Wiley and Sons titling: Handbook of Islamic Finance. Moreover, he has published more than 30 articles in reputable international journals such Review of Islamic Economics (England); Journal of Islamic Banking and Finance (Pakistan); Journal of Islamic Economics, Banking and Finance (Bangladesh); IQTISAD International Journal of Islamic Economics (Indonesia – Malaysia); International Journal of Management Research (India dan University of Philadelphia, USA); ISRA International Journal of Islamic Finance (Malaysia); Gajah Mada International Journal of Business (Indonesia); Kyoto Bulletin of Islamic Studies (Kyoto University, Japan); Al-Liqa Journal (Palestine) and; ones published by Emerald Journal Series (England) for examples Humanomics International Journal of system and ethic; International Journal of Islam and Middle Eastern Finance and; Journal of Studies in Economics and Finance.

Dr. Sutan Emir Hidayat Dr. Sutan Emir Hidayat is an assistant professor and academic advisor for Islamic

finance at University College of Bahrain. Dr. Hidayat obtained his PhD and MBA in

Islamic Banking and Finance from International Islamic University Malaysia (IIUM).


Dr. Hidayat is actively engaged with academic research. He has presented several

papers at reputable international conferences such as IRTI conferences in Indonesia,

Malaysia and Qatar, AAOIFI-World Bank Annual Conference on Islamic Banking

and Finance (2011 and 2012) in Bahrain, GRM 2012 at University of Cambridge, UK

and 11th Harvard University Forum on Islamic Finance held at Harvard Law School,

Cambridge, Massachusetts, USA. Dr. Hidayat has also published several research

papers in peer reviewed international journals. Among them are Journal of

Economics and Finance, CCSE, International Research Journal of Finance and

Economics, International SAMANM Journal of Finance and Accounting, Journal of

US-China Public Administration, Journal of Pedagogical and Innovations and other

reputable journals. .In addition, he is also a reviewer for the International Journal of

Islamic and Middle Eastern Finance and Management, Emerald, a member of

editorial board of SAMANM journals During his academic career, he has completely

supervised and examined 21 MBA theses. He also contributed chapters in three

books and regularly publishes articles in Islamic Finance News (IFN)-Red Money

and other reputable magazines, newspapers and databases. At IFN, Dr. Hidayat has

been appointed as a sector correspondent for Takaful and Re-Takaful. In early 2013,

Dr. Hidayat was involved in developing examination questions for Certified Islamic

Professional Accountant (CIPA), a professional certificate offered by AAOIFI. Dr.

Hidayat also serves as a member of advisory committee for centre of Islamic finance

and external research associates at Bahrain Institute of Banking and Finance (BIBF).

He is also an active member of Indonesian community serving as the vice president

of Indonesian community in Bahrain (Nov 2012-Oct20013), the chairman for the

Association of Indonesian Islamic Economists (IAEI)-Bahrain Chapter and a

commissioner of the special task force for the 2014 Indonesian general election

(PPLN) in Bahrain.

Dr. Hafiz Majdi Abdul Rashid

Dr. Hafiz Majdi Abdul Rashid is an Associate Professor at the Department of

Accounting, Faculty of Economics & Management Sciences, International Islamic

University Malaysia. He graduated with a Bachelor of Accounting (Honours) degree

from the International Islamic University Malaysia and obtained his Master's in

Accounting and Finance and PhD in Accounting and Finance from Lancaster

University, United Kingdom. His research interests are in financial accounting and

reporting, capital market-based accounting research and corporate governance.


Dr. Sheila Nu Nu Htay

Dr. Sheila Nu Nu Htay is a Ph.D Programme Coordinator at Institute of Islamic Banking and Finance, International Islamic University Malaysia (IIUM). Her areas of expertise cover Accounting for Islamic banks, Takaful and Re-takaful Companies and Islamic capital markets. Dr. Sheila holds a Bachelor, Master and Phd in Accounting from International Islamic University, Malaysia. She has presented several research papers at national and international conferences and had a number of articles published in peer-reviewed academic journals. She has written the books in the area of financial reporting, corporate governance and Takaful. She has experience of training locally as well as internationally related to Islamic banking and finance.

Mohammed Rosli Mohammed Sain

Mr Sain is a former banker (in Malaysia) for over 20 years in the area of Recovery

and Credit Control, Banking Litigation, Risk Management and Credit Operations. He

holds a Bachelor degree in business (honours) majoring in International Business and

a graduate certificate in Islamic Law. He is currently a final year student of Master in

Business Research in the field of Islamic Finance with the School of Commerce,

University of Southern Queensland, Australia.

Dr Mafizur Rahman

Dr M. M. Rahman is a senior Lecturer in Economics at the University of Southern

Queensland, Australia. Obtaining First Class Honours and M.Sc. degrees in

Economics from Jahangirnagar University, Bangladesh, Dr Rahman gained Graduate

Diploma and Masters Degree in Economics of Development from The Australian

National University, Canberra, and a PhD degree in Economics from the University

of Sydney, Australia. He has 25 years of teaching and research experience both in

Bangladeshi and Australian universities, many research publications published from

different professional journals including Journal of Economic Issues, Journal of

Biosocial Science, Journal of the Asia Pacific Economy, Journal of Developing Areas

and Economic Issues, and conference papers presented in the USA, UK, Canada,

Australia, New Zealand, Spain, Denmark, China, Japan and South Korea. Dr Rahman

has successfully supervised many PhD students, and examined a good number of

PhD theses.


Rasheda Khanam

Dr Khanam is a senior Lecturer at the University of Southern Queensland. She gained a PhD in Economics from the University of Sydney. Prior to coming to Australia for her PhD research she was an Assistant Professor of Economics at the University of Chittagong, Bangladesh. In addition to her teaching commitments at the USQ, the UQ, the University of Sydney and the University of Chittagong over a period of 16 years, Dr Khanam has been actively involved with research in the areas of Health Economics and Development Economics. She has published in prestigious economics journals including the Journal of Health Economics, Journal of Biosocial Science, Health Economics and the Journal of Economic Issues.

Titi Dewi Warninda

Titi Dewi Warninda is a Lecturer at Faculty of Economics and Business, Syarif Hidayatullah State Islamic University, Jakarta, Indonesia. She received her Bachelor degree from Faculty Of Economics, Gadjah Mada University and Master degree in Finance from Graduate Program in Management, Faculty of Economics, University of Indonesia. Her research interests are in the area of finance, Islamic banking, and Islamic finance.

Nurul Huda

Nurul Huda is The Head of Magister Management Programme in YARSI University, Jakarta. He received his B.A degree from Andalas Univeristy in 1993, the M.Si. degree on Islamic Economic and Finance from Middle East and Islamic Studies Programme in Universitas Indonesia, Jakarta, in 2004, and the Ph.D degree in Islamic Economics from Universitas Airlangga, Surabaya, in 2013, respectively.He has held lecturing positions at YARSI University, Post Graduate Programme Universitas Indonesia, Az Zahra University, STIE Trinanda and STIE Tazkia. He is currently a Senior Lecturer at YARSI University, Jakarta, Indonesia. Dr. Huda has actived in various organizations such as The Indonesian Association of Islamic Economist (IAEI) as a one of the chairman, a member of Cooperation Commitee of Sharia Economic Community (MES) and others. His current research interest include Islamic Ecomonic and Finance. He has published many articles in news papers and magazine about Sharia economics, also scientific papers on Islamic Economics theme which has been published in national and international scientific journal. Dr. Huda and his collagues has published several books, such as An Exclusive Introduction to Islamic Economics, Islamic Capital Market Investment, Islamic Macroeconomics: Theoritical Approach, Current Issue of Islamic Financial Institution, Islamic


Financial Institution: Theoritical and Practical Review, Islamic Public Finance Approach Abu Yusuf Al-Kharaj, etc. He is also active as speaker at national forums in theme related to Islamic Economics.

Desti Anggraini

Desti Anggraini was born at Jakarta, Indonesia in 1980. She is currently a staff at Middle East and Islamic Studies Programme, Universitas Indonesia since 2007.She received B.A in agriculture from Institut Pertanian Bogor (IPB), Bogor, in 2003 and the M.Si. degree in Islamic Economic and Finance from Middle East and Islamic Studies Programme in Universitas Indonesia, Jakarta, in 2005. Shehas actived in The Indonesian Association of Islamic Economist (IAEI) as a one of secretary. Her current research interest is on Islamic Economics, involved in several scientific research and community engagement programme related to Sharia Economics funded by DIKTI and Universitas Indonesia, Jakarta.

Khalifah Muhammad Ali

Khalifah Muhammad Ali was born in1986. He is currently a lecturer at Islamic

Economic Departement, Faculty of Economic and Management at Institut Pertanian

Bogor (IPB), Bogor, Indonesia. He received B.A in forestry from Institut Pertanian

Bogor (IPB), Bogor, in 2009 and the M.Si. degree in Islamic Economic and Finance

from Middle East and Islamic Studies Programme in Universitas Indonesia, Jakarta,

in 2013. He also had studied Arab Linguistic for his undergraduate programme from

Lembaga Ilmu Pengetahuan Islam Arab (LIPIA), Jakarta and currectly now he is

completing for bachelor degree from Sharia Faculty of LIPIA, Jakarta.

Novarini

Novarini, was born at Riau, Indonesia, in 1980. She received B.A. degree in Economics from Universitas Riau, Riau, in 2002, and M.Si. degree on Islamic Economic and Finance from Middle East and Islamic Studies Programme in Universitas Indonesia, Jakarta, in 2008. She is currently has a lecturing positions at STIE Muhammadiyah, Jakarta, since 2009. She also has held lecturing positions atMiddle East and Islamic Studies Programme in Universitas Indonesia from 2010-2011. She also had position as The Chaiman of STIE Muhammadiyah Research Institute until 2015. Her current research interest is on Islamic Economics, involved in several scientific research and community engagement programme related to Sharia Economics funded by DIKTI and Universitas Indonesia, Jakarta.


Yosi Mardoni

Yosi Mardoni, was born at Padang, in 1984. He recieved B.A. in economics from Economic Science Departement, Universitas Andalas, Padang, in 2008, and M.Si. degree on Islamic Economic and Finance from Middle East and Islamic Studies Programme in Universitas Indonesia, Jakarta, in 2012. He is currently have lecturer position in several university. His current research interest in on Islamic Economics, specially Zakah, and have involved in several scientific research about zakah which result has been publish in national and international scientific Journal. He is a member of The Indonesian Association of Islamic Economist (IAEI), and involed in community engagement programme conducted by The Middle East and Islamic Studies Programme in Universitas Indonesia.

Dr. Kazi Fayz Ahamed

Dr. Kazi Fayz Ahamed is an Associate Professor of Management at Dhaka Commerce College, Dhaka. In additional duty, currently he is working as the Director of BBA Professional Program at the same institute. Dr. Ahamed is also a tutor of BBA and PGDM Program at Open University, Bangladesh. Dr. Ahamed received B.Com. (Hons.) in Management, M.Com. in Management, M.Phil. in Management, and also Ph.D. in Management from the University of Dhaka. Dr. Ahamed has 8 papers published in refereed academic journals such as Dhaka University Journal of Management, Dhaka University Journal of Business Studies, Jagannath University Journal of Business Studies(JUJBS), Journal of Science and Technology, Journal of the Institute of Cost and Management Accountants of Bangladesh, Journal of Socioeconomic Research and Development, and Dhaka Commerce College Journal. Dr. Ahamed is working as a research co-supervisor in the department of International Business, University of Dhaka, Bangladesh. 5 students are doing their M.Phil. and Ph.D. research work under his supervision. Dr. Ahamed is co-author of 6 textbooks namely Fundamentals of Management, Advanced Banking and Insurance, Business Studies, Business Principles and Practice, Principles of Management, Business Organization and Management (NCTB approved). He was a member of the Editorial Board of Dhaka Commerce College Journal. Dr. Ahamed is a qualified Income Tax Practitioner (ITP).

Md. Tarikul Islam

Md. Tarikul Islam is an Assistant Professor in the Department of Finance & Banking of Jahangirnagar University, Bangladesh. He received his graduate education from couple of universities in Europe with Erasmus Mundus Scholarship while


Jahangirnagar University is the home institution for his undergraduate education. From July 2014, he will start his PhD program at Queensland University of Technology, Australia with a research focus on corporate governance and corporate social responsibility. He worked as associate editor and member of editorial board of The Jahangirnagar Journal of Business Studies and in 2013 he edited the first volume of The Jahangirnagar Journal of Finance & Banking.

Mohammad Irfan Shah

Mohammad Irfan Shah born in district Pulwama, (J&K) India in 1987 completed his graduation from Govt. Degree College Pulwama. With a long-cherished dream, he achieved M.A in Islamic Studies at Islamic University of Science and Technology (J&K) and successfully completed this degree by submitting a Mastoral dissertation on “Islamic Banking and Finance as an Academic Discipline” jointly with his companion Mohammad Athar Shahbaz, under the supervision of Dr Showkat Hussain. Having qualified NET/JRF, he is currently registered as a research scholar in the department of Islamic Studies, Aligarh Muslim University, and Aligarh. Besides having a keen interest in participation in the national and international seminars, workshops etc he is engaged in writing of articles and papers on varied topics and has already got published a few research papers in some reputed journals both online as well as offline.

Dr. Showkat Hussain

Dr. Showkat Hussain Dar was born on 1975 in Mohalla Kralteng Sopore(J&K) India. After completing his graduation from Govt. Degree College Sopore he pursued his M.A Islamic Studies and distinguished himself with a Gold medalist in the faculty of Social Sciences, the University of Kashmir. Dr. Showkat Hussain pursued his M.Phill and Ph.D from Centre of Central Asian Studies, the University of Kashmir and was awarded the Doctorate in March, 2009.He has to his credit a good number of International and National publications in the academic journals of repute. His field of specialization is Islamic Jurisprudence, Islamic Finance & Investment and Central Asia. Dr Showkat Hussain is also engaged in conducting, organizing and participating in International and National Seminars and has already presented research papers upon varied themes with relevance to the occasions. The author has a good command on Arabic and Persian as well. Presently he is working in Department of Islamic Studies, Islamic University of Science & Technology, Awantipora (J&K) as Sr. Assistant Professor and is heading the department since 2010.


Abdelaziz Chazi

Abdelaziz Chazi holds a PhD in Finance with backgrounds in Management and Marketing. He has won several international grants and awards including the prestigious Fulbright full scholarship. Dr. Chazi has several publications in the area of Finance, and serves on the editorial board and as a reviewer for a number of academic journals. His past industry experience includes eight years with ExxonMobil Corporation, while his current teaching and consulting interests are in the area of Islamic finance and corporate finance.

Dr. Narendar V. Rao

Dr. Narendar V. Rao obtained his MBA and Ph.D. from the University of Cincinnati,

Cincinnati, Ohio. In addition to the doctorate, he holds three professional

certifications. He is currently a tenured Full Professor of Finance at Northeastern

Illinois University (NEIU), Chicago, Illinois. He has served in a leadership capacity

in several important committees at the Department, College, and University levels at

NEIU. He served as the Head of the Graduate Programs in Business as well as the

Chairperson of the College Faculty Assembly. He is currently the Chairperson of the

Graduate Programs Advisory Committee at NEIU. He played a key role in several

prestigious initiatives at NEIU such as international partnerships and study tours. He

planned and led study tours to Spain, France, Italy, Australia, Fiji, and India (twice).

He will be leading a study tour to Peru In May 2014. He was selected by the

University of Hawaii at Manoa and to participate in a study tour to Malaysia in June

2004. This tour was supported by the Freeman Foundation and the U.S. Department

of Education. He was conferred the Faculty Excellence Award (five times), the

Distinguished Service Award, and the Distinguished Leadership Award at NEIU. He

has extensive international teaching experience and a significant record of scholarly

activities. He has served in academia in the United States for more than 24 years. He

was the Director of the Post Graduate Program in Management at a world-class

private business school in India in 2008. He has been the external adjudicator for

PhD dissertations for several universities in India (Pondicherry University, The

University of Madras, Bharatidasan University, Tiruchirappalli, Nagarjuna

University, as well as Bengal Engineering and Science, Shibpur, West Bengal) and

New Zealand (The University of Waikato, Hamilton, New Zealand).


Lateef A.M Syed

Lateef Syed holds a Ph.D., in finance and a CPA. He has spent about 24 years in the academic field doing teaching and research. Dr. Syed has taught courses in both the areas of finance and accounting at the undergraduate and graduate levels. Dr. Syed is associated with Robert Morris University as a professor, and has been an active member of curriculum committees and a member of the Graduate Council of the University. He is the curriculum chair of finance for the School of Business and at the Morris Graduate School. He has about 15 research-based publications in the US, UK, and Indian journals in the area of privatization, divestments, stock valuation, financial performance, and Islamic finance. He has presented papers on “Diversification, Financing Decision, and Performance” at the Global Conference on Business and Economics in London and on “Use of Sukuk in Project Financing” at the 6th Annual Hawaii International Conference on Business, Hawaii in 2006. His current research interest focuses on Islamic finance and Sukuk. His paper (co-authored), published in United Kingdom, has a study of 2008 financial crisis and its impact on Islamic banks. Dr. Syed was awarded the ICSSR fellowship for research and he has served the Institute of Public Enterprise, a think tank in India from 1990-92.

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