My Lords, I congratulate my noble friend Lord Popat on securing this debate and on his excellent speech. I also welcome my noble friend the Minister to her new role on the Front Bench.
I was born and brought up in east Africa. I am a strong supporter of the Commonwealth and the African countries. I have visited a number of countries overseas and know their ambassadors and high commissioners in London. I have also met members of their diaspora in the United Kingdom.
I have spoken in your Lordships’ House several times previously on various aspects of trade with the Commonwealth and the African countries. Today, I will talk specifically about the Islamic finance market in the United Kingdom and the opportunities to promote this in the Commonwealth and the African countries.
I declare an interest as the co-chair of the All-Party Parliamentary Group on Islamic Finance. My background is in financial services and I have a long and strong connection with the City of London. In fact, my full title is Baron Sheikh, of Cornhill in the City of London. The APPG is a robust body and enjoys strong cross-party support in both Houses of Parliament.
The UK has the largest Islamic finance industry outside the Muslim world. We have five fully sharia-compliant licensed banks and 20 banks offering Islamic finance services. We were the first western nation to secure a sovereign sukuk. The net assets of Islamic funds in the UK are $728 million, and 65 sukuks issued at $48 billion have been listed on the London Stock Exchange.
The global market for Islamic financial assets grew by 7% last year and it stood at $2.3 trillion at the end of December 2016. With global Muslim population numbers expected to rise from 1.6 billion in 2010 to 2.8 billion in 2050, the demand for Islamic finance products and instruments will indeed continue to grow.
Islamic finance is also an attractive proposition for non-Muslim consumers who wish to have a more ethical form of finance. Although penetration of the industry as a whole is low, the levels of public awareness and understanding of Islamic financial products and services are increasing. I believe that there are still considerable opportunities to develop and grow Islamic finance in Muslim and non-Muslim countries, particularly across Africa and the Commonwealth.
The APPG on Islamic Finance aims to promote the understanding and development of Islamic finance in the UK as well as in overseas countries. The UK has been providing Islamic financial services for more than 40 years, while government policy over the last decade has created a fiscal and regulatory framework that encourages the growth of Islamic finance.
Services in the UK are offered by financial intermediaries, asset managers, insurance providers and more than 30 international law, accountancy and consultancy firms. A number of them attended the stakeholders meeting that I will refer to later. The UK is the leading centre of Islamic finance education training, with four professional institutions and nearly 70 universities and business schools offering Islamic finance courses and degrees.
The APPG believes that, by harnessing our status as the leading western hub, Islamic finance can offer a great way to build new relationships and access new overseas markets. This is particularly important post Brexit. As the global market for Islamic finance expands, UK organisations and institutions are well placed to help develop, support and optimise Islamic finance frameworks within the emerging sectoral markets where there is growing domestic demand.
This very point was made at the dinner that the APPG recently hosted in London for 30 guests. They represented around 16 countries and were visiting London for the Global Islamic Finance and Investment Group, which is an important platform to discuss the global opportunities and barriers facing Islamic finance. We can certainly play a role in this regard.
Last week, the APPG held its inaugural stakeholders meeting, which was attended by 30 Islamic finance practitioners. The discussion addressed the very matter of exporting our Islamic finance capability, and there was a desire among the stakeholders to be more involved in overseas activities. I believe the time is now right to better understand the global demand and develop a UK proposition that meets this need.
DfID can play a greater role in achieving this objective. I had a meeting with DfID about three weeks ago to discuss the matter, and we were pleased that DfID attended last week’s stakeholders meeting. It has a growing interest in Islamic finance from a financial inclusion and development perspective. We welcomed DfID’s suggestion of working with the APPG and the stakeholders to develop export opportunities for the UK Islamic finance sector.
In conclusion, I believe that our domestic capabilities, coupled with the growing demand for Islamic finance in Africa and Commonwealth countries, present a great opportunity for the UK to export its expertise in this area. I request that the Government, regulators and our Islamic finance industry work together to showcase our capability in Islamic finance at a global level.
What are my noble friend’s views on the export of Islamic finance activities, and would she would be willing to work with the APPG and the stakeholders to promote these activities?