“Humankind’s most valuable untapped natural resource,” said former UN secretary-general Ban Ki Moon. “Women are the largest untapped reservoir of talent in the world,” said US Democrat presidential candidate Hillary Clinton. And in the Holy Quran (3:195): “...I will not suffer the work of any worker among you to be lost, whether male or female, the one of you being from the other...” said the Prophet (pbuh). In this day and age it hardly needs to be said, but women hold the key to enormous economic power. So what, asks LAUREN MCAUGHTRY, is the Islamic finance industry doing to help and harness this potential?
Muslims are expected to account for 30% of the world’s population by 2050, and the stage has already been set for the contribution the Islamic dollar will make to the global economy. But the female economic opportunity is equally exciting — and while much has already been written about this trend, it is sadly rare that we see headline news highlighting concrete progress.
The Islamic finance industry has not been backward in its support for women — far from it. In Malaysia, women hold some of the most influential positions in the industry. In the GCC, women’s net worth is predicted to grow 15% to US$258 billion by 2023 (according to PwC) and institutions such as Dubai Islamic Bank are already providing female-focused services such as Johara Ladies to leverage this. In the UK, former Merrill Lynch banker Samina Akram launched the Women in Islamic & Ethical Finance Forum in 2015 to international support. “We learn so much from people’s stories, their struggles, what has motivated them, what inspired them. Also more importantly, these inspirational role models in turn motivate, encourage and inspire others,” explained Samina to IFN. “The long-term goal of WIEFF is to become an active think tank for the industry. We hope WIEFF can assist and play an important role to support and inspire female talent.”
Setting the stage
This is a worthy goal indeed. But it is not in the UK that women suffer from daily discrimination, not in the UK that women cannot access financing, not in the UK that women are frequently paid less or nothing for their labor, or are barred from accessing jobs. “Even in the industrialized world, no country offers women the same degree of opportunity as men,” says EY. “And in developing nations, there are often substantial barriers to women earning a living.” According to the latest UN figures, the global male employment-to-population ratio stands at 72.2% compared to just 47.1% for women. And even when they do work, globally women earn on average 60-75% of men’s wages for the same job. “Women are more likely to be wage workers and unpaid family workers; women are more likely to engage in low-productivity activities and to work in the informal sector, with less mobility to the formal sector than men,” confirms the UN.
Opening the door
But what would happen if this changed? The answer, apparently, is an economic revolution.
If the global wage and employment participation gap was closed, women could increase their income by up to 76% — which would have a global value of US$17 trillion, according to the UN. Not convinced? Try the latest calculations from EY. In their recent report on ‘Women: The Next Emerging Market’, the firm estimates that over the next decade, the impact of women on the global economy will be at least as significant as that of the world’s top two emerging markets. “In the next five years, the global incomes of women will grow from US$13 trillion to US$18 trillion. That incremental US$5 trillion is almost twice the growth in GDP expected from China and India combined.” By 2028, women will control 75% of discretionary spending worldwide. Women already own almost half of all global businesses, and nearly half of those businesses are in emerging markets. And on the corporate side, the average return on equity for companies with a diverse management board is 25%, compared to 9% for a uniform board.
Or how about the new research from McKinsey Global Institute, released in September 2015, which found that advancing women’s economic equality could add between US$12-28 trillion to global growth? “This impact is roughly equivalent to the size of the combined Chinese and US economies today,” pointed out McKinsey analysts. “The public, private and social sectors will need to act to close gender gaps in work and society.” And this doesn’t just apply to industrial nations and developed markets. “If rural women had equal access to productive resources, agricultural yields would rise by 4%,” noted Ban Ki Moon.
Hard to argue
The figures speak for themselves, and we could quote facts all day — the economic arguments for female participation are at this point really more of a foregone conclusion. The question, then, is how all of this potential can be harnessed. And, more importantly for our pages, how the Islamic finance industry can leverage this opportunity to provide support for female economic integration — and benefit financially and economically from their success. Female-only banks catering to wealthy GCC clients or comfortable lunches in London boardrooms celebrating the achievements of educated women in the global Islamic finance workforce are all very well — and they are valid and valuable steps forward. But what of the forgotten women, the rural women, the quiet women? What of the women in India, in Pakistan, in Indonesia, in Yemen, in Africa, in frontier and emerging markets across the world who demand nothing more than the opportunity to earn a living for their family — and are often denied even this small chance? How can Islamic finance help them?
Reassuringly, it is already doing so. It might not hit headlines every week, but the Islamic finance industry — and unsurprisingly, the Islamic microfinance industry — is quietly working away behind the scenes to empower, integrate and enable women to earn their own living and make their own contribution.
In Egypt, a country with a 94.7% Muslim population, 47% of microentrepreneurs are women. Muhammed Yunus, the Nobel prize-winning Bangladeshi academic-turned-banker who founded the legendary Grameen Bank, and has been called the ‘godfather of microcredit’, directs close to 97% of his small loans toward women. In June this year Axis Bank, India’s third largest private lender and one of the few institutions in the country which offers interest-free banking, launched a new Urban Microfinance segment providing credit facilities to low income women. In October, IMF Director Christine Lagarde spoke to urge female integration in the Pakistani economy, where women currently own just 3% of domestic businesses. “Closing gender gaps in economic participation could boost GDP by up to a third,” she announced. “These gains are non-trivial. Women can be a game-changer for Pakistan!”
Incremental changes, tiny steps forward and new commitments are happening every day, every month, every year — and sometimes in the most unexpected of places. But more needs to be done.
In Minneapolis, the 16th-biggest city in the US, female Muslim entrepreneurs have created one of the most successful small business centers in the country. Flooded by over 50,000 Somali refugees who fled to Minnesota in the 1990s to escape their country’s political upheaval, the city is now home to a quarter of the country’s total Somali population and has had its own problems with integration and unemployment. But the Karmel Square business center, at which 150 out of 175 businesses are owned by Muslim women, has seen Somali unemployment in Minnesota drop from 20% in 2010 to 6% in 2013 — and sparked numerous emulations, such as the rival Riverside Mall on the other side of town, in which 36 of the 47 businesses are owned by Muslim women. The owner of Karmel Square, Basim Sabri, calls it simply a smart business move. “In my opinion, they are the smartest businesspeople in Africa, probably the smartest in the Middle East,” he told the Minnesota Star Tribune earlier this year. “Women play a big role in business.” But it hasn’t been easy. Even to start a small clothing shop in one of these malls requires start-up capital of around US$20,000 — and most of these women rely on family and friends to raise the money, because interest-free loans are simply not widely available. Ali, the owner of a salon at Karmel Square, believes the local banks are missing a trick. “If you have a fixed-rate loan, you can charge me whatever you want and pre-calculate it, and say because of this, this is how much money I’m making on this deal,” she told the Tribune. “The banks could sell anything they want, at any price.”
In the UK, the Muslim Lifestyle Expo 2016, a showcase for Muslim-friendly brands, was held on the 29-30th October in Manchester — and according to organizer Tahir Mirza, 60% of the 130 exhibitors taking part are female entrepreneurs. “According to our research, women represent 50% of the [Muslim] start-up business community and this figure is set to grow further over the next few years,” he told the BBC. However, he warned that better financial access was urgently needed to encourage this trend. “The traditional working-class Muslim woman doesn’t often get the [financial] support to start a business, and they don’t use traditional crowdfunding methods.”
Elsewhere however, countries have already recognized this opportunity and are taking steps to develop it. In Indonesia last week, Economic Coordinating Minister Darmin Nasution highlighted the importance of developing the country’s Shariah finance industry to increase female participation in the economy and empower women — particularly in the areas of fashion and Halal cosmetics, which are currently popular with Indonesian lenders for their strong performance. “Women automatically dominate the female-related businesses,” he said. Indonesia is already home to one of the top five Islamic fashion industries in the world, with annual sales of US$12.7 billion. It also hosts a thriving Halal cosmetics and pharmaceutical industry, which saw US$4.8 billion in sales in 2015, according to Bank Indonesia.
Other governments are already ahead of the game. Malaysia’s government-funded SME Bank has a specific Women Entrepreneur Financing Program based on a Shariah financing structure, which offers fixed asset and working capital loans of up to RM2.5 million (US$594,587) to women under its Leaders Acceleration Program. The Malaysian Budget 2016 includes a RM300 million (US$71.35 million) allocation to the National Entrepreneurial Group Economic Fund that includes a new scheme called TEMANITA especially designed for female entrepreneurs.
The IDB, always a pioneer, has awarded annual cash prizes of US$50-100,000 every year since 2006 for the IDB Prize for Women’s Contribution to Development, and this year the line-up was no less than inspiring. The goal is to “recognize, encourage, inspire and reward women’s participation in the socioeconomic process” and improve women’s access to opportunities and resources. This year, awards went to Nafisa Al-Deek of Palestine for her “pioneering role in promoting the rights of girls in spite of the scarcity of resources and opportunities they suffer as a result of the difficult situation in the state of Palestine”; and to Vannie Kouamou Djounguep of Cameroon for her “innovative and creative strategies to provide girls in her society with a better life”. Prizes also went to the Abnaa El-Ghad (Banati) Foundation in Egypt for its outstanding work toward a better future for homeless girls; and the Bahir Integrated Child and Family Support Organization in Ethiopia for the role it plays in addressing the problems faced by needy orphans and children, especially girls, in remote areas. The bank has its own Women’s Advisory Board and conducts programs across member countries to support women and increase financial literacy and inclusion.
The road ahead
It’s not an easy subject. It’s not always popular; it doesn’t make headlines; and it doesn’t lend itself to snappy soundbites, career-promoting quotes or immediate and concrete contributions to the bottom line. But supporting women, through whatever means possible, to access finance and to make an equal and genuine contribution to the economy, might be the single biggest step we can take toward growing our future — a future that benefits everyone.