Wednesday, April 3, 2019
In a first of its kind for this country, the findings of The Philip Lee Islamic Finance Survey highlight an overwhelming desire from the Muslim community in Ireland for Islamic mortgages and other financial products. Based on the responses, leading expert Simon O’Neill, Partner, Banking and Finance Group at Dublin law firm Philip Lee, estimates that there is an investment opportunity/gap in the market worth over €30million – and that’s just initially.
Simon O’Neill said: “We see that the lack of availability in the market in Ireland is creating financial exclusion in the Muslim community which numbers 63,500 (according to Census 2016). The survey shows that 98% of respondents would take up a compliant finance option if it was available in the market.
In the context of Brexit, established institutions in the UK will potentially lose the ability to carry on business in the EU. Therefore, Ireland offers a similar stable market and legal system, with an untapped demand for Islamic finance, allowing these institutions to continue to have access to the markets of the other EU27.”
Islamic Finance is a type of financing that must comply with the principles of Islamic Law (Sharia). The main difference between conventional finance and Islamic finance is that some of the practices and principles used in conventional finance are strictly prohibited under Sharia laws. Not allowed are: Paying or Charging Interest (Islam considers lending with interest payments as an exploitative practice that favours the lender at the expense of the borrower. According to Sharia law, interest is usury (riba), which is strictly prohibited), Any form of Speculation or Gambling (maisir), Participating in Contracts with excessive Risk and/or uncertainly (gharar) or Investing in businesses involved in prohibited activities (Some activities, such as producing and selling alcohol or pork, are prohibited in Islam. The activities are considered haram or forbidden. Therefore, investing in such activities is likewise forbidden).
Carried out between mid-December 2018 and the start of February 2019, The Philip Lee Islamic Finance Survey was circulated to the Muslim community in Ireland. It was completed by over 400 individuals. The findings of the report show:
At present, there are no Islamic financial institutions operating or established in Ireland. As a result, there are no Islamic finance compliant financial products available to the 63,500 strong Muslim community either in the form of deposit, mortgage, SME or other products. Therefore, the community in Ireland has no option but to either accept conventional loan products (interest bearing amongst other criteria), or be excluded from availing of financial accommodation.
It’s also worth noting that Islamic finance is not restricted to the Muslim community. In the UK many Islamic financial products have been taken up by non-Muslims seeking ethical alternative products. Most notably, deposit accounts offered by Islamic banks have been particularly popular due to the competitive profit rates offered on deposits.
Ireland’s First Islamic Financing Product: The First of Many
Simon has also been working closely with Community Finance Ireland to introduce Ireland’s first Shariah compliant financing product. Read more about these developments here.
The report can be accessed here.
The Newstalk FM podcast in which Simon discusses the findings of the Philip Lee Islamic Finance survey can be accessed on Newstalk.com, starting at 4 minutes 44 seconds, under Breakfast Business, April 4th.