Muslim Current Affairs (Socio Economic development by Muslims)

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Dr. Yunoos Osman presented the paper at the SANHA conference in Durban on 23 November 2016

Respected Ulama, Respected Scholars, Members of SANHA, guests and members of the public

Assalamualaikum

Spirituality

The foremost belief around which all the Islamic concepts revolve is that the whole universe is created and controlled by the only One Allah. He has created man and appointed him as His vicegerent on the earth to fulfill certain objectives through obeying His commands. These commands are not restricted to some modes of worship or so-called religious rituals. They, on the contrary, cover a substantial area of almost every aspect of our life. These commands are neither so exhaustive that restricted the human activities within a narrow circle, leaving no role for human intellect to play, nor are they so little or ambiguous that they leave every sphere of life at the mercy of human perception and desire. Far from these two extremes, Islam has a balanced approach to govern the human life. On the one hand, it has left a very wide area of human activities to man's own rational judgment where he can take decisions on the basis of his reason, assessment of facts and expedience. On the other hand, Islam has subjected human activities to a set of principles which have eternal application and cannot be violated on superficial grounds of expediency based on human assessment.

It is these areas in which Allah Almighty, the Creator of the universe, has provided guidance through His revelations sent down to His prophets and cannot be violated or ignored on the basis of one's rational arguments or his inner desires. Therefore, all the human activities must always be subject to these commands and must work within the limits prescribed by them. Unlike other religions, Islam is not confined to some moral teachings, some rituals or some modes of worship. It rather contains guidance in every sphere of life also in their daily mundane activities.

Over the last few decades, the Muslims have been trying to restructure their lives on the basis of Islamic principles. They strongly feel that the dominance of the West, during past centuries, has deprived them of the divine guidance.

 Therefore, after acquiring political freedom, the masses are striving for the revival of their Islamic identity to organize their collective life in accordance with the Islamic teachings. In the field specifically related to the institutions producing or processing Halal foods, it was the biggest challenge for Muslims to bring them in harmony with the dictates of Shari‘ah. In an environment where the entire system was based on unislamic principals, it was a formidable task to structure these institutions on a sharia basis.

Points:

In my paper today I will not delve into the definition of the word halal nor give you a religious approach through Quran and hadith the importance of consumption of halal in a Muslim’s live, as this you all are aware of and constantly remaindered of by the Great Ulama and Scholars of our country, I would just like to highlight the Halal Industry as a whole and its growth and importance Globally and the role we in South Africa can play to promote this to the world of Islam.

Ulama

Halal authorities were a need created by the increasing halal-demands of Muslim consumers. Furthermore, the industry’s existence was necessitated by the increasing use of food-technology that allowed the infiltration of halal considerations into previously harmless scenarios. Realizing this the Ulama …………………………..

Let us not forget that these authoritative bodies cannot work independently without the Ulama Guidance as the Interpretation of the Shariah requirements can only be fulfilled by the Ulama and scholars……………………….. as the muslim public in South Africa were since their arrival and are still comfortable with their endorsements. Maulana Fateh Mohammed, The Jamiat Kzn and other Jamiat bodies in the country had set up the platform for these bodies and authorities.

The claims that Islam is the fastest growing religion and second largest in the world are true based on the increasing number of Muslim population by over 235 percent in the last fifty years. Food is a basic part of existence of mankind. The increasing awareness of Muslims all over the world on their obligation to consume food based on Islamic dietary requirements creates greater demand for halal foods

The fact of living in era of modern science and technology creates food products encumbered with varieties. This evolution comes together with booming of additives and ingredients to match with demands and perfections in food production. Different types and variety of foods and products offered in the market often confuse the consumers and most of them are unaware of what they have consumed or are consuming.  Consumers have to rely on the seller or outside observers, and put their trust in the information source and information received. Hence, it is important to facilitate consumers with guideline through teaching and exposure to purchasing the right food. A major factor in the growth of the halal industry has been the increasing awareness of the potential for food technology to allow the surreptitious infiltration of haram into seemingly harmless products. The use of chemical additives in food products has increased the likelihood for impermissible products to be included in seemingly benign foods. Halal authorities/Ulama were fully aware of this risk. They have promoted it in order to position themselves as information-ally privileged intermediaries who were responsible for halal certification.

It is clear that there has been an active attempt to educate the Muslim consumer regarding the risk of food technology.

One of the best ways of making people aware of types of what they eat in the context of safety and hygienic condition which is the main aim of halal is through educational exposure. Educating them would make them expose and make the right choice of what they consume daily. Thus, major responsibility of government or agency in charge of halal lies in delivering food safety education and resources to a variety of target audiences. Food safety education efforts must be directed toward consumers,

Introduction The global halal industry is estimated to be worth around USD2.3 trillion (excluding Islamic finance). Growing at an estimated annual rate of 20%, the industry is valued at about USD560 billion a year. Thus, making it one of the fastest growing consumer segments in the world. The global halal market of 1.8 billion Muslims is no longer confined to food and food related products. The halal industry has now expanded beyond the food sector to include pharmaceuticals, cosmetics, health products, toiletries and medical devices as well as service sector components such as logistics, marketing, print and electronic media, packaging, branding, and financing.

In recent years, with the increase in the number of affluent Muslims, the halal industry has expanded further into lifestyle offerings including halal travel and hospitality services as well as fashion. This development has been triggered by the change in the mind set of Muslim consumers as well as ethical consumer trends worldwide. The halal market is non-exclusive to Muslims, and has gained increasing acceptance among nonMuslim consumers who associate halal with ethical consumerism. As such, the values promoted by halal - social responsibility, stewardship of the earth, economic and social justice, animal welfare and ethical investment - have gathered interest beyond its religious compliance. The popularity of, and demand for, halal certified products among non-Muslim consumers have been on the rise as more consumers are looking for high quality, safe and ethical products. No longer a mere religious obligation or observance for Muslims, halal (which means “lawful” or “allowable”) has become a powerful market force, becoming increasingly a world-wide market phenomenon for both Muslims and non-Muslims alike.

The appendage of “Halal” to a product is not just a guarantee that the product is permitted for Muslims, but it has also become a global symbol for quality assurance and lifestyle choice. This is evident by the participation and involvement of non Muslim countries and organizations where halal is fast emerging as the standard of choice. Many Western countries have recognized the emerging global trend in consumerism towards halal products and services, and are now racing to gain a footing in the halal industry. In lieu of the paradigm shift on global issues such as sustainability, environmental protection, and animal welfare, the potential growth of the halal industry has made it a lucrative market to be tapped into and presenting a major global opportunity. Players from every sector of the industry, from the huge multinationals down to small enterprises, are looking to capture their share of this growing market. In the last decade, the halal industry has undergone further evolution as a market force when governments have started to look at halal in terms of policy formation for developing their own economies. 13.2

A growing market force Muslims represent an estimated 23% of the global population or about 1.8 billion consumers with an average growth rate of 3% per annum.2 If this growth trend continues, Muslims are expected to make up about 26% of the world’s total projected population of 2.2 billion in 2030. The two strongest markets for halal products are the Asia Pacific and the Middle East. More than half of the global Muslim population lives in the South Asia and Asia Pacific and the number of Muslims from these region are expected to reach 1.3 billion by 2030.3 Four of the ten countries in the world boasting the largest Muslim population in the world are located in the South Asia and Pacific region: Indonesia, Pakistan, India, and Bangladesh. In spite of its small percentage of Muslims, South Africa has emerged as a leader in the halal food industry. Thanks to a highly advanced halal certification programme, the country has become one of the five largest producers of halal products worldwide, and because it comprises 25 per cent of the African continent’s gross domestic product (GDP), significant opportunities exist for halal trade throughout Africa.

The story of this development is intricately entwined with South Africa’s unique and painful history, as the fight against apartheid gained momentum in the second half of the last century. Halal certification was introduced in the 1960s, under the supervision of the Ulama (religious leader of the Muslim community), but was limited to meat slaughterhouses and abattoirs.
The Muslim Judicial Council (M.J.C.), established in Cape Town in 1945, was the first halal authority in the continent of Africa, and has been certifying halal products for more than 50 years.

In the 1970s, oversight was extended to poultry, and in the 1980s to other consumables. In 1996, the South African National Halal Authority (SANHA) established itself as another pre-eminent halal    certification body. This is despite the fact that South Africa’s Muslim community is not large. For instance, Pretoria, one of the country’s three capital cities, is home to a population of around 50 million, of which 79 per cent are Christian, two per cent Muslim, 0.1 per cent Jewish, 1.2 per cent Hindu, 3.7 per cent other beliefs, and 14 per cent with no religious affiliation. The Muslim population is estimated to be 1.2 million officially, and over two million unofficially. Throughout history, three waves of Muslim immigrants came to South Africa. The Indonesian Muslims were the first to arrive in the 1650s from Java and Sumatra. They came as political prisoners of Dutch colonialists, and included many artisans. Around half the Muslims residing in South Africa today are the "Cape Malay" Muslims of the Cape area, especially Western Cape, and they’ve played a major role in the fight against oppression.

Indian Muslims formed the second wave around the 1870s. After the abolition of slavery in the early 1800s, the British needed indentured labour to work the sugarcane fields. Many businessmen and traders also came along at that time. The third wave of Muslims came in the early 1990s, when the borders were opened to refugees from North African countries, such as Nigeria, Somalia and Malawi.

Over the decades, under apartheid, Muslims were confined on a racial basis to special areas. This was a major form of oppression. At the same time, by keeping the Muslims concentrated tn certain neighborhoods, cultural characteristics were reinforced and religious identities were strongly maintained.

As a result, the Muslim sense of identity flourished in South Africa, leading to huge efforts in social and political progress and upliftment. Today, South Africa boasts of 700 mosques and 600 educational institutions. Some private Muslim schools are even “secular” in outlook. Higher Islamic education at universities is strong, leading to the presence of several Islamic financiers in the country. In the new dispensation of 1994, a number of cabinet ministers and a handful of Members of Parliament were inevitably Muslim.

When halal certification was introduced to South Africa in the early 1960s, people’s lifestyles were much simpler. Since almost everything took place at home, from baking bread to slaughtering chickens, oversight was limited. Abattoirs began to be controlled, but it was not until the late 1980s that food control extended beyond poultry and red meat in slaughterhouses, often presumed to be the only objective of halal certification.After the African National Congress took over the country’s affairs in 1994, South Africa faced huge challenges. Products had to be exported, while a huge amount of halal products began to be imported too. There was strict regulation of the meat and agriculture businesses by the government.This led to an expansion of the MJC's halal services as well as the establishment of SANHA.

Deregulation of the meat industry meant that “we had to develop national infrastructure to deal with the complexities of supply chain,” said Navlakhi. There was a lack of uniformity in inspections, the system was grossly inadequate and there was no control over halal imports. “The industry didn’t really understand what halal entailed,” he added.This infrastructure was quickly extended beyond the meat industry to the food, beverage and pharmaceutical industries, such that every facet of the consumables industry was covered.Today, incredibly, around 60 per cent of all products on display at outlets in South Africa are halal certified. Despite Muslims forming only two per cent of the population, this huge percentage of halal products is due to the large quantity of exports to the north of the continent, much of which is Muslim, and the fact that South African traders make up around 50 per cent of the continent’s fast moving consumer goods (FMCG) sector. Thirty-five per cent of these are Muslim.

In a decade and a half, South African halah authorities have gone on to assist countries like Zambia, Namibia, Botswana and Mozambique in setting up halal certification. The total value of the global halal industry is more than $2 trillion per annum, if Islamic finance, pharmaceuticals, cosmetics, logistics and fashion are included. The food industry alone is said to be worth around $160 billion a year worldwide, Navlakhi clarifies. Development in supply chain is bringing change around the world.

“You’d be surprised to know that Rotterdam is the first port in the world to embrace the halal logistics concept, and has established a separate section for halal logistics at its port.”A great deal of work done in South Africa over the decades is now paying off. Halal is becoming a holistic concept. This has not gone unnoticed in the Arabian peninsula. The Gulf Cooperation Council (GCC) is thought to be looking more closely at South Africa, to benefit from its expertise.

The concept of halal products or foods is now gaining a worldwide discussion due to its recognition as an alternative benchmark for safety, hygiene and quality assurance of what we consume or drink daily. Thus products or foods that are produced in line with halal prescriptions are readily acceptable by Muslim consumers as well as consumers from other religions. For a Muslim consumer, halal foods and drinks means that the products has met the requirements laid down by the Shariah law whereas for a non-Muslim consumer, it represents the symbol of hygiene, quality and safety product when produced strictly under the Holistic Halal Assurance Management System. Therefore, consumers nowadays are so much concerned and always be aware of what they eat, drink and use. The awareness of the Muslim and non-Muslim consumers describes their perception and cognitive reaction to products or foods in the market. As such, their awareness is an internal state or a visceral feeling by way of sensory perception towards the products/foods they used or consumed. Given the significance role of awareness about halal in the life of Muslims and their obligations to be Shariah compliant; this paper will address the determinants and identify the sources of awareness of Muslim consumers on halal products or foods. It is argued that many things can lead to awareness of halal products or food unfortunately, most of the previous studies only focused on halal certification logo. Many problems are associated with halal logo (labeling) as the only source of awareness for Muslim consumers on halal. This logo is also yet to be empirically proven as well. This paper delves into other sources that can bring about awareness of Muslims on halal products in order to fill the void. Methodologically, the paper utilizes both qualitative and quantitative approaches. Qualitatively, the paper delves into literatures to identify those alternative ways and quantitatively tests them through self-administered survey using Partial Least Square (PLS). The findings show that the religious belief, exposure, certification logo, and health reason are potential sources of Muslim awareness about halal consumption. However, health reason is the most contributing predictor of level of halal awareness. It is hoped that the results from the paper would provide another avenues for government and policy makers to improve their policy decisions and mechanisms of making Muslims in Malaysia to be more aware of halal foods and products.

With the Muslim world showing rapid population growth, economic development, and increased disposable income, the global halal market now accounts for 16% of the entire global food industry. With no single worldwide industry standard for certification of halal products, SGS’s partnership with the Halal Authority Board (HAB) provides a strong option for halal certification and training which can be delivered anywhere in the world.

According to a recent report, published by the World Halal Forum, global trade in halal food and beverages is currently estimated to be worth around ca. USD 1.4 trillion annually¹. With Islam now considered to be the second largest religion, and the fastest growing, Muslims are soon expected to represent the largest share of global consumer spending².

It has been reported that the halal market is currently worth 16% of the entire global food industry and is predicted to rise to 20% in the near future – with Asia, Africa and Europe accounting for 63%, 24% and 10% respectively³. Although no official figures have been provided, the halal market is estimated to contribute between 40 and 100 billion EURO to the European Economy².

Population Expansion Drives Growth

The main drivers of halal growth have been: a growing Muslim population, economic growth within the Muslim world, and increased disposable income¹.

For reasons of religious observance, halal meat is the preferred meat of Muslims. It has been shown that 75% of Muslims living in the US and 84% of Muslims in France, always eat halal meat. In addition to its religious value, consumers are attracted by some of the central tenets in Islam: to preserve life, to safeguard future generations and to maintain self-respect and integrity. In addition to this, health, respect for animal welfare and a degree of acculturation have also been noted as important drivers⁴.

The rapid growth in halal meat sales mirrors the growth in the Muslim population - recently estimated to account for 26% of the global population. Recent data has shown that, between 2009 and 2014, countries with a predominantly Muslim population have seen substantial increases in fresh meat sales – the United Arab Emirates reported growth of 33%, Egypt reported 28% growth, and Morocco reported 19%. Asia Pacific, Pakistan, Indonesia and Malaysia also shared significant growth in fresh meat sales of up to 54%². The majority of meat sold, if not all, is considered to be halal by default; any non-halal meat is clearly labelled to cater for the non-Muslim population.

Food Service Operators Meeting Demand

In countries where the Muslim population is considered to be an important minority (up to 10% of the local population) e.g. Germany, France, and United Kingdom, food service represents the main channel contributing to the rise in the demand for halal meat and meat products. Germany is the largest market for Middle Eastern full-service restaurants (value retail sales of 2.3 billion EURO in 2014), while the UK is considered to be the leader market, amongst the Western Europe countries, in Middle Eastern fast-food offering halal meat (value sales of 3.7 billion EURO in 2014) and the largest market for halal chicken fast-food (value sales of 2.7 billion EURO in 2014)².

Defining and Qualifying Halal

Muslim consumers increasingly desire and demand the adoption of a quality assurance approach that guarantees the halal process standards. Such an approach would require a formal certification and labelling strategy to reassure consumers of the quality and authenticity of halal meat, whilst improving shopping convenience and choice. Halal certification is not yet globally standardised, but its need is internationally recognised. Apart from its religious significance and its ‘seal of quality’ perception amongst consumers, halal certification provides reliable and independent authentication, and a means of claim substantiation. ‘Authentic halal’ is a cause of controversy amongst certifying bodies and Muslim countries, as halal is widely defined by the choice and effectiveness of stunning methods used in animal slaughter.

Halal is a process associated with religious belief and as such it would be difficult to control and guarantee. From the consumer point of view, it is the authenticity of halal certification that is difficult to evaluate. Therefore, when purchasing halal products, consumers have to largely rely on the seller and/or trust the information provided on the product label. In the case of halal, the trust associated with the product label would be all about the halal process attributes, including handling and safety. The latter has been linked with the effectiveness of the slaughtering process leading to complete animal bleed out, therefore ensuring that blood, a potential source of bacterial contamination, is removed, which results in healthier meat.

Preserving Identity and Supporting Religious Obligations

The concept of halal certification was initiated in the United States in the mid-1960s as a necessary safety measure for Muslims living in a non-Muslim society. It was introduced with the aim of preserving Muslim identity and assisting with religious obligations. The halal quality standard was originally designed to encompass product supply and manufacturing of processed food, cosmetics, pharmaceutical and medical products. However, it has gradually been extended to cover services involved in halal product logistics. The halal concept is no longer confined to food or other products, but also covers the process of handling, packaging, storage, transportation and delivery. Halal certification is considered to be the prerequisite for entering the global halal market, helping companies meet local requirements, expand their marketplace and increase their sales and revenue^{5, 6}.

Certification is important in ensuring compliance to Islamic Law. It is also an important building block in generating trust amongst consumers concerning the authenticity and reliability of halal products. A clear and standard approach to audit and certification, along with full awareness and transparency in terms of compliance requirements and expectations, would allow the food industry to build a stable infrastructure, capable of meeting customer expectations.

With no globally recognised certification scheme for halal produce, there has been a rise in the number of country-specific halal certification bodies. This, in turn, has contributed to the overall confusion around what constitutes halal and this represents a challenge to the growth of the halal market.

Certification Bodies

It is estimated that there are currently around 122 active halal certification bodies around the world, including local government departments that have taken charge of halal certification in countries such as Malaysia, Indonesia, Singapore, Thailand and the Philippines. Some of those certification bodies are non-profit organisations, government agencies, private for-profit businesses, as well as some private individuals. There are also instances of self-certification by some groups and individuals, which has the potential to undermine certification trust.

Apart from credibility, recognition and acceptance by importing countries (e.g. Malaysia, Indonesia, UAE, etc), the following were identified as important criteria for the selection of a halal scheme and halal certification body⁷:

1. Resource availability: responsiveness in handling paperwork; providing auditors at the plants on a timely basis; and in doing routine inspections at a defined frequency during the year
2. Willingness to work with the company on problem solving
3. Ability to clearly explain their halal standards and their fee structure
4. Whether or not an agency’s halal standards meet the company’s needs in the marketplace; meaning the acceptability among the consumers and importers

As a leading provider of certification, verification, inspection and testing services, with a global reach, SGS is happy to discuss all aspects of halal certification and training. Our partnership with the HAB, a European based Muslim halal certification organisation, offers this industry an opportunity to meet the demand for authentic, safe and affordable halal food, whilst at the same time adhering to the strictest religious principles defined in HAB’s transparent and comprehensive halal supply chain standard.

In a globalized, highly-connected world, institutions other than the nation-state are having a profound influence on markets and market behavior (Kale 2004, Mittelstaedt 2002). In particular, transnational religion-based consumer practices and ideologies can exert a strong effect on the evolution of the market and vice-versa (Izberk-Bilgin 2012; Sandikci and Ger 2010). Web-based communities play an increasingly important role in shaping transnational consumer practices (Cayla and Eckhardt 2008; Kozinets, Hemetsberger, and Schau 2008), including religion-related consumption patterns. With spiritual lifestyles being increasingly supported via digital media, we need an improved understanding of how social media platforms intercede in the relationship between religion and markets. This study investigate the role of social media tools in connecting and mediating transnational religious communities and markets, using the search for halal food as a focal point. The Muslim population is reported to have reached approximately 21.01% of the world population, for a total of 1.43 billion adherents (CIA 2009). Halal products and services are estimated to constitute a US$2.7 trillion market today and forecasted to grow to a $30 trillion market by 2050 (JWT 2007). Despite the buying power of Muslims, the market for halal products is undeveloped in many non-Muslim majority regions, such as the U.S. The immature market for halal meat products in the U.S. means that social media websites play an important mediating role in the religion-market nexus. This research uses netnographic analysis to seek answers to the following research questions: How do transnational religious adherents use social media sites to identify and evaluate products and services that support their religious practices? By what mechanisms do social media interactions mediate religion and markets to enable faith-based consumption experiences? In our exploration of these questions, we find that Internet-based interactions do not only directly affect the market for religious products and services, but also have broader influences on religious identity, community construction, religious commitment, and, ultimately, quality of life. RELIGION, FOOD, AND COMMUNITY Food and eating serves a vital role in virtually all religious traditions and practices, through both formal and informal means, including feasting, fasting, sharing, taboos, offerings, sacrifices, consumption of symbolic foods, and dietetic regimens (Anderson 2005). Some religions, including Hinduism, Orthodox Judaism, Seventh Day Adventism, and Islam have particularly distinct and complex food cultures. As a vestige from the past, or as a modern moral mandate, gastro-religious rules can operate for various reasons, including to prevent cruelty to animals, to protect the environment, to improve the economy, to prevent food poisoning, to promote selfdiscipline, and to improve physical or spiritual health (Finch 2010). Above all, food codes serve to bind groups across time and space (Durkheim 1915/1965). Food practices, like other religious behaviors and symbols, provide a “hard-to-fake signal of commitment” (Irons 2001), with acceptance of food practices signaling affirmation of the broader moral codes of a particular community. At the same time, gastro-religious habits demarcate boundaries that distinguish loyal members of a group from those who are not in their community—i.e. serving to “construct Otherness” (Freidenreich 2011). 4 Religiously-defined food patterns are seldom static, interacting with place and time to inspire adoptions, compromises, and innovations in food practices (Anderson 2005; Finch 2010). When traveling, migrants are often exposed to unfamiliar interpretations of religious values and codes in congregations that are likely to be more ethnically diverse than those of their region of origin (Chafetz and Ebaugh 2002). Consequently, within religious traditions, there are often diverse, and even conflicting, interpretations of eating rules (Kraemer 2010). TRANSNATIONALISM, MARKETS, AND SOCIAL MEDIA In recent years, the globalization of economic and labor markets, combined with time-space compression, has accelerated the spread of transnational religious practices and attachments (Wuthnow and Offutt 2008). The costs of belonging to a religion—time, money, effort, and sometimes stigma--can escalate when a practitioner is physically located in a place where the religion is not practiced by a majority of the population. As a result, living in a community as a religious minority might lead to the practice of more moderate or more conservative interpretations of faith, according to complex patterns relating to identity, community, and the marketplace. Consonantly, increased or decreased use of products or services associated with the religion may occur (Grinstein and Nisan 2009; Hirschman, Ruvio, and Touzani 2011). The most influential and game-changing technological advance in recent years for global communication is (arguably) the Internet, which allows considerable options for the religious diaspora to maintain their chosen identities. As it the case for many sub-communities (Kozinets 1999), the Internet is used as an important source of communication among many faith-based communities. Social media sites, such as, hisholyspace.com for Christianity, theschmooze.org for Judaism and muslimsocial.com for Islam, allow the spiritually curious to explore meanings of their faiths (Bunt 2009; Mishra and Semaan 2010). In addition, as with other types of consumption products and services, religious-based offerings are increasingly subject to scrutiny via the Internet by both insiders and outsiders. THE GLOBAL BUSINESS OF HALAL FOOD The growth of Muslim residents in the U.S. (Pew Research Center 2011), combined with growing numbers of Muslim tourists (Jafari and Scott 2014), has led to an increasing demand in the U.S. for halal food. Halal food--i.e. food that is permissible under Islamic law—not only is mandated by religion, but is perceived by many Muslims to be healthier, tastier, and more hygienic (Regenstein, Chaudry, and Regenstein 2003). In large U.S. cities, such as New York City and Chicago, and areas with large concentrations of Muslims, such as Dearborn, Michigan, halal food is relatively accessible, but in other places, obtaining halal food can be onerous. Even in places in the U.S. where halal food can be easily purchased, regulation related to halal standards are not uniform. Halal is a credence product attribute (Bonne and Verbeke 2008; Grunert 2002), with no visibly discernible qualities to identify genuineness, and, as such, assurance of halal standards can be shrouded in uncertainty. Producers and retailers are trusted to accurately represent the food, yet increasingly long and complex logistic chains make it difficult to ascertain the “purity” of the food (Tieman et al. 2013), This has led to widespread concern that much of the meat and poultry sold as halal has not been prepared properly, violating people’s trust and religious beliefs (Regenstein, Chaudry, and Regenstein 2003). In recent years, a number of scandals have tarred sellers of halal food in Muslim communities. Products designated as halal were allegedly misrepresented by major providers such as Cadbury (Nangoy and Hamzah 2014) and Ajinomoto (Arnold 2001). In 2013, accused of misrepresentation, a MacDonald’s in Dearborn, Michigan ceased offering halal chicken sandwiches (Warikoo 2013). A consumer’s search for halal food is further complicated because 5 the standards of what makes meat “halal” can differ widely according to interpretation (Robinson 2014; Wilson 2014). For example, an increasing number of Muslim shoppers believe that for meat to be characterized as “halal,” proper responsibility and care should be taken for the welfare of the animals, employees, and land involved at every stage of the process from farm to market (Robinson 2014). Differing standards of halal create the need for an acceptable level of product information associated with a potential purchase for individuals to evaluate the acceptability of the product. In short, a number of factors can make procuring halal food a challenge in ensuring sources and standards in geographic regions that are not majority Muslim.

New

Optimism pays in Islamic Banking

Whether one chooses to call it ethical finance or risk management finance, a rose is a rose and by any other name Islamic finance is looking to take root globally. If not already entrenched in a given market, steps are being taken to carve out legal and regulatory intricacies that will enable the healthy growth of the Islamic finance industry.

Take Canada, where government lawyers are looking to amend legislation and identify assets to issue its first sovereign Sukuk. This is despite the discovery that it will take some time and commitment from investors to work with investment bankers to realize Sukuk as a new asset class, states Omar Kalair of UM Financial in one of our reports this week.

Moving south, the US’s efforts to welcome and integrate Islamic finance into its current financial system have not been as prominent as those made by some other western nations. However, there have been important moves including the first leveraged private equity buyouts and Sukuk issuances using Rule 144A. These American securities laws continue to allow Islamic finance to innovate and thrive in the US, as discussed in a report by Murtha Cullina. Staying in the US, one of our IFN Reports this week suggests a recently unveiled paper detailing Shariah as a threat to the American way, is way off the mark.

Other IFN reports focus on Australia and Ireland who are both taking firm action in exploring the possibility of Islamic banking and finance. Australia is reviewing its taxation treatment of Islamic finance, banking and insurance products, even though market demand is yet to reach the desired level.

In Ireland, the Muslim community is finding Islamic financing difficult to secure, as Islamic banks have yet to penetrate the market sufficiently, following a general low volume of interest.

The Islamic REIT industry is also up for discussion, where the South Africa based Oasis Holding Group suggests that Islamic REITs, which have much in common with their conventional counterparts, have taken time to establish, due to financing requirements and stipulations that property tenants must be Shariah compliant.

There does however seem to be a healthy appetite for trusts and investment funds with a notable spur in growth of offshore trusts in Islamic finance transactions, confirms Conyers Dill & Pearman. Travers Smith concurs and suggests that the Islamic fund market has big potential to facilitate investment with a focus on equity rather than debt.

For all the talk of growth and potential, David Kinloch, our Meet the Head personality for this week, believes that the challenge to Islamic finance is to ensure that the growth attained so far is sustainable, and that Islamic finance has a permanent role to play in the global financial landscape.

This will not be a problem for Indonesia, as it constantly looks to Islamic finance, particularly Sukuk, for general financing. The country’s US$224 million Hajj Fund Sukuk is our featured Termsheet this week.

For those of you attending the Global Islamic Finance Forum in Kuala Lumpur next week, we look forward to seeing you there. For those who are unable to attend, do not worry, as we will be publishing a full newsletter each day to keep everyone abreast of the news and views.

The Following is a excerp from Moulana Yunus Osman's (Shariah Supervisor to Absa Bank -Barclays International) lectures at different seminars which will be posted here regularly.

How does Islamic Banking Works

For Islamic finance to comply with sharia, or Islamic law, financiers charge no interest and do not invest in prohibited businesses such as trading in alcohol, arms, pornography or gambling.Following are some widely used methods of Islamic finance:n Islamic bonds, or sukuk  typically backed by physical assets that pay a dividend or rent to bondholders rather than interest.n Murabaha  a financier, such as a bank, buys a commodity and sells it to the purchaser at a higher price.n Mudaraba  the bank provides funding to entrepreneurs, who share the profits of any venture.

The entrepreneurs do not put up any capital.n Musharaka — the bank provides funding to entrepreneurs, who also contribute capital. Profits from the venture are shared.n Ijarah  Arabic for leasing. An agreement in which banks lease an asset to a client for a specific time at a specific price. At the end of the leasing period, the client may or may not own the asset.n Istisna  The purchaser asks the seller to create a product, which is then sold to the purchaser at a given price.Istisna allows parties to contract the sale of a something that does not exist at the time of the agreement.

By Moulana Yunus Osman (Founder of the Academy)

Respected Scholars, Members of the Absa Team and honorable guests.

Assalamualaikum

We are today living in a multiracial, multi-religious and multicultural society. To live in harmony, peace and friendship, it is important that we understand each other’s’ traditions and faiths and religions, which have great impact on human sensitivities and emotions.

Both the individual and the society are in dire need of a belief that accommodates and directs all their vital activities towards construction and growth. When the individual and society adopt such a belief and apply it to life, humanity can accomplish seemingly miraculous achievements which can only occur when man unites himself with the Eternal Power that channels his personality -potential in the right direction.

Unlike other religions, Islam is unique in its ability to provide guidance for the entire range of human activity. It does not separate spiritual and secular life as unrelated entities.

Islamic principles and teachings can provide realistic, fair and objective solutions to the prevention of individual, family, social and international problems which are threatening the existence of human communities throughout the world.

To understand the essence of Islam is to understand the very essence of humanity. More than a religion, Islam is a complete and comprehensive way of life leading to a balanced way of living.

History has shown that Islam is unique in its ability to provide guidance for the entire range of human activity.

Muslims strongly feel that the dominance of the West, during past centuries, has deprived them of the divine guidance. Therefore over the last few decades, after acquiring political freedom, Muslims have been trying to restructure their lives on the basis of Islamic principles, in accordance with the Islamic teachings. In the economic field it was a great challenge for Muslims to structure the financial and economic institutions on a sharia basis, and bring it in harmony with the dictates of Shari‘ah.  Especially in an environment where the entire system was based on unislamic principals.

The claims that Islam is the fastest growing religion and second largest in the world are true based on the increasing number of Muslim population by over 235 percent in the last fifty years. Business and Economics is a basic and integral part of existence of mankind. The increasing awareness of Muslims all over the world on their obligation to earn halal income based on Islamic principles creates greater demand for shariah compliant, interest free and Riba free products to be offered by banks to the Muslim.

The literal meaning of interest or Al-RIBA as it is used in the Arabic language means to excess or increase. In the Islamic terminology interest means effortless profit or that profit which comes free from compensation or that extra earning obtained that is free of exchange. Shah Waliullah Dehlvi a great scholar and leader after giving a very concise and precise definition of interest, says, Riba is primarily an economic issue in view of the fact that all religions and mythologies have prohibited restricted, discouraged, disliked, or degraded Riba in one way or the other since the inception of human interaction.

Harms of interest

• Riba is a sure gain without any possibility of loss, hence all the risk is taken by the borrower, rather than sharing the risk and the profits with both parties.
• Riba conflicts with the spirit of brotherhood and sympathy, and is based on greed, selfishness and hard heartedness.
• Riba causes trauma and depression due to mounting debts.
• Riba creates a monopoly in society, where the rich are rewarded for being wealthy, while those who are not are forced to pay extra!

·         Riba causes Inflation which negatively affects the social structure and the relationship between social classes.

How can One avoid Riba?

Living in a capitalist society makes it difficult to completely avoid riba. However, this should not be used as an excuse to freely indulge in it. An obvious way to steer clear of this evil is not to take out a loan which involves paying riba. The other solution is Opening riba-free bank accounts.

The origin of the modern Islamic banking system can be traced back to the very birth of Islam when the Prophet himself acted as an agent for his wife's trading operations. Islamic partnerships (mudarabah) dominated the business world for centuries and the concept of interest found very little application in day-to-day transactions.

Islamic Banks in the 20th Century

When, in the1960s, Muslim thinkers began to explore ways and means of organising commercial banking on an interest-free basis, economists dismissed their work as wishful thinking.

But, in 1963, in Mit Ghamr, in Egypt, the first Islamic interest-free bank came into being. Mt Ghamr was a rural area and the people were religious. They did not place their savings in any bank, knowing that interest was forbidden in Islam. In these circumstances, the task was not only to respect Islamic values concerning interest, but also to educate the people about the use of banking.

In 1974, the world’s first development bank in compliance with the Sharia, the Islamic Development Bank, was established.

Islamic Banking going global

Islamic banking spread all over the world. Some of those were: Islamic Finance House in Luxembourg, Dar Al Mal Al Islami in Geneva, American Finance House (LARIBA), Islamic Bank of Britain, Islamic Investment Bank and Emirates International Islamic Bank in the UK.

Islamic banking, enlightened with the guidance of Islamic Sharia principles, emerged as an alternative financial system that neither gave nor took interest, thereby introducing a fair system of social justice and equality, while fulfilling the financial needs of people and maintaining high standards of ethics, transparency and a sense of responsibility.

Their number and size has grown so greatly that by 2009, there were over 300 banks and 250 mutual funds around the world complying with Islamic principles, and around $3 trillion were sharia-compliant by 2016.  Although Islamic Banking still makes up only a fraction of the banking assets of Muslims, since its inception it has been growing faster than other banking assets as a whole, and is projected to continue to do so.

It is a banking system in which millions around the world, irrespective of religious beliefs, are putting their faith in. A banking system to which even the world’s leading conventional banks are turning to.  A banking system which is governed by a resilient code of ethics in all its practices and functions. And, a banking system where ‘no interest’ is just one of the many aspects you’ll find interesting to follow for your own benefit.

Islamic banking is unique in the way that it helps individuals as well as businesses build tangible and appreciating assets for themselves. This not only leads to prosperity founded on a solid economic base, but also encourages the spirit of entrepreneurship amongst its customers. Islamic banks are based on the unique concept of profit and loss sharing with the customers by way of various Sharia-compliant financing and investment tools.

Due to their very nature of complying with the Sharia principles, the Islamic banks are forbidden from indulging in any such practice, which may prove harmful to a customer.

Islamic banking is also the first where a customer, whether individual or corporate, isn't just a customer, but is a partner with the bank or owner of goods or assets. This means they share the risks, as well as the profits of such a partnership or ownership. And this unique arrangement is done in accordance with the laws of Sharia, which ensures complete transparency at all times.

Islamic banking therefore offers a portfolio of innovative, Sharia-compliant financial models that formalize this unique arrangement between customers and the bank. These are Murabaha, Musharaka, Mudaraba, Istisna, Salam and Ijara, to name a few.

And last but not least, Islamic banking is perhaps the only financial system to forbid the use of its finances or services for misleading, dishonorable, immoral and other purposes that would be harmful to society.

During the global financial crisis in 2008 and 2009, the Daily Vatican newspaper, L’Osservatore Romano, reported the Vatican as saying that the Islamic finance system may help Western banks in the crisis as an alternative. The Vatican advised: “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.”

Where a riba-based market fails, Islamic financial institutions do not suffer the same consequences since the risk is shared by both parties. Lenders will be more careful, as they also share the risk of losing money if the borrower cannot pay back the original sum.

After a gap of almost three decades, starting from 2006, the Absa Islamic bank was established in South Africa.

The most effective way to avoid riba and determine which transactions are permissible, is by consulting such Islamic scholars who are well versed in the Islamic Financial and Banking systems and have knowledge of the current market trends.

Success in this Life & the Hereafter

When examining this issue of riba, we should remember that true success lies with the help of Allah alone. If we abide by that which is lawful, and avoid that which is haram, our wealth will be blessed and beneficial in this world and the Hereafter. What good is extra money earned through riba if there is no blessing in it, and it is cursed – a source of misery?

On the Day of Resurrection, people will rise from their graves quickly, except those who engaged in riba. They will stand up and then fall down like epileptics because:

“Those who consume riba cannot stand (on the Day of Resurrection) except as one stands who is being beaten by Satan into insanity. That is because they say, ‘Trade is (just) like riba.’ But Allah has permitted trade and has forbidden riba…” Qur’an 2:275

Such is the punishment for those who consume riba and do not sincerely repent from this great sin.

As for those who strive toward success by earning Allah’s pleasure, they take comfort from the following verse:

“O you who believe! Do not devour Riba (e.g. interest), making it double & redouble, and be careful of (your duty to) Allah, that you may be successful.” Qur’an 3:130

Conclusion

None can doubt that riba is haram and a major sin, and no disobedience to Allah is worth the risk of His punishment. We must remember that the life of this world is short and not to lust after wealth, but rather to worship Allah correctly and live by His rules. Just because riba is widespread and common, it does not make it permissible.

“And whosoever fears Allah and keeps his duty to Him, He will make a way for him to get out (from every difficulty), and will provide him sustenance from where he never even imagined. And whosoever puts his trust in Allah, Allah is sufficient for him.” Qur’an 65:2-3

By Maulana  ( Dr.)Yunoos Osman (Founder of the Academy). October 2017 Cape Town