Britain to be the first non-Muslim country to issue a Sharia bond

More than 1,000 Islamic investors and 15 global leaders will meet in London this week at the ninth World Islamic Economic Forum. This is the first time the forum has been hosted outside of an Islamic polity and has brought mass financial intrigue as prime minister David Cameron has unveiled the first Sukuk Bond issued by a non-Islamic country.

The issuance of the £200 million Islamic Gilt from British soil will allow Britain access to the rapidly growing area of Islamic finance that is forecast to hit £1.3 trillion by next year. The Sukuk, or Islamic bond, is one of the more high-profile examples of the rapid growth on Islamic finance which has grown from a monetary issuance of $3.5 billion in 2003 to $44.8 billion this year according to economic platform Dealogic.

Islamic finance falls under Sharia law which finds its basis in the interpretations of the concepts put forth in the Quran, the example set by Muhammad and the consensus of religious scholars.

Islamic finance as a practice in itself started just outside Cairo in 1942 when Islamic scholars started writing on the subject.

Under Islamic finance rules, interest cannot be charged on loans and must be based on tangible assets. It also cannot be based on practices regarded as sinful in Islam such as gambling or alcohol.

Most countries do not recognise Sharia law and the handful of states that use Sharia law as a foundation to their political systems in the Middle East and North Africa. Few other countries have any association with Sharia law except use in personal matters such as divorce and inheritance.

The introduction of Sharia law is a set goal for the international Islamic community which has stemmed cultural controversy as well as an intellectual debate as to whether Sharia law and the secular laws of most other countries are compatible with freedom of thought, women’s rights and a free democracy.

David Cameron said: “I don’t just want London to be a great capital of Islamic finance in the Western world, I want London to stand alongside Dubai as one of the great capitals of Islamic finance anywhere in the world.”

“There are some countries which naturally look inwards, pull up the drawbridge and refuse to recognise that the way the world is changing affects their future success. But Britain will not make that mistake,” he added.

Patrick Corby