SPECIAL COMMENT: Sisterhood in Islamic Finance

Mosque of Sultan Ahmet I, interior, Constantinople, Turkey. (c) Library of Congress

By Rushdi Siddiqui, head of Islamic Finance at Thomson Reuters

If Islamic finance is about inclusion, where are the sisters?

Someone once said, ‘50% of the world’s population is women, and the other half, have mothers.’ Recently, two major articles were widely carried on women in Islamic finance, and highlighted the often heard issues: underrepresentation, interaction with male bankers, travel for meetings in conservative countries, from women scholars to women’s branches, and so on.

If Islamic finance (IF) is about inclusion, where are the sisters?

Stage one of IF has been male dominated industry. Stage two, march towards $2 Trillion, will require addressing a major bottleneck, lack of qualified people, and, its here, women can an important role.

There are numerous studies on poverty reduction in the third world, comprising of almost all of 57 Muslim majority countries, emphasizing the role of women as effective ‘managers’ in raising and educating children, household finances, dealing with stakeholders (extended families), etc., if they are empowered with the right ‘opportunity tools.’

It’s also important to separate cultural (mis)influence versus references to women in Holy Koran, Sunnah of Prophet (PBUH), and leading roles Prophet Mohammad’s (PBUH) wives, Khadija and Ayesha.

Finally, to those that say Shariah finance is slippery slope of loss of women’s right or ‘eroding family structure’ is not only ignorant, but also against the wealth of studies by, say, World Bank/IMF. In Muslim countries where Shariah finance exists, like Bangladesh, Indonesia, Turkey, and Pakistan, there have been women country leaders as Prime Ministers.

To date, in the US, we have yet to have a woman President or Vice President.

CSR
Stage two of Islamic finance is corporate social responsibility, including encouraging workplace diversity and rights of employees. It can be said where countries have achieved the status of ‘knowledge or service based,’ the roles of women has been elevated to managerial positions.

Thus, issues related to continuing education scholarships, working remotely/telecommuting, maternity leave and sabbaticals without penalty (have same job upon return), family healthcare coverage, equal/equitable pay, etc., are not luxuries, but commonly found in employment contracts.

How much of the above are offered to women in [Islamic] financial institutions (IFIs) in the GCC?

Beyond women in meaningful positions, it would interesting to know how many women owned businesses ask for and receive financing compared to male owned businesses? An important facilitator for successful entrepreneurship is the role [equity] financing in the country.

Yes, IFIs have women branches and ‘Ladies Banking’, but that may be more for deposit taking and offering investments and wealth management solutions, i.e., ‘taking’ money.

Query: Are ladies branches and banking most profitable for an IFI?

But, IFIs role as financial intermediaries in deploying surplus capital from, say, women’s branches for non-real estate projects can be ‘counted on one hand.’

Thus, can it said that IFIs are driving Muslim entrepreneurs towards ‘Riba’ based lending for non-realty financing?

In providing Islamic financing to more women owned businesses, it may have an interesting multiplier effect. Obviously, as these businesses grow, will encourage women to apply for jobs, internships by college students, women owned businesses acting as suppliers/vendors, and so on.

Costs
In last few years, there have been media stories concerning corruption/fraud at IFIs, and it usually involved men. There have been numerous studies that show when women are in charge of family finances in, say, third world, the outcome includes stable home environment and ‘educated’ children; i.e., stability and profitable growth! Thus, women are more trusted and have good work ethics.

During the petro-liquidity spike years, there was much turnover at IFIs due to unusually attractive compensation package as shortage of ‘talent.’ Such job ‘hopping’ increases bank’s cost structure as people need to trained and integrated, adjust to the IT systems, etc. I suspect the percentage of men pursuing ‘paycheck employment’ was much higher than women.

Women’s Index
It would be interesting to see an index provider create a global index of women led CEO companies, call it Women Businesses Leaders Index (WBLIV) and pronounced as ‘We-Believe’ index, for following:

-Performance compared to world Islamic index over a market cycle of 10 years

-Employee turnover over the market cycle

-Awards received by the companies

-CSR activities of the companies

If (western) women can lead public companies on above parameters, enhancing shareholder value, they can also lead IFIs.

Cultural male dominance and mis-influence may take a generation to address, but the need of the hour entails a more holistic approach to encouraging women at managerial positions. Its well recognized women are change agents in families, and, if given the opportunity and encouragement, they will contribute to IF 2.0.