North America, and Canada in particular, continues to experience strong growth in the Muslim population. Although there are no exact figures of the total Muslim population in North America, statistics from different sources indicate that currently, the total Muslim population in the US is over 8 million and in Canada over 1 million, with 3.6 percent growth per annum. The Muslim population in Canada is projected to reach about 2 million by 2015. These astounding growth figures have finally put North America on the radar for global Islamic financial institutions that have in the past largely ignored the region.
Power of Public Perception
Islamic finance in North America is in the early stages of its development, and Islamic banking, in particular, is non-existent in Canada and the US. One issue faced by early-stage industries such as Islamic finance is public perception. Since the tragic events of 9/11 in the US, the public in both the US and Canada has become increasingly suspicious of "Muslim" organisations and entities. There was a significant backlash for Muslim businesses and organisations in the US immediately after 9/11 and there continues to be a less than positive perception of Muslims. The daily TV highlights of the conflict in Iraq and the involvement of the Canadian military peacekeepers in Afghanistan constantly remind the public of "Muslim world" issues.
Considering these circumstances and the fact that 9/11 still relatively fresh in the minds of Americans, they are familiar with the "Islamic bomb," but how will they react to an "Islamic bank"? Both Islamic banking and Islamic financial firms need to thoroughly evaluate the public perception challenges that exist in the marketplace and position themselves accordingly.
The immigration policies of Canada encourage immigration and the building of a Canadian "mosaic" rather than the "melting pot" of the US. Thus, public perception of Islamic banking in Canada may be easier to manage than in the US. However it would be naïve to rely on this for a positive welcome of Islamic banking by Canadians or Americans. Public perception can be significantly strengthened by developing awareness and educating the public on Islamic finance. This will require a strategy that is much more comprehensive than merely telling the masses what Islamic finance is; it will mean demonstrating how Islamic finance is a viable alternative to conventional banking and another option to meet financial needs.
Lessons Learned
In Canada, the Muslim population is primarily concentrated in the provinces of Ontario and Quebec. In Ontario, it is largely concentrated in what is known as the Greater Toronto Area (GTA). All major financial firms providing Islamic products started in Ontario, except for Ittihad Capital Corporation, an investment and private equity firm that was founded in the province of Alberta, almost 3,000 kilometres west of Toronto.
Alberta is the leading producer of petroleum and natural gas in North America and is also one of the world's largest petroleum reserves in the form of oil or tar sands. Alberta has one of the smallest minority populations in Canada and is generally considered a conservative province that is not as welcoming to foreigners.
With this backdrop, Ittihad Capital Corporation faced the challenging task of ensuring a positive public perception for the successful development of its business. One of the key strategies employed by the firm is active involvement with the mainstream business community, including membership in the local Calgary Chamber of Commerce and the Better Business Bureau (BBB) Alberta chapter. "Ittihad," an Arabic word that was completely foreign to most Albertans, was featured in a local Chamber directory and the company was showcased in the newspaper as a new member of the local business community. Furthermore, Ittihad Capital Corporation positioned itself as a solutions provider for all businesses and investors, not just the Muslim community. The firm now has offices in both Calgary and Toronto and provides services to clients and investors worldwide.
Riding the Social Responsibility Wave
A biannual survey released in March 2007 by the Social Investment Organization reported that Canadian Socially Responsible Investment (SRI) assets have grown to more than CAN$500 billion. This marks a substantial leap from SIO's last survey, which estimated 2004 SRI assets at CAN$65.5 billion. The credit for this increase can be pinned on growing institutional interest in SRI practices and the inclusion of broad SRI strategies in 2006's asset total.
Promoting itself as an SRI firm was also a key distinguishing factor for Ittihad Capital Corporation's positive public perception. With global warming, corporate accountability and other social factors becoming more high-profile, the public is increasingly supportive of organisations and firms that are tackling these issues. Islamic finance is the "essence" of socially responsible investing, as it promotes equal access to capital and risk sharing for economic and social development. Islamic banking and financial firms must be active members of their respective communities to establish themselves as socially responsible firms and develop a positive image with the public.
On the Upswing
Although more than two-thirds of Islamic finance business currently originates in the Middle East, North America, and Canada in particular, are going to be the next playing fields for the burgeoning global industry. Islamic finance being an ethical, equitable and socially responsible mode of financing has appeal to both Muslims and non-Muslims across North America and this will help ensure that a positive public perception is built and maintained for the industry.
Suhail I. Ahmad is the co-founder, president and managing director of Ittihad Capital Corporation. With over 10 years of financial industry experience, Ahmad is a proud recipient of the Alberta Centennial Award in 2005 for his outstanding contribution to Canadian business. Canadian-born, Ahmad has a bachelor's degree in economics from the University of Calgary, has completed various professional development courses and financial industry designations, including the LLQP, and is a qualified Canadian Investment Manager (CIM) with the Canadian Securities Institute.
By Suhail I. Ahmad
© Business Islamica 2007
