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|28 October, 2018

How the Islamic economy can guide the Fourth Industrial Revolution

Ammar Radhi is responsible for leading the global Islamic finance business for the Thomson Reuters group. His focus has been the intersection of technology, financial services, media and intelligence to produce actionable results across the Islamic markets, from high street Sukuk to main street SMEs. He previously worked as a consultant in the Gulf Growth Capital Fund at Investcorp, responsible for investment intelligence and research on growth companies in the GCC.

Website: www.reuters.com

The Fourth Industrial Revolution is moving so fast, so unpredictably, and in so many different directions at once

The Fourth Industrial Revolution is transforming every aspect of our lives and promises innumerable benefits, not least huge increases in productivity, but if the Islamic economy is to fully benefit then governments will need to be on top of these developments and, where they can, ensure this revolution benefits everybody. This is a big ask. The Fourth Industrial Revolution is moving so fast, so unpredictably, and in so many different directions at once, that it is difficult to keep up with the latest technological marvels, never mind lead the future. We are currently in the midst of a multiplicity of revolutions including in artificial intelligence, robotics, biotechnology, nanotechnology, metamaterials, the Internet of Things, the Industrial Internet of Things, autonomous vehicles, quantum computing, 3D printing, blockchain, and digitalisation of the electric grid.

As Klaus Schwab, founder of the World Economic Forum and author of The Fourth Industrial Revolution, has said: ”The possibilities of billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge, are unlimited.”

We cannot know just how all this will play out, but what is certain is that governments and intergovernmental organisations must keep abreast of these changes and lead efforts involving all sectors of society to make them work for all.

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Governments need to make the rules
There is a danger with this, as in previous industrial revolutions, that it can promise so much and is so clearly progressive that governments leave its practitioners much to their own devices. The industrial revolutionaries are left to make up their own rules, but this is too often more to their own benefit than society’s.

The First Industrial Revolution, by establishing the factory system and devising new methods of standardisation, made goods available to a mass consumer base which before had been way beyond their purses. Somebody who before would have to get a single pair of shoes custom-made by the village cobbler could now pick up a couple of cheap pairs of size 9s from a shoe shop. Such changes were made possible by the industrial revolution’s huge increases in productivity. But in the revolution’s early days at least, industrialists had such little regulation that they could treat their factory workers as little better than slaves. The world progressed, but the political outcome was catastrophic.

Similarly today, governments often seem helpless in the face of technological development. The Internet in large parts of the world is barely policed at all. When social media becomes anti-social media, governments helplessly ask the social media companies to think up some rules, which they then do badly if at all.

Uber and AirBnB have made hailing a taxi or finding a room so much easier and cheaper for everybody, but have been largely allowed to make their own laws while their licenced taxi and hotel competitors are subject to back-breaking regulatory requirements.

And in the new digital-enabled ‘gig economy’, are there any employment rights at all? Governments don’t seem to know.

The result of such lags in technological change and government response is that many people feel that the latest industrial revolution might be wonderful but it is not for them. Because governments are helpless, people feel helpless. And they will tend to see governments as part of the problem rather than inert bystanders.

Islamic economy able to guide revolution to society’s benefit
For the Islamic economy, as with other economies, the Fourth Industrial Revolution promises so much but needs guidance. The Islamic economy, however, because of the ethical aspects of Shariah and its natural affinity with the United Nations’ Sustainable Development Goals, may be better able to ease the Fourth Revolution in the direction of social benefit.

How the Islamic economy should react in the face of today’s sweeping technological changes will be the over-riding theme of this year’s Global Islamic Economy Summit in Dubai. Participants at this summit will consider matters including Islam’s response to the new digital world, cryptocurrencies, blockchain, Islamic fintech (financial technology), and the future of work.

It is not just governments that must shape the Fourth Industrial Revolution for the Muslim world through means such as enabling regulation, education, research, establishing technology hubs and providing sandbox opportunities for innovative technology start-ups; Islamic financial institutions must also stay fully abreast of the opportunities and threats from the digital revolution.

Islamic financial institutions may even be set to benefit the most from the digitalisation of the financial landscape. Islamic finance is a rapidly growing area that has done much to raise financial inclusion and provide funding for small and medium-sized enterprises in the Muslim world. The development of digital solutions could help Islamic finance to grow still faster if it can overcome such issues as the greater complexity of contracts in a non-interest environment and a lack of clarity and standardisation in what constitutes Shariah-compliance.

In all, the Fourth Industrial Revolution is here and it is essential that Islamic governments, public bodies and financial institutions stay fully in tune with it so they can shape it in a way that benefits everybody.

The Global Islamic Economy Summit (GIES) is the world’s largest and most comprehensive forum dedicated to the Islamic economy. It is organised by the Dubai Chamber of Commerce and Industry and Dubai Islamic Economy Development Centre (DIEDC) and strategically supported by Thomson Reuters.

Any opinions expressed here are the author’s own.


Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here. 

© Opinion 2018

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