Expert Calls for a New Investment View on Islamic Economies

A call for new thinking on investment in the growing Islamic economies has been made by a leading international expert who will be speaking in the region soon.

Rafi-uddin Shikoh, chief executive officer of research consultancy DinarStandard, will outline a new model for Islamic investment when he speaks at the Global Islamic Investment Gateway event to be held in Bahrain on March 2 and 3.

He believed that if one looked beyond the headlines of falling oil prices, they would see a rich set of breakthrough businesses driven by youthful populations and strong long-term dynamics of Islamic economies globally.    

“The take-over battle for Egyptian cake and biscuit maker Bisco Misr led by global giant Kelloggs is just one of a series of transactions which reflect the escalating international appetite for investment in the diversifying Islamic Middle East and North Africa (Mena) markets,” said Shikoh.

“Prized assets such as Bisco Misr, Kudu and Aujan Industries are part of the wider growth potential of diversified consumer sectors in Muslim-majority growth markets driven by their large, growing, and young populations,” he said.

“Major government infrastructure and diversification spending drives from Indonesia, Turkey, Morocco to the GCC are further supporting this growth.”

The global Islamic marketplace is represented by the mostly-Muslim majority 57 countries of the Organisation of the Islamic Cooperation (OIC), which as a collective holds $6.7 trillion in GDP (2013), said a statement.

Significantly, these 57 countries are growing faster than the rest of the world and their citizens are young, which is another indication of future growth markets – their average GDP growth rate is 5.4 per cent through 2019 compared to 3.6 per cent for all other countries and their projected average age is 30 years by 2030 compared to 44 years for North America and Europe.

The biggest manifestation of these countries’ ‘connectedness’ has been the multilateral Islamic Development Bank capitalised at $150 billion that represents 56 mostly-Muslim majority countries.

The IDB has successfully delivered on investments across its membership and indeed the broader multi-trillion dollar Islamic finance industry, centred around Muslim majority markets, has also multiplied this connectivity.

“The time has come for another investment view for Islamic economies. That’s why DinarStandard has developed a new model to leverage all the different connections of mostly Muslim-countries,” said Shikoh.

“They have high trade, demographic, and political connectivity.  But what fundamentally connects the global Islamic marketplace is the underlying faith-based drivers of the world’s 1.6 billion Muslim population that is driving the potential $2 trillion global halal food and lifestyle sector space such as modest fashion, travel, media/recreation, pharmaceutical and cosmetics.”

The model has identified 23 food and agriculture sub-sectors in which different Islamic markets have complementary competencies across the respective industry value chains. 

The thousands of publicly listed, private- and government-owned corporates domiciled in these markets together present a set of unique opportunities.   Opportunities also exist in the form of new greenfield projects especially in fast growing markets with major trade gaps.

Most Islamic marketplace investments have focused on national level or sub-regional level opportunities (that is GCC, Southeast Asia, Central Asia).  While there will always be many opportunities at these levels, a new view also exists in looking at investment opportunities across select industry value chain and import export complementarities across the full geographic spectrum of the Islamic marketplace.

“Unlike the more familiar geographically centred industry clusters like Silicon Valley, companies such as Procter & Gamble recognise the value of conducting R&D globally of limiting its work geographically,” Shikoh added.