Achieving Innovation In Islamic Economy

The previous edition of the International Innovative Platform for Islamic Economy Products coincided with the announcement of UAE Innovation Week. To acknowledge the necessity of innovation for growth and competitiveness across all fields, this year’s edition fittingly took place in February that has been declared the UAE Innovation Month by our visionary leadership. The all-pervasive culture of innovation encourages us to be open to everything new, and Islamic economy products are no exception.

Innovation has many forms, but I will focus here on two essential ones. The first — product innovation — is very important because it provides an ideal opportunity for the Islamic economy to introduce new concepts to the public and enhances the competitiveness of this niche economic system in conventional markets.

This form of innovation has resulted in the launch of the Awqaf International Organisation, the Emirates International Accreditation Centre, the International Halal Accreditation Forum, the FinTech Hive accelerator programme, the Global Islamic Business Excellence Centre and several other initiatives that owe their existence to the efforts of people who took the lead in promoting Islamic economy.

These initiatives have helped create a conducive environment for product innovation across the region and beyond, and have contributed to shaping a harmonised regulatory framework for the Islamic economy.

The other essential form of innovation at work here is innovation in our objectives — reinventing existing products to pursue new and strategic goals, such as sustainability, growth, and economic and social justice. This form of innovation brings about a qualitative shift in investment, financing and management of economic activities. Prime examples of such innovations are the products that feature on global agendas of Islamic economy conventions today, including istibdal sukuk, waqf or endowment funds and flexible spending credit cards. These products have been in the market for a while. However, their objectives are entirely new.

The two types of innovation highlighted above embody the essence of Islamic economy and its aspirations for transforming global markets. They prove that Islamic economy can redirect national economies from risk-taking to sustainability, from self-orientation to collective interest and from imbalance to equality.

Through considering the example of waqf or endowment funds, we can illustrate what innovation can achieve. In the Islamic world, endowments are still viewed predominantly as charity instruments. However, with a little innovation and inspiration, we can leverage them to accomplish great things — drive progress, boost market liquidity and bolster vital sectors, such as education, research and development, and funding of small and medium-sized enterprises.

Transcending the traditional definition of endowments and strengthening their role in supporting comprehensive development is an innovation in both the function and the objective. This applies to sukuk and flexible credit cards as well.

With a shift in perception and a brand new set of objectives and functions, these existing products can have a significant positive impact on individuals and communities on multiple levels.