Islamic Finance with Mohamad Sawwaf | E080

Financial Planning For Canadian Business Owners

Today, Islamic finance and the challenges it brings to people who follow that faith, particularly business owners, and how those restrictions around Islamic finances can be adapted to many of our current financial structures that are not supportive of it. But there are options, and to discuss that, we have Mohamad Sawwaf, co-founder of a company called Manzil.

Episode Highlights:

• 02.00: Islamic finance is finance before interest, and that is the difference in terms of what we see today. Islamic finance’s main principle is that money has no value, says Sawwaf.
• 04.25: Jason says that as a Muslim, you can’t borrow, and that is incredibly restrictive from a business owner’s standpoint. He asks, about the other means for accessing capital to buy homes or even start your own business?
• 12.21: Mohammad says that they are starting to see a real growth spurt in the Islamic Fintech space regarding innovative solutions, especially in the digital area that allows financial transactions to be much more simplified and accessible.
• 13.32: When you consider diversifying your investments as a Muslim investor, especially when it comes to the fixed income market, Islamic bonds are available, and they are called Sukuk, says Sawwaf.
• 15.37: Jason asks what does that look like if any Muslim in Canada, looking for a new business or building a manufacturing plant and wants to do things in a Halala method?
• 22.51: Today’s people are renting and avoiding homeownership because they want to sleep at night peacefully, knowing that their financial affairs are in order from an Islamic perspective, says Sawwaf
• 26.24: Federally, all meat out of New Zealand and Australia are halal because they export more than they consume and export to neighboring countries like Malaysia, Indonesia, and Singapore that require, says Sawwaf.
• 29.08: When you are trying to diversify an economy, and if you want to stick with primary industries, you have to create some specialties, says Sawwaf.
• 31.24: As per Sawwaf, nothing stops us from creating product industries except the capital required to bring it out into the open. There is no shortage of demand for anything.

3 Key Points:

1. Sawwaf says that for inventory financing, as long as there is the element of shared risk in a moment and the asset-backed or asset-based transaction principle is fulfilled, we are good to go.
2. The bigger issue is the infrastructure. It just hasn’t gained mass adoption around the world the way it needs to supplant or replace the needs of the Islamic community, and traditional banking would otherwise provide if they could do it, says Jason.
3. When you look at Census Canada, you see that Muslims have the lowest participation rates of homeownership and capital markets. It is not because of our balance sheet. It is because of a lack of power and rights, says Sawwaf.

Tweetable Quotes

• “Multiple mechanisms allow you to do larger types of transactions, like buying a car or home, all happening under the pretense of Islamic finance.” - Mohamad
• “The halal meat industry is a $2 billion industry in Canada that the FDA of Canada entirely regulates.” - Mohamad

Resources

• Facebook – Jason Pereira’s Facebook
• Mohamad Sawwaf: Website
• LinkedIn – Jason Pereira’s LinkedIn

Transcript

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