Sheikh Saleh Abdullah Kamel is a Saudi businessman, chairman and founder of the Dallah al Baraka Group (DBG). Chairman of ABG and he is also the chairman of the General Council for Islamic Banks.
He is estimated to be worth about $5.3 billion, ranking number 12 on Arabian Business list of richest Arabs 2008.[ Most of Kamel’s business work focus on coded TV channels, trade and civil services. Under the current economic climate, Sheikh Saleh Kamel did not withdraw or pull back but on the contrary, he is still exploring new business opportunities and investing heavily in the banking idustry especially that the Islamic banking industry needs this investment at a time where the price of oil has been rising and the world is on the verge of economic fall down. It seems that almost everything is falling down into bits and pieces.
BL: Sheikh Saleh Kamel, How did you build your business empire and what are the reasons for your outstanding success?
Sheikh Kamel: Well, let me start by thanking you for giving me the opportunity to host me in your prestigious “think tank” – Business Life. Now, with regard to your question, and for the benefit of your respected readers, let me begin by stating that at the outset any venture requires the blessings of Allah the Almighty. Every success depends on the degree of clarity of the Organizational Vision, sound and equitable management system, and finally the overall organizational governance and control.
When I started my career in the trading industry, my mother used to constantly remind me of the values of Islam and would speak of usury as against our values. She would always speak of savings and transactions the Islamic way. This greatly influenced me and I did my first contract in the late 60s using mudharaba and musharaka modes of finance with a conventional bank. This sowed the seeds that were blessed and from which, the tree of Al Baraka grew and expanded.
I do not wish to say I am successful, because I believe that I am as yet to realise my dream of having true Islamic economic principles. It is upon this that the entire resources of society should be mobilized - according to the principles of Shari’a – and should be utilized for the benefit of society, again according to the principles of Shari’a. Shari’a focuses on the equitable distribution of wealth and rewards efforts, for the welfare of the entire society.
BL: What are your comments on Islamic Banking Performance in the Middle East and in the West?
Sheikh Kamel: As you are aware, Islamic Banking has grown in size and numbers in the 80s and 90s and is acclaimed to be one of the most powerful sectors of the banking market in the world today. This is because, markets the world over have shown a huge appetite for Shari’a compliant transactions and investment products even though, until recently many people did not really understand such types of transactions. The growth in this segment in the financial industry presented a new opportunity for financial institutions located n the Middle East to export their business outside of the region to serve the large global Muslim population in other countries.
I wish to reiterate that the good performance and growth is the effect of understanding and knowledge about Shari’a compliant finance, not only among individuals and customers, but also within central banks, financial institutions and professional bodies. Today, there is a much deeper understanding about these transactions; so people have greater faith in them. Customers across the globe have started to show interest in and their greater acceptance has resulted in Islamic financial institutions being recognised as fully functional counterparts of conventional institutions. Furthermore, a number of Islamic investments have outperformed conventional investments making conventional banks becoming keen to offer Shari’a based products & services world-wide.
BL: Do you think this growth is related to the resurgence of Islamic feeling in the region and therefore vulnerable to the political mood?
Sheikh Kamel: No, the sector has been growing for almost three decades now, and is becoming more sophisticated with its products and services offerings. Today, Islamic financial institutions can match most of the products offered by conventional banks in the international markets. Even in Europe, Islamic finance is being seen as something that is open to everyone, not only for Muslims. Clients look for good service at good rates, and for non-Muslims, whether it is Islamic or not, it does not matter. In fact, for many companies, it is attractive to be able to diversify their borrowing activities. For Muslims there is, of course, the added attraction of Shari’a compliance. So I think this growth will continue for some time, and this is why we see most conventional banks in the region opening Shari’a windows or subsidiaries, and some even converting their full operations.
BL: Riots and revolutions have hit the MENA region. Do you think things are going to settle down anytime soon?
Sheikh Kamel: The current turmoil and disturbances definitely has had its impact on the overall economic climate. We have seen fluctuations in the oil prices and other commodities and this will indeed cause a slowdown in the economies of the affected countries and to some extent in the rest of the world. Luckily, until this moment, we have not seen harsh slow down at the global level because of what is going on in the Mena region and Japan. Of course, it is very hard to predict a timeline or volumes or size of the losses so far. We have seen some negative reports and analysis coming from the research centres and rating agencies which I believe, would have caused more damage than the crisis itself. For example, one of the countries which has seen unrest has been downgraded by the rating agencies due to political factors only, with total disregard to the intrinsic strength and the support of the rest of the nations in that country’s region. I am always optimistic about the future as has always been the case in the region. I believe that the region has a lot of resilience and strength and will bounce back again to follow a growth path and a bright future for the rest of the world. We have seen this happening in Dubai most recently and in Kuwait in the 1990 s after the crash of the stock exchange there and also after the 2nd Gulf war. After each and every unrest, we always come back more stronger than before… and this is definitely attributed to the accumulative wisdom of our business elites and political leaders in managing the natural resources gifted to us by Allah, Subanahu wa-tallaa.
BL: Will there be new Islamic Banks established in Libya, Morocco, Algeria, Tunis and Egypt?
Sheikh Kamel: Definitely the answer is yes and as you know, banks are established to meet the financial needs of the societies and as long as these needs exist, the need for banks will exist. I would like to inform you of a good news that I am privileged to have regarding a new bank in Egypt. This bank will be specialised in providing developmental finance and of course in a growing economy like Egypt, the society needs such types of financial institutions. The bank is at an advanced stage of being set up.
BL: Sheikh Saleh, does Al Baraka Banking Group have any plans to set up new banks in the above countries?
Sheikh Kamel: As you know, we have already in Egypt, Tunisia and Algeria, with a strong presence in these three countries. Recently, we had obtained a preliminary approval for operations in Libya, which will as of now be a representative office. Of course we will be waiting for the current unrest to settle down.
BL: How were the financial results of the Group?
Sheikh Kamel: Yes, we have achieved excellent results despite the fact that the year was characterised by great uncertainties for the economies of the industrial world and mixed fortunes for those of the Group’s areas of operations. The economies have been affected in greater or lesser degree by the impact of commodity and hydrocarbon prices and the value of their local currencies on the international exchanges, Al Baraka Banking Group did well to record a 4% increase in operating revenue at US $ 659 million and another year of increased net profit, which grew by 15% to US $193 million. The rise in profitability reflected a 21% growth in Al Baraka Banking Group’s assets, as all major classes of banking assets rose to meet extensive demand from the growing customer base, itself the result of the continuing expansion of the Group network. Most of our subsidiaries extended their branch networks, such that by the end of the year the Group network had expanded by a total of 81 branches, making it around 400 branches in all - our stellar achievements during the year were undoubtedly the acquisition of Emirates Global Islamic Bank to form one of the largest Islamic banks in Pakistan and the opening for business of our new subsidiary in Syria. This expansion in our representation base across our geographies in turn enabled our subsidiaries to deliver more services and products to their clients, resulting in an increase in our total financings and investments in all major classes. We also maintained progress on our strategy of investing in infrastructure and in strengthening our risk management and operating systems, policies and procedures. Most of the subsidiaries have now completed the transformation to new core banking systems and to achieving Basel II and regulatory compliance milestones, whilst introducing international best practice risk management, AML and Disaster Recovery systems and methodology throughout the group.
We were also proud to receive a number of international accolades for our achievements to date – the first “Mediterranean Awards for Global Excellence in Islamic Finance” was awarded at the Malta Islamic Finance Conference, the Hawkamah Union of Arab Banks “Bank Corporate Governance Award” and “Best Regional Bank” at the prestigious Annual Islamic Business & Finance Awards in December. Such tokens of the respect and regard with which we are held by our peers only serve to strengthen our determination and redouble our efforts in our quest for the highest standards in the field of Islamic banking.
Unfolding events in a number of countries in the Middle East and North Africa region presage a time of change for many of them. Whilst we cannot know exactly how these events will ultimately impact on the economies of the region nor its business activity in the short term, we nevertheless remain confident that the Group will not be adversely affected in light of its fundamental soundness and financial strength
BL: Some people say that Islamic banks have not been creative enough in generating new products and have merely repackaged conventional products. Do you think Islamic banking is creatively challenged?
Sheikh Kamel: I disagree. In fact, it is the opposite. It is my belief that Islamic Financial Services Industry itself is an innovative initiative. We are more creative than conventional banks. How many innovative products have conventional banks brought to the market in the past 30 years? But Islamic banks are bringing entirely new Shari’a-compliant products into the market which the others now copying. We are the creative ones. But still there are gaps in our product menu. You can never stop putting forward new ideas. Mortgage loans, for example, is one growing area that Islamic banks have yet to fully explore. I am always supporting the view that the Islamic Finance Industry – despite contemporary challenges – is capable of developing initiatives required to adapt to any economic or legal changes.
BL: What other areas are under-developed in Islamic finance; Where would you like to see more innovation, sophistication and growth in Islamic financial products and transactions?
Sheikh Kamel: Like any other Banking Business, our Industry faces different challenges that need continuous care. At the top of these is the need to expand the current Islamic Financial basket of Products. There is a need for more Islamic Financial Institutions with investment banking focus to develop Islamic Capital markets and to actively participate in project finance type of activities. The industry needs to expand in Sukuk issuance and other related money market products. I have noticed that the Islamic Financial Institutions have already started addressing the liquidity management issue by introducing new products – they no longer depend on the International commodity Murabaha – which is proof that the sector is improving. Furthermore, patrons and practitioners of the Industry need to pay more attention to Shari’a compliance, and particularly, I want to emphasise on the importance of creating new products that meet the requirements of their customer segments at one level, as well as meet the three Shari’a requirements for structuring new products at another level. The three Shari’a requirements for structuring being, - the purpose, the mechanism and the end result that adds value to the wealth or income of the societies in which they are operating in.
BL: The fast growth of the Islamic finance sector has clearly thrown up some challenges, not least of which is in human resources, both as financiers and to sit on Sharia boards. What are your views on this?
Sheikh Kamel: As you said Islamic Banking has always been growing at a fast rate. But with such rapid growth, you need to build supporting institutions at the industry level. These are needed to address non-core challenges such as R&D and shortage of specialists in Islamic Banking.
