Aims and Objectives
The banks and companies of the Albaraka Group have set out a number of strategic objectives. These include a comprehensive and integrated plan of work which aims at the ideal utilization of human and juridical Islamic capabilities and resources in order to participate creatively in the socio-economic system with its economic, financial and investment rules and regulations.
The chief characteristics of an Islamic economy are prohibition of usury, proper channelization of God-given resources, just circulation of money, holistic development of communities and proper balancing of the present and future needs of the individual. Accordingly, the Group has outlined a number of general objectives which are considered as guidelines for the performance of its activities and also as standards for evaluating its successes and failures.
General objectives: i. To attract savings in Muslim communities and to correlate work with experience and achieve reasonable profits in all productive. ii. To participate in the development of host countries and societies. iii. To enhance and strengthen economic and commercial relationships among Muslim countries and communities. iv. To establish banks and insurance companies wherever possible as indispensable obligation to enable Muslims to get rid of the evils of usury. v. To work towards the Islamization of the economic, social, informational and educational aspects of Muslim life in modern day societies. vi. To assist in the development of laws, regulations and guidelines which are compatible with the Islamic Shariah. Specific Guidelines for Implementation:
a) To seek to implement Islamic banking transactions wherever appropriate conditions are available.
b) To apply principles of co-operative insurance (takaful) wherever circumstances permit.
c) To establish and participate in the functioning of agricultural companies wherever appropriate in all Muslim countries and communities.
d) To establish or participate in the establishing of industrial companies wherever an opportunity for successful operation is available in Muslim countries and societies.
e) To establish or participate in establishing commercial companies in order to promote exports among Muslim countries and to increase the rate of exchange.
f) To make available investments, financial services and professional skills to insure the growth of secondary markets for capital formation.
g) To encourage the establishment of successful joint stock companies in Muslim countries and communities for the purpose of directing the savings of individuals and group towards successful and profitable investments.
h) To introduce educational and cultural programmes and establish schools with the aim of developing a close link between education, careers and the Islamic region.
i) To encourage and establish media facilities like those of television and cinema in conformity with Islamic principles in order to promote healthy and socially beneficial norms of media entertainment and behaviour. Banking Sector Activities
Objectives of the Sector
a) To establish and develop financial and banking models in conformity with the Islamic Shariah using the latest systems and techniques.
b) To encourage the mobilisation of resources for development and their prudent use.
Dallah Albaraka banks and companies are spread worldwide in 33 countries. They provide banking and investment services according to Islamic principles. By the end of 1990, the 22 banks and investment companies already established and functioning had a balance sheet of over 4 billion dollars in a shareholders equity of 908.6 million dollars. Other Sector Activities
Service Sector
The objectives of this sector are as follows
i) To provide standards of technical maintenance services in all fields.
ii) To help people achieve high standards of living and make required services affordable.
iii) To train manpower in specialised training centres.
iv) To participate in the improvement and uplift of Muslim societies. Dallah Albaraka has accomplished several projects in this sector including operation and maintenance of airports in Saudi Arabia; cleaning and maintenance of two Holy Mosques; road construction in the Kingdom; maintenance and operation of electromechanical facilities, water and sewage systems network; hospital maintenance like the Dallah Hospital in Riyadh and others; cleaning of cities; upgrading of public transportation; setting up training schools for automobile drivers; maintenance of Saudi Air force and Civil Aviation facilities; development works for housing and tourist sites for the project at Lake Tunis called the Project of the 20th Century clue to its size arid volume. The group also participated in the execution of Prince Fawaz Housing Project, the biggest housing project in the Middle East. Industry Sector
Objectives of the Sector
Important objectives were set for this sector and a substantial amount of money has been invested in various modern, industrial projects in many Arab and Muslim countries for the realization of these objectives:
To attain a high and stable growth rate for the countries being assisted and to help them in realizing their capabilities for technical and scientific progress.
To provide job opportunities, thus minimizing unemployment.
To develop manpower skills through scientific training.
To reduce dependence on imports and foreign capital.
To increase export opportunities.
To utilize and optimize the existing resources present in all countries where the Albaraka is involved.
To achieve self-sufficiency in the near future. The investments of the Dallah Albaraka group in this sector have reached approximately 295 million US dollars. Trade Sector
Objectives
i) Promotion of commercial exchanges and enabling Muslim countries to export their surplus products. ii) Furthering development in Muslim countries through promotion of their exports and integration of economic operations conducted by Albaraka banks and commercial companies operating in those countries. iii) Setting up foundations for establishment of the desired Islamic common market.
Dallah Albaraka investments in this sector amount to 300 million US dollars and are divided among a number of companies all over the world (details forthcoming). Agricultural Sector
Objectives of the Sector i) Providing job opportunities and preparing through training the necessary manpower essential in the promotion of the agricultural field in Arab and Muslim countries. ii) Actively participating in the export of production of surplus goods to the world market from Arab Muslim countries. iii) Promoting the acquisition of hard currency for all concerned countries sharing a mutual goal. iv) Sharing modern technological applications with other countries seeking to improve agricultural methods. v) Achieving food sufficiency in the Muslim world. Dallah Albaraka has more than 20 agricultural projects around the world (details forthcoming). Insurance Sector In order to provide integrated financial services to Muslim communities in conformity with the tenets of Islam and to protect the properties and interests of the Dallah Albaraka group, an insurance sector was created to set up insurance companies in each and every country where the group already had or may have a bank in the future. The group has so far established 4 insurance companies and plans are underway to establish 3 more. Furthermore, in order to support the growth of the insurance companies, 2 reinsurance companies have also been established. Total capital investment in the 4 insurance companies and 2 reinsurance companies amounts to 48 million US dollars. Total premium income written by these companies during the year 1990 amounted to 32 million US dollars. The names of these insurance companies are as follows:
i) Islamic Arab Insurance Co. (IAIC) with 10 million UAE dirhams as capital.
ii) Albaraka Insurance Company - Sudan with 2 million Sudanese pounds as capital.
iii) Emin Sigorta Insurance Company - Turkey with 12 million US dollars as capital.
iv) Al-Aman Insurance Company - Senegal. As for the reinsurance companies:
i) Islamic Insurance and Reinsurance Company - Bahrain with a capital of 25 million US dollars.
ii) BEST RE-Tunisia with 5 million US dollars as capital. Group Investments in Muslim Minority Regions:
Magnitude and Extent of the Problem Muslim population is spread all over the world but in several countries compared to the total population of the country, Muslims are in a minority. Available information from these countries shows that Muslim representation in public and private sectors is very low and their representation in industry is almost negligible. The basic cause of backwardness of Muslims in these countries is their educational inferiority, sense of insecurity, lack of awareness of available facilities and inadequate organisational and infrastructural support.
Muslim craftsmen have over the years contributed to the progress of these countries in various fields, but their representation in these fields has reduced and most craftsmen are getting poorer and poorer. They and Muslim traders and small industrialists have not graduated into medium and large industry sectors and have not been able to play their full role in the economic and social progress of their country. Among the long term measures which have to be adopted to deal with the situation are promoting basic, elementary and higher education, mostly technical of the and professional, and creating a sense of security among the Muslims. Short term measures should focus on creating awareness of facilities among the Muslims and providing counseling, encouragement and equity capital to potential Muslim industrialists, traders, craftsmen etc.
In order to create awareness of facilities a “Service and / or Command Area Approach” should be adopted. And in order to provide empathetic organisational support special institutions like Akbaraka should be set up, which can provide advice, information and equity capital to the weaker sections of the society and, in particular, the Muslims.
Aims and Objectives of Dallah Albaraka Group Activities Among Muslim Minorities
Muslim minority regions of domicile, most of them, suffer from weak infrastructures, including roads, electricity, communications in addition to lack of professionally experienced personnel in the financial and technical fields. This has had a negative impact on investment returns and efficiency in project implementation. Even where the minorities exist in relatively developed regions, investment activities that could be undertaken by Islamic banks and companies are hindered by administrative or legislative restrictions. Foreign investors are therefore very much hesitant to venture in such areas, for fear of risking their investment or because of low rates of return compared to other areas.
However the Dallah Albaraka group decided to accept the challenge for 2 basic reasons: firstly, because of its obligation to Muslims worldwide excuses of high risk and low returns could not deter it from the performance of its duties and its continuing responsibility of providing services to the Muslim minorities wherever they reside. Secondly, the group possesses vast experience and efficiency and it believed that suitable selection of projects with good chances of success could be undertaken by the group. Although the aims and objectives of the group in undertaking banking and investment activities in Muslim minority regions vary according to the economic, political and social circumstances of each area, there remain a number of general objectives which could be applied to all regions of Muslim minority domicile. 1. Development of such areas where Muslim minorities live, through proper financing and establishment of economic, agricultural, industrial, banking and service projects and introduction of modern technology and updated management systems. 2. As a general principle encourage savings in these regions, and help Muslim businessmen by providing them with financing in order to increase their trading and financial capabilities, thereby creating jobs for the unemployed and providing training opportunities for those who lack such skills. 3. Create new instruments for individuals to invest their savings through Islamic channels and to rid them of the embarrassment of having to deal through non-Islamic methods. Islamic investments in such communities could also be take the form of building Schools, institutes, mosques and other structures dealing in Zakat distribution, Islamic propagation etc. 4. Diversify the activities of the group geographically and sector wise and find new resources to achieve more profits for depositors as a result of working in compliance with Islamic principles and venturing into regions of abundant natural resources with adequate manpower that could be trained. 5. Present the Islamic economic model in non-Muslim countries as, a boost to the economy and the just utilisation of available resources which also allows for opportunities of development and progress in negative the modern context. This will help spread Islamic economic concepts. Some Case Studies
South Africa: Banking Activities Muslims in South Africa represent a significant and active percentage of the population and possess excellent organizational and management capabilities in addition to good living standards.
The activities of the banking sector of the Dallah group were extended to the Muslim community in this country with the intention of augmenting the abilities of Muslims and at the same time to benefit from their organisation and management experience to establish feasible projects.
1990 marked establishment of an Albaraka bank with an authorized capital of 10 million rand (U.S. dollar $ 1=2.5 rands) fully paid, the share of Albaraka group being 50% while the other 50% representing the share of Muslim citizens of South Africa.
The bank was successful in achieving good rates of deposits which increased from 5 million rands in 1991 to 34 million rands in 1992. Bank investments increased from 17 million rands in 1991 to 48 million rands in 1992. Also the bank realised profits of approximately 1.2 million rands in 1992 without having to wait for a break-even point as is usual.
Another Albaraka bank was opened in CapeTown in response to the desires of the Muslims of that region. The bank was concerned that all its investments, instruments, policies and services should be directed to the benefit of the Muslim minority. We give hereunder references to our South African investment and service trends.
Development of Small industrial Projects Very many South African Muslims are highly skilled in particular jobs while other Muslim families are capable of running small domestic projects. This inspired Albaraka bank to take the initiative and start the development of small occupations and industries through financing of such projects according to Islamic methods; musharaka and mudaraba transactions. The bank provided required technical assistance enabling these families to become productive families and turning employees into owners of private enterprises directed towards their own interests. These projects assist in raising the living standards of Muslim communities. Albaraka Haji Investment Scheme One of the leading projects for the assistance of the Muslim minority in South Africa is Albaraka Hajj investment scheme. Under this scheme accounts are opened for individuals with a specified minimum amount to which regular amounts are deposited over a specific period of time. Such amounts are invested as soon as they are placed in the bank. The profits realised are credited to the account until the amount reaches a certain percentage of the total cost of the hajj journey, whereupon the client is called to perform the hajj journey, during which he/she is provided with facilities, privileges and special deductions. The group in Saudi Arabia also helps with domestic services such as residence and transportation. This scheme has the following benefits:
i) The scheme makes savings for hajj easier and provides an avenue for members to earn halaal income on their investment, thereby increasing their chances of going on pilgrimage earlier. ii) Investments are managed in a manner consistent with Islamic principles, free of interest or riba. iii) Possible savings in the cost of air travel to Saudi Arabia. The bank also provides additional benefits such as a comprehensive hajj package and related services; gifts that will be useful during hajj; guidance and advice on performance of hajj; eligibility draw i.e., a minimum of two return air tickets for hajj at the expense of the bank. iv) Subscribers to this scheme are also entitled to a higher share of the profits earned on funds invested by them in this scheme as compared with other forms of investment offered by Albaraka bank. The bank also intends to open in South Africa. Iqra which is a charity association of the Dallah Albaraka group is basically concerned with providing assistance in the field of education. India Although Muslims in India are considered a minority, their number compared to the number of Muslims in the world is of great importance. Unfortunately, they live in very bad economic conditions. The Dallah Albaraka group established a Albaraka Finance House in Bombay in 1990 with an authorised capital of 50 million rupees, the paid amount being 30 million rupees, out of which the Albaraka share was 51% of the capital. According to the licence given to the House, it acts as an investment bank within the limits allowed by the Indian Banking Law. The bank endeavours, within the available capabilities, to enhance the group’s aims and objectives. United Kingdom A large number of Muslims of various nationalities live in the United Kingdom with a special concentration in London. Because of the vastly developed financial and banking sectors in the country, these Muslims are constrained to deal with banks for their investments, deposits and for the financing of their basic needs, especially in home mortgages. In such a situation an Islamic banking institution becomes a necessity and this is why the Dallah Abaraka group has given special attention to the minority community in the United Kingdom. Albaraka International Bank Limited The Dallah group established in U.K. the Albaraka International Bank Limited in 1983 with an authorised capital of GBP 5 million, the paid amount being GBP 1 million.
The bank is wholly owned by the group. The total deposits as of 1991 amounted to GBP 154 million, most of which were in trade finance, leasing and real estate.
The bank also started a hajj fund with similar objectives and conditions to the one in South Africa. The bank is currently engaged in developing a fund for education and another for Medical Care to assist Muslims who come to U.K. for the purposes of education or receiving medical care. Albaraka Investment Co, London The group established this company for the same reasons that led to the opening of the Albaraka bank in London. The company’s paid-up capital amounted to GBP 60 million. Investments at the company amounted to GBP 170 million at the end of 1992. The United States of America The group also inaugurated a new scheme to provide services for the Muslim minorities in the United States. This has taken the form of the establishment of:
i) Albarakah U.S. Holding Company, with a capital of 6 million U.S. dollars, with an equity of 3.1 million U.S. dollars and a total investment of 33.3 million U.S. dollars in the year 1991.
ii) Albarakah Bancorp - Texas, with a capital of 230,000 U.S. dollars and an investment of 3,366,182 U.S. dollars. Its assets amount to 62,508 U.S. dollars.
iii) Albarakah Bancorp - Chicago, with investments amounting to 1,400,000 U.S. dollars and assets to 75,550 U.S. dollars. China Despite the bureaucratic problems that private investments may encounter in a country like China, the group was determined to provide services to millions of Muslims in China. Hence an office was opened in Ningxia region. Negotiations are under way for the establishment of a bank with an authorised capital of 80 million U.S. dollars, 60% of which will be owned by the Albaraka group. Another office was opened in Shanghai and the group has applied for the establishment of a bank with an authorised capital of 30 million U.S. dollars. The intended share of the Albarakah will be 50%. The authorities in China are still studying this application. The group has, during the last three years, studied a number of industrial projects that could be implemented in the future in China. Russia The Albaraka group was interested in the establishment of banking investment and agricultural institutes in areas of Muslim concentration in the Soviet Union. Towards this end the Group Chairman invited the ministers of finance and of labour, the Governor of the Central bank, the Mayor of Moscow and a number of regional ministers, consultants and chairmen of specialised banks for a week-long meeting in Cairo between 23 and 30 September, 1990. An initial agreement was reached allowing Albaraka to start activities in Muslim regions such as Kazakhistan and Tajakistan in addition to Russia itself. A decision was subsequently made to establish an Albaraka bank in Kazakhistan with an authorised capital of 150 million U.S. dollars, with the Albaraka share being of 50%. Also to be set up is the Al Tawfeek bank in Uzbekistan in participation with the private sector. The next step will be the establishment of the Albaraka bank of Uzbekistan with an authorised capital of 100 million U.S. dollars in participation with the government, the share of each being 50% of the total capital.
At present, the group is engaged in establishing an Albaraka bank in Moscow with an authorised capital of 100 million U.S. dollars, with Albaraka owning 50% of the total capital shares. As an incentive, the group has opened a number of institutes to make available training opportunities in the fields of management and Islamic economy in Tashkent and currently the group is planning to open other Islamic educational institutes in the remaining parts of the former Soviet Union.
Non Banking Activities
We mentioned in the beginning about the trading, industrial, agricultural and service sectoral activities which are managed by central companies of the group. Due to certain factors these are mainly concentrated in Muslim majority regions. But some of them are already well established in areas of Muslim minority residence as well. Trade Sector This sector was established in 1986 with Samaha Oil Trading Company in Panama with a capital of 1.5 million U.S. dollars. This company specialises in trade and in the field of energy, especially crude oil and petrochemical products. The trade sector also established Samaha-Kyoei in 1980 in London with a capital of GBP 300,000 to work in the fields of trade, finance, insurance, consultancy, industrial operations, agency distribution and marine transportation. The sector also established in 1987, Samaha Textile Co. in Paris with a capital of 1.5 million U.S. dollars to operate in the field of marketing, textiles and ready-made clothes particularly in Muslim countries.
In 1987 the trade sector also started Samaha Food Stuff with a capital of 1.5 million U.S. dollars for trading in all kinds of food stuffs.
In Muslim minority areas, the trade sector established the Samaha Tunisian & Cameroonian Co. in Cameroon with a capital of CFA 100 million U.S. dollars. Furthermore, the Tunisian Tugian Trading Co. was started in 1986 with a capital of CFA 100 million and the Tunisian Ivory trading Co. in Abidjan with a capital of CFA 125 million. Industrial Sector The industrial sector of the Dallah Albaraka group participated in the establishment of Langive Co. in South Africa with a capital of 10 million U.S. dollars. The group’s share in that capital is 6 million U.S. dollars. The company produces cooking oil and soap.
The group was also involved in an extensive study, through a group of professionals, for the selection of some industrial projects in Kazakhistan. Some of these projects have already proven to be feasible and work could start shortly. Agricultural Sector In this sector the group has through its affiliate, the Arab Co. for Agricultural Investment and in participation with the Phillipine Organisation for Islamic Propagation and Reformation agreed to establish an agricultural project at Lanawbailsur district. This project will have a capital of 1.5 million U.S. dollars with the group’s share being 60% of the capital.
This project comes under the programme known as the Raising Income of Poor Muslims. The funds of the project will be invested in agricultural and fishing projects which require large manpower. The project also aims at the development of capabilities of local farmers to run their own businesses.
The Project has also furnished required finance for the operation of such businessmen.
A Dallah agricultural company was established under the name West Point Pastoral Co., in the Esperance region of Australia in 1981 with a capital of 4.3 million U.S dollars. The company is involved in raising sheep and trading in products such as meat and wool in addition to other agricultural activities such as wheat and paddy raising. Conclusion The Albaraka group’s focus Oii Muslim Minorities is the result of its realisation of its responsibilities toward these communities and its obligations towards the development of these regions as suitable investment areas for the establishment of successful and beneficial projects for the group, for the depositors and the participants as well as for regions of Muslim minority domicile.
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