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BUSINESS & ECONOMY

Davos Really Comes to the Desert as the WEF Arrives in Riyadh

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By Frank Kane

The World Economic Forum’s “Special Meeting” got off to a comparatively low-key start in Riyadh on Sunday – the first time Saudi Arabia has staged a full-blown WEF event after a few years of dancing around issues on both sides. Would the security-conscious Saudis allow the “men from Switzerland” the freedom to organise potentially controversial discussions with the abandon they sometimes display in Davos?

Would the Swiss be sufficiently aware of the red lines in the kingdom, all the more vivid in times of heightened regional geopolitical tensions?On the evidence of Day 1, there was sufficient give-and-take on both sides to produce a valuable and thought-provoking addition to the global forums circuit – even if it lacked some of the pizzazz of the Future Investment Initiative gathering known as “Davos in the desert” and the anarchic round-the-clock buzz of the WEF’s annual meeting in the Swiss Alps.

It was certainly smaller and less crowded than the other two events. The Saudi Royal Guard, who assumed responsibility for security at the Ritz-Carlton conference complex, ensured an orderly event, although some members of the international media had difficulty getting the necessary security clearance.

The theme of the two-day forum is “global collaboration, growth and energy for development”, which is a neat way of encapsulating the biggest issue of the day in global economic and politics: will geopolitics derail progress on climate change and economic development?

Saudi Arabia – at the cockpit of those tensions in the Middle East and a leading energy exporter – is the perfect place to consider the question. Mohammed Al Jadaan, the Saudi finance minister, set the tone in an early panel session with the grave warning that ”geopolitical risks are possibly the No 1 risk as you look at the global economy” and urged “agility” by policymakers to head off the threat.

Kristalina Georgieva, managing director of the International Monetary Fund, which is due to open a regional office in Riyadh, hammered home that message in a neat bit of alliteration: “We may end up with this decade being remembered as the Turbulent Twenties, or the Tepid Twenties, when what we actually want is the Transformational Twenties.”

The first of many “elephants in the room” – the risk of confrontation between Israel and Iran arising from the conflict in Gaza – was recognised when Mahmoud Abbas, the Palestinian president, arrived at the opening plenary session. No stranger to the Davos circuit, Abbas repeated his call for the US to push for a two-state solution, saying it was the only way to end the conflict. “Only they can do it,” he declared.

Kristalina Georgieva, IMF managing director, told the forum the decade should be remembered as ‘the Transformational Twenties’ Most of the WEF’s overarching themes came together in the first big set-piece devoted to energy. The session was called “People, policy, finance: realising an equitable energy transition” – and there were elephants aplenty in the chandeliered cavern of the plenary hall.

The hydrocarbon giants were well represented by Prince Abdulaziz bin Salman, Saudi Arabia’s energy minister, and his Qatari counterpart Saad Al Kaabi, as well as Darren Woods and Vicki Hollub, CEOs of ExxonMobil and Occidental, respectively. You had to feel sorry for Kadri Simson, the Estonian politician and EU energy commissioner, as she pitched a decidedly different view from her co-panellists. But Børge Brende, the WEF president and the session’s moderator, did his best to even up the odds. It was a clash between those destined for either “hydrocarbon hell or green heaven” – in the unattributable sarcasm of one senior energy policymaker – and though the debate stayed within civilised bounds, it had its moments.

Al Kaabi accused the environmental lobby of “demonising oil and gas for decades”; Woods called for an end to the “propaganda and politics”. The panel became heated when it came to the issue of what was the real “elephant in the room”. Was it coal? Or the cost of energy transition? Or subsidies for fossil fuels? Prince Abdulaziz cut through the rhetoric with the announcement that he had detected the “camel in the room”: the fact that the campaign against climate change cannot be waged within national boundaries, but has to be global.

Towards the end of the day a frisson went through the forum as it was whispered that Crown Prince Mohammed bin Salman, Saudi Arabia’s prime minister and the patron of the event, was on his way. He duly arrived, oversaw a private meeting of forum dignitaries and departed, with much security fanfare.

At the end of Day 1, I was just a little underwhelmed. The clinical Swiss lines of the WEF signage did not quite gel with the Arabic splendour of the King Abdulaziz International Conference Centre. I’m sure it just needs time.

Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He acts as a consultant to the Ministry of Energy of Saudi Arabia and is a media adviser to First Abu Dhabi Bank of the UAE


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Trump’s Tariff Battles: The Global Fallout

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Baba Yunus Muhammad

Tariffs are a form of taxation on goods crossing national borders. While proponents argue that they can protect local industries by making imports more expensive, most economists view them as a blunt instrument that can harm both the target country and the domestic economy while also escalating trade conflicts. Here’s an overview of Trump’s latest tariff threats and their potential impact worldwide.

China: Retaliation and Countermeasures

During his campaign, Trump threatened a 60% tariff on Chinese goods, but the actual figure has been set at 10%. When combined with existing tariffs, this brings the average rate on Chinese imports to between 20% and 30%. Trump claims these measures are aimed at pressuring Beijing to crack down on the smuggling of fentanyl and its precursors into the US. However, analysts see broader economic motives at play.

With 14% of China’s exports directed to the US, the impact of Trump’s tariffs is somewhat limited. Many Chinese firms have already relocated parts of their supply chains to circumvent these barriers. Still, Beijing has responded forcefully by imposing 15% tariffs on US coal and liquefied natural gas, and 10% tariffs on crude oil, farm equipment, and large vehicles. Additionally, China has imposed export restrictions on critical materials such as tungsten and tellurium, which are vital for US industries.

Perhaps more consequentially, China has initiated an anti-trust investigation into Google, raising concerns that this could be the beginning of a broader crackdown on American tech firms operating in the country. The deepening divide between the world’s two largest economies could have long-term global repercussions.

Mexico: Short-Term Relief, Long-Term Uncertainty

With 83% of Mexico’s exports going to the US, the impact of tariffs would have been significant. However, a last-minute deal has paused the proposed tariffs for a month.

While the official justification for the tariffs was Mexico’s alleged cooperation with criminal organizations facilitating illegal immigration and fentanyl trafficking, critics argue that the real motivation is Trump’s opposition to trade deficits. Economist Paul Krugman has warned that measures designed to eliminate trade deficits could also deter foreign investment.

In response, Mexican President Claudia Sheinbaum dismissed Trump’s claims as baseless but agreed to deploy 10,000 troops to the border. The US, in turn, has pledged to curb the flow of high-powered weapons into Mexico. Despite this temporary resolution, business leaders worry about long-term instability, with Brian Winter, a Latin America expert, warning that companies may reassess Mexico’s role in North American supply chains.

Canada: Last-Minute Reprieve Amid Economic Anxiety

A temporary pause on tariffs against Canada was announced following urgent discussions between Trump and Prime Minister Justin Trudeau. Given that 77% of Canada’s exports go to the US, this was a crucial development.

The justification for targeting Canada—stemming the flow of fentanyl—was unconvincing, as only 19kg of the drug was seized at the US-Canada border last year compared to 9,600kg from Mexico. However, the vagueness of Trump’s objectives may actually work in his favor, allowing him to declare victory without a clear benchmark.

Canada had prepared retaliatory tariffs on $106 billion worth of US goods, primarily from Republican-leaning states. Meanwhile, a grassroots movement in Canada has emerged in response to Trump’s threats, with campaigns encouraging domestic purchases and branding pro-Trump figures as “Vichy Canadians.”

European Union: Preparing for Retaliation

Trump has vowed that new tariffs on the European Union will “definitely happen,” citing the US’s goods trade deficit with the bloc, which he claims exceeds $300 billion. However, official data from 2023 puts the deficit at approximately $160 billion. Furthermore, when services are included, the US actually runs a trade surplus of $107 billion with the EU.

In anticipation of Trump’s measures, the European Commission has devised a “carrot and stick” strategy—offering increased imports of US liquefied natural gas while preparing retaliatory tariffs on American goods. The outcome of these negotiations will be pivotal for transatlantic trade relations.

United Kingdom: A Balancing Act

While Trump has suggested that the UK might face tariffs, he also indicated that a resolution could be found, citing his positive relationship with Prime Minister Keir Starmer. For now, this uncertainty leaves Britain in a precarious position.

With 68% of the UK’s exports being services, which are not subject to tariffs, the immediate impact may be lower than for other countries. However, the UK’s trade relationship with the EU complicates matters. If Trump’s tariffs escalate into a full-scale trade war, Britain could be forced to choose between aligning with the US or the EU—its largest trading partner.

Conclusion: A Risky Game

Trump’s tariff threats have created economic uncertainty across multiple regions. While some countries have secured temporary relief, the long-term impact of these measures remains unclear. If trade tensions continue to escalate, the global economy could face significant disruptions, with repercussions extending far beyond the US and its trading partners.


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African Nations Target 300 Million New Power Connections by 2030

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In a bold initiative to address Africa’s persistent electricity deficit, several African nations have committed to opening up their energy sectors to attract investment and provide electricity to 300 million people by 2030. This effort, known as Mission 300, was launched in April by the World Bank and the African Development Bank (AfDB) and aims to mobilize at least $90 billion in funding from multilateral banks, development agencies, private investors, and philanthropies.

Bridging Africa’s Energy Gap

Africa remains the region with the highest number of people lacking access to electricity, a major hindrance to economic growth and development. To tackle this, Nigeria, Senegal, Zambia, and Tanzania, among other nations, have pledged to reform their electricity utilities, integrate more renewable energy, and increase national electrification targets. These commitments were made at an energy summit attended by African heads of state in Tanzania’s commercial capital.

Kevin Kariuki, Vice President for Infrastructure at the AfDB, emphasized the need for cost-effective expansion and rehabilitation of national electricity grids. “We want to expand and rehabilitate our electricity grids using the least cost possible,” Kariuki stated.

Financing the Mission

World Bank President Ajay Banga highlighted that the initiative’s success hinges on unlocking significant private sector investment. The World Bank plans to contribute $30-40 billion, while the AfDB will provide an additional $10-15 billion, with the remainder expected from private investors and other sources.

To encourage private sector participation, the World Bank will only disburse funds to countries that implement necessary regulatory and policy reforms. Historically, investors have been hesitant due to concerns over unfriendly regulations, bureaucratic delays, and currency risks.

Renewable Energy at the Core

Half of the planned new electricity connections will be through expanding national grids, while the other half will rely on renewable energy sources, including solar and wind-powered mini-grids. This approach aligns with Africa’s growing push toward sustainable energy solutions, reducing dependence on fossil fuels and enhancing energy resilience. Ajay Banga underscored the developmental significance of electrification, noting that access to power is a key enabler of economic growth, job creation, and poverty reduction.

Looking Ahead

As African nations embark on this ambitious journey, the success of Mission 300 will depend on effective implementation, transparent governance, and sustained investor confidence. If successful, this initiative could mark a turning point in Africa’s economic transformation, unlocking new opportunities for businesses and communities across the continent.

The coming years will be critical in determining whether these commitments translate into tangible results, providing millions of Africans with the electricity needed to power industries, businesses, and households.


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Pakistan’s Bold Gamble: Can it Build a Riba-Free Economy?

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Imagine a world where money doesn’t just grow—it heals. That’s the vision 2,000+ global leaders brought to life at the 8th World Islamic Economics and Finance Conference (WIEFC) with Islamic Finance Trends 2024 in Lahore this January. Forget stuffy lectures—this was a revolution. Pakistan, often overlooked in global finance debates, suddenly became the heartbeat of a $4.5 trillion ethical finance movement. From AI tools sniffing out hidden interest to ‘green Sukuk’ funding hurricane-proof homes, this conference didn’t just talk about change—it blueprinted it.

Why should you care? Whether you’re a student, investor, or just tired of Wall Street’s greed-first mindset, Islamic Finance Trends 2024 is reshaping how money works for everyone. Think climate action funded by ethical bonds, apps that calculate Zakat in seconds, and microloans lifting farmers out of poverty—without interest.

Stick around. We’re breaking down the conference’s biggest reveals, from Pakistan’s bold legal reforms to the tech tools making ethical finance as easy as ordering Uber Eats. Spoiler: This isn’t just about halal banking—it’s about building a financial system that doesn’t leave anyone behind.

Pakistan’s Legal Revolution—A Model for the World

Pakistan’s bold legislative reforms have turned heads globally. The 2022 Federal Shariat Court (FSC) ruling, which declared interest-based systems unconstitutional, set off a chain reaction. By 2024, the 26th Constitutional Amendment cemented this shift, mandating a full transition to Shariah-compliant finance by 2028. But what does this mean in practice?

  • Pakistan’s Islamic banking assets soared to 50 billion in 2024, up from 30 billion in 2022. This growth now represents 22% of the nation’s total banking sector, with projections hitting 35% by 2027. Analysts attribute this surge to regulatory incentives, including tax breaks for Shariah-compliant institutions and public awareness campaigns.
  • Globally, the Islamic finance industry expanded by 14% in 2023, driven by Sukuk issuances worth 250 billion a record high. Saudi Arabia’s12 billion sovereign Sukuk and Indonesia’s blockchain-based offerings contributed significantly.

Malaysia, a pioneer in Islamic finance with a $900 billion industry, recently signed a knowledge-sharing pact with Pakistan. “Their regulatory framework is a gold standard,” noted Bank Negara Malaysia’s governor, citing Malaysia’s dual banking system, which allows conventional and Islamic banks to operate side-by-side. Key features include:

  • Shariah Advisory Councils: Independent bodies that audit financial products.
  • Tax Neutrality: Equal tax treatment for Islamic and conventional instruments.

Saudi Arabia’s Vision 2030 has allocated $1.2 billion to develop fintech solutions compliant with Shariah principles. The Saudi Central Bank (SAMA) launched a sandbox in 2023, testing 40+ startups focused on digital Zakat platforms and AI-driven Murabaha contracts.

Dr. Hussain Qadri’s Vision: Beyond Compliance

In his keynote, Dr. Hussain Mohi-ud-Din Qadri warned against “checklist Islamization.” He argued:

“Replacing ‘interest’ with ‘profit’ in contracts isn’t enough. True Islamic finance must dismantle systems that perpetuate inequality.”

His speech highlighted Pakistan’s new Zakat-based social safety net, which redistributes 2.5% of assets annually to 8 million low-income families. The program uses biometric verification to prevent fraud, ensuring 98% of funds reach intended recipients.

Converting Pakistan’s $130 billion interest-based debt into Shariah-compliant instruments is a Herculean task. The solution? Asset-backed Sukuk—a financial instrument that ties returns to tangible assets like infrastructure or renewable energy. Unlike conventional bonds, Sukuk holders own a share of the asset, aligning with Islam’s prohibition of speculative risk.

In March 2024, Pakistan issued $2 billion in green Sukuk to fund wind farms in Sindh. The offering was oversubscribed by 300%, attracting investors from the UAE and Singapore. By 2025, these projects are expected to power 1.2 million homes and cut carbon emissions by 4.5 million tons annually. Key terms:

  • Tenure: 10 years.
  • Profit Rate: 7% annually, tied to energy sales.
  • Guarantor: International Finance Corporation (IFC).
  1. Nigeria: Lagos State’s $1.25 billion Sukuk funded the Lekki Deep Sea Port, creating 170,000 jobs. Investors receive profits from port operations, with returns averaging 9% since 2024.
  2. Indonesia: The world’s first blockchain Sukuk raised $500 million in 2024, with 60% of buyers under 35. Built on Ethereum, the platform allows real-time tracking of proceeds.
  3. Germany: Tesla’s Berlin Gigafactory secured €750 million via hybrid Sukuk, blending Islamic finance with ESG principles. Proceeds fund solar panel installations and worker housing.

In Punjab, a pilot project offers micro-Sukuk to small farmers. Instead of loans, investors receive a share of harvest profits. Early results:

  • 40% rise in crop yields due to better equipment access.
  • Default rates below 2%, compared to 15% for traditional microloans.
  • Farmers like Ali Raza, 42, report higher incomes: “I used to pay 20% interest. Now, I share 10% of my wheat profits—it’s fairer.”

Education Crisis—Building the Next Generation of Experts

The Islamic finance talent gap is staggering. With 1.9 billion Muslims worldwide, the industry needs 1 million new professionals by 2030—but current graduation rates meet only 30% of demand.

Since 2006, Kuala Lumpur’s International Centre for Education in Islamic Finance (INCEIF) has trained 25,000 professionals across 100 countries. Its secret? A curriculum blending Shariah, finance, and tech. Courses include:

  1. Fintech Ethics: Balancing AI with Shariah principles.
  2. Climate Finance: Structuring green Sukuk.
  3. Pakistan’s new National Islamic Finance Development Fund (NIFDF) aims to replicate this, targeting 10,000 graduates by 2030. The fund partners with 15 universities to offer scholarships and internships.
  • Egypt’s NowPay: This AI platform offers “halal investing” tutorials to 500,000 users monthly. Interactive modules simulate real-world scenarios, like screening stocks for Shariah compliance.
  • Saudi Arabia’s Hala: A robo-advisor that screens 10,000+ stocks in real-time using algorithms vetted by scholars. Users grew by 300% in 2024.

A 24-year-old graduate of Lahore’s Islamic Finance Academy, Rahman now designs Sukuk for a Dubai-based bank. “My internship at Malaysia’s CIMB Islamic changed everything,” she says. “We need more cross-border programs.” Rahman’s team recently structured a $500 million Sukuk for a Saudi solar project, integrating ESG metrics.

Ethical Finance Goes Global—Unexpected Adoption

Islamic finance is no longer confined to Muslim-majority nations. From London to Tokyo, ethical banking is resonating with ESG-focused millennials.

Launched in 2024, Britain’s first fully Shariah-compliant pension fund attracted £300 million in six months. “Even non-Muslims are opting in,” says fund manager Amina Khan. The fund excludes companies with debt-to-asset ratios above 33%, aligning with Shariah’s risk-sharing ethos. Top holdings include Unilever and Nestlé, both screened for ethical supply chains.

Goldman Sachs’ Islamic ESG ETF saw $1.2 billion in inflows in Q1 2024, outperforming conventional funds by 8%. The ETF uses a dual screening process:

  1. Shariah Compliance: No alcohol, gambling, or interest-based income.
  2. ESG Metrics: Companies must score B+ or higher on climate audits.

Toyota’s $500 million Sukuk funded a hydrogen-powered vehicle plant in Osaka. Meanwhile, 40% of Japanese homebuyers now consider “ethical financing” a priority—up from 12% in 2020. Firms like Japan Islamic Finance Consultancy (JIFC) facilitate Musharaka (partnership) agreements, where banks and buyers co-own properties.

Pakistan’s 2028 Roadmap—Bold or Overambitious?

Dr. Qadri’s WIEFC address laid out a three-pillar strategy:

  1. National Islamic Finance Development Fund:
    • $200 million pool with 30% reserved for women-led startups.
    • First project: A blockchain Zakat platform to track donations from source to beneficiary. Pilot launches in Karachi in 2025.
  2. Regulatory Sandbox:
    • Testing AI Shariah auditors that scan contracts in seconds. The AI cross-references 50+ scholarly opinions to flag non-compliant terms.
    • Pilot with Karachi’s Stock Exchange begins Q3 2025.
  3. Rural Inclusion:
    • 15 million unbanked Pakistanis to gain mobile Islamic banking access by 2027.
    • Partnering with China’s Alipay to deploy 10,000 agent networks in villages. Agents earn commissions for onboarding users.
  • Skeptics: “Egypt took 15 years; Pakistan’s 2028 deadline is reckless,” argues Cairo-based economist Dr. Farid. He cites Egypt’s 2004-2019 transition, which required rewriting 120+ laws.
  • Supporters: “Iran eliminated interest in 18 months post-1983,” counters Dr. Qadri. The Central Bank of Iran replaced interest with “expected profit rates,” though critics argue this is semantics.

Climate Action—The Unlikely Role of Islamic Finance

A surprise WIEFC theme was climate change. With 63% of Sukuk funding green projects, ethical finance is becoming a climate ally.

In March 2024, the UAE’s $1.5 billion green Sukuk for Dubai’s Mohammed bin Rashid Solar Park sold out in 3 hours. The project will offset 6.5 million tons of CO2 yearly—equivalent to taking 1.4 million cars off roads. Investors include BlackRock and Norway’s sovereign wealth fund.

After 2022’s catastrophic floods, Pakistan launched Qard al-Hasan (benevolent loans) for rebuilding. Features:

  1. 0% interest, 5-year repayment grace period.
  2. 200,000 homes rebuilt by 2024, using climate-resilient designs like raised foundations and bamboo frames.

Technology—A Double-Edged Sword

As AI reshapes finance, WIEFC speakers debated: Can algorithms uphold Shariah ethics?

  • Bahrain’s Rain: A crypto exchange screening tokens for Shariah compliance. Rain’s scholars reject tokens linked to gambling or excessive debt.
  • Pakistan’s Nayapay: Mobile app offering AI-driven Zakat calculations to 2 million users. The app scans bank statements and suggests donations based on income and assets.

Dr. Kamarul Zaman Yusoff warned:

“Technology can’t replace scholars. An AI might miss the maqasid (higher purpose) of a transaction.” He cited a 2024 case where an AI approved a contract with hidden interest (Riba), later overturned by scholars.

Lagos State Governor Babajide Sanwo-Olu:

“Our Sukuk-funded port proves Islamic finance can drive development without debt traps. We’re replicating this model for schools and hospitals.”

France’s Ethical Banking Experiment

Société Générale’s Paris branch now offers Shariah-compliant mortgages. Client Marie Dupont:

“I’m not Muslim, but I prefer their transparent pricing. No hidden fees—just a fixed profit rate.”

Finance Minister of Indonesia Sri Mulyani Indrawati:

“Young investors want tech and ethics. Blockchain Sukuk delivers both. Our next step? Tokenizing Waqf (endowment) assets.”

The WIEFC 2025 made one truth undeniable: Ethical finance isn’t a niche—it’s the future. As Dr. Qadri concluded:

“Profit and piety can coexist. Our task is to build systems that honor both.”

What began in Pakistan’s flood-ravaged villages with interest-free Qard al-Hasan loans now echoes on Wall Street through Goldman Sachs’ billion-dollar Islamic ETFs. Islamic Finance Trends 2024 aren’t just reshaping markets—they’re rewriting the rules of ethical wealth. From Saudi Arabia’s $12 billion green Sukuk funding solar megaprojects to Indonesia’s blockchain-powered bonds attracting Gen Z investors, this year has proven one truth: money can uplift communities and portfolios when guided by conscience.

Pakistan’s bold legal reforms—eliminating Riba by 2028—show how nations can balance faith and finance. Malaysia’s education hubs and Nigeria’s Sukuk-funded ports prove this isn’t a niche movement. Even skeptics can’t ignore the numbers: a $4.5 trillion industry growing 14% annually, 63% of Sukuk funding climate projects, and apps like Egypt’s NowPay making halal investing as easy as TikTok.

But the real win? Islamic finance’s DNA—zero interest, shared risk, and ESG alignment—is pushing all finance toward fairness. Whether you’re a farmer in Punjab accessing micro-Sukuk or a Tokyo salaryman choosing ethical mortgages, 2024’s trends offer a roadmap: profit doesn’t have to come at humanity’s expense.

Courtesy: Halal Times


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