Bright Simons spent precious time out of his busy schedule to respond to my article, which sought to bring clarity on his earlier take on the Exposure Draft on Non-Interest Banking released by the Bank of Ghana.
In his response, Bright Simons dwelled on a point I had made, which he duly quoted in his response.
To provide a context for my response, I would like to quote my earlier statement on which Bright dwelt. “Indeed, central banks in secular countries do not have to change banking laws to accommodate non-interest banking. I did not just make this statement in vain; I supported it with another statement: “The Bank of England did not have to change the banking laws.
Luckily, Bright Simons quoted this supporting statement from my earlier article in his response.
Clearly, I made an emphatic point to the effect that it is not a must for central banks in secular countries to change their banking laws before non-interest banking can be allowed or accommodated. I gave the example of the Bank of England.
The right thing I expected from Bright was to prove to me that there has never been a single secular country in the world which allowed non-interest banking without changing or amending the banking laws.
Surprisingly, Bright chose to make the point that I did not “distinguish between those situations where a country wants to promote uptake of Islamic/non-interest banking or merely wishes to tolerate it/not outlaw it”. Now, let me break this point down.
Bright is implying that secular countries which want to promote uptake of Islamic banking do change their banking laws. It also implies that countries which only want to tolerate Islamic banking do not change their banking laws.
This is not the case. I gave a specific example of UK. In the UK, the Bank of England has been explicit that the reason why there is no dedicated regulatory regime for Islamic banks is that they do not want to favour or disadvantage any bank or group of banks. The essence is to create a level playing field for all the banks.
Bright goes further to emphatically claim that where secular countries decide not to change or amend their banking laws to allow Islamic banks to operate, the said Islamic banks in those countries do not gain roots. When I read this, I honestly could not hold back my laughter.
I say so because I made a specific reference to the context of the United Kingdom (UK). The UK is home to one of the most vibrant Islamic banking ecosystems outside the Gulf countries.
The UK did not change its banking laws, and yet Islamic banking has developed deeper roots since the 1970s.
The success story of Islamic banking in the UK is a testament that Bright’s point is untenable. Bright’s point that such banks do not gain roots falls very flat. Interestingly, Bright chose to provide examples of amendments to banking laws in Kenya to buttress his point.
He would realise that Islamic banking in the UK (where banking laws have not been changed) has deeper roots than what we have in Kenya (where banking laws have been amended).
The Islamic banking portfolio (in terms of assets) in Kenya is nowhere near what it is in the UK.
On the use of religious symbols, Bright cites the example of Kenya, and I find it difficult to understand why he thinks that, since Kenya has not banned such uses, it must necessarily be the paragon for other secular countries.
I gave the example of Turkey, which is also a secular country which decided not to use the name “Islamic”. It is therefore a matter of choice.
When Bright cites names and terms such as “La Riba Banking”, “Sahl Banking”, “Amana”, and “Saadiq”, I may have to draw his attention to the fact that Arabic names or terms are not necessarily religious and the two should not be confused.
Bright Simons also makes the point in paragraph 17 that Malaysia has a dedicated Islamic Finance Act. That is true. However, I expected him to be fair to the public by admitting that the said Act did not birth Islamic banking in Malaysia. Indeed, the Act was enacted several decades after Islamic finance had been in existence.
Bright also refers to amendments of tax laws in Australia and the UK. Meanwhile, my emphatic statement was not about tax laws but rather banking laws. Going to refer to tax laws in the UK when the bone of contention is on banking laws beats my imagination.
He then concludes that he hopes someone will bring these references to my attention to help me update my notes. I laughed like a ‘last killer’.
Are these the references Bright thinks are so valuable to feature in my notes? But what can I say? The very intelligent Bright has spoken. All I can say is that I have heard him.
Just to let Bright know that Kumasi Technical University is also referred to as KsTU and not KTU.
The latter is Koforidua Technical University.
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