IN THE DRIVING SEAT
TBY talks to Mazin Saad Al-Nahedh, Group CEO of Kuwait Finance House (KFH), on promoting ethical finance, the growth of the sukuk market, and how demand for those products is building momentum.
BIOGRAPHY
Mazin Saad Al-Nahedh received his bachelor’s in finance from California State University Sacramento in 1992. He completed a general management program and several specialized training courses from Harvard University, in addition to receiving numerous certifications. He went on to serve many banking functions related to wholesale banking, finance, retail banking, and treasury and was successful in managing the assets and liabilities of financial institutions within regulatory and administrative requirements. He joined KFH in October 2014, and before then served as a member of the management executive committee, Group General Manager-Treasury, General Manager-Corporate Banking Group, and Retail Banking General Manager at the National Bank of Kuwait (NBK).What is the position of KFH as a primary service provider for Islamic finance and as a driver for the industry?
Our vision is to be the leading sustainable Islamic bank in the world. One of our core principles is to educate the world about Islamic finance and promote it as an alternative to conventional banking. We believe Islamic finance involves ethical banking solutions that would interest and attract many customers from around the world today, be they Muslim or non-Muslim. Most of our customers are attracted to sharia-compliant banking because it is line with their beliefs, but many others see the value of the ethical dimension and safety that these products imply. There is no interest rate, just a profit rate, and at maturity the amount remains the same without accruing any additional charges. It is also asset-based, which makes the recovery much easier, and there is a limit on over-leveraging of the same asset. Once it is moneyed, there is no way it could be leveraged again. That provides assurance and prevents things like credit derivatives that we saw in the conventional finance sector, and which were instrumental in bringing about the 2008 economic crisis. So Islamic finance is an attractive field for investors looking for an ethical and secure source of financing.
In 2016, the volume of sukuk traded via the KFH exceeded USD11.4 billion, nearly doubling the amount of the year before. Why has the sukuk market gained so much momentum in recent years?
What has helped is the change in oil prices. Most GCC governments are hydrocarbon based and have been affected by oil prices, thus having to fill gaps in their fiscal budgets. They have tapped the international bond markets for a long time but have not been able to attract Islamic funds due to the form of the financing. We are now seeing more diversity in the financing pools and more appetite toward Islamic financing. In essence, it is a complementary liquidity product that suits Islamic banks because it has liquidity features and tradability, and because it also suits the investor in the sense that it comes at the right price in relative terms, and accesses a larger audience of participants rather than limiting yourself to purely conventional banks. Relative to conventional issuances, it is still small, and the question is how we can grow in terms of diversifying the funding sources between Islamic and conventional.
Large-scale infrastructure projects and other megaprojects have been the bedrock of the Kuwait government's five-year plan for 2015-2020. Have you seen a concomitant growth in Islamic financing to fund these projects?
Definitely. To give an example, last year the KNPC deal included an Islamic tranche for the first time, opening the door for potential future deals in Islamic finance, be it in local or foreign currency. For example, EQUATE was looking to raise KWD500 million and the book closed at 3.7 billion, so it was significantly over subscribed, with a price that was actually lower than conventional bonds. I see this trend continuing, and the valid proposition of sukuks and the demand we are seeing for those issuances significantly outweighs any conventional bank issue.
How important are common international Islamic finance standards, and is there a need for a body to bring about standardization?
What needs to be standardized are transparency, accounting standards, agreement, and contract regulations. In terms of products, it helps create flexibility and innovation to have different sharia boards, enriching the Islamic finance world and the products on offer. To centralize would be to kill innovation. However, standardization of processes and procedures is beneficial and important, and is being done by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
IN THE DRIVING SEAT
TABLE OF CONTENTS
Guest Speaker
Dato’ Sri Haji Mohammad Najib bin Tun Haji Abdul Razak, Prime Minister , Malaysia
TBY talks to Dato' Sri Haji Mohammad Najib bin Tun Haji Abdul Razak, Prime Minister of Malaysia, on the growing contribution that Islamic countries are making to the global economy and how Islamic financing can offer new opportunities to industry and academia.
read articleInterview
HE Khaled Nasser Abdullah Al-Roudan, Minister, Commerce and Industry (MoCI)
TBY talks to HE Khaled Nasser Abdullah Al-Roudan, Minister of Commerce and Industry (MoCI), on tools and strategies for diversifying the economy, the role of international players in supporting a wider range of sectors, and the rapidly developing food industry.
read articleInterview
HE Yousef Al-Ebraheem, Advisor , Al-Diwan Al-Amiri
TBY talks to HE Yousef Al-Ebraheem, Economic Advisor to the Al-Diwan Al-Amiri, on the need for a rejuvenation of Kuwait's infrastructure to support an economy that has come a long way and the role education will play in delivering the expertise required by the society.
read articleInterview
Dr. Khaled A. Mahdi, Secretary-General , Supreme Council for Planning & Development (GSSCPD)
TBY talks to Dr. Khaled A. Mahdi, Secretary General of the Supreme Council for Planning & Development (GSSCPD), on the breakdown of Kuwait's long-term economic plan, the KPIs that will benchmark its success, and what Vision 2035 means for the nature of the economy.
read articleInterview
Sheikh Dr. Meshaal Jaber Al Ahmed Al Sabah, Director General, Kuwait Direct Investment Promotion Authority (KDIPA)
TBY talks to Sheikh Dr. Meshaal Jaber Al Ahmed Al Sabah, Director General of the Kuwait Direct Investment Promotion Authority (KDIPA), on launching an investment promotion conference, attracting the right partners for PPP, and expectations for the year ahead.
read articleInterview
HE Dr. Mohammad M. Al-Zuhair, Executive Chairman, Kuwait National Fund for Small and Medium Enterprise Development
TBY talks to HE Dr. Mohammad M. Al-Zuhair, Executive Chairman of the Kuwait National Fund for Small and Medium Enterprise Development, on empowering young Kuwaitis, IT and entrepreneurialism, and the growth of fintech.
read articleFocus: Still all in the family?
Merchant families in Kuwait
Family-owned businesses play a major role in the Kuwaiti economy. However, with many approaching the third generation of management, they are starting to come across unique problems that may pose issues for the greater economy.
read articleInterview
HE Sheikh Abdullah Ahmad Al-Humoud Al-Sabah, Director, Environmental Public Authority (EPA)
TBY talks to HE Sheikh Abdullah Ahmad Al-Humoud Al-Sabah, Director of Environmental Public Authority (EPA), on how oil companies can contribute to Kuwait's vision on sustainability and the various projects that are coming to fruition.
read articleInterview
Dr. Samira S. Omar Asem, Director General, Kuwait Institute for Scientific Research (KISR)
TBY talks to Dr. Samira S. Omar Asem, Director General of the Kuwait Institute for Scientific Research (KISR), on commercializing the green innovations coming from R&D initiatives, the role of collaboration across multiple sectors, and projects that we should expect to see more of in the future.
read articleInterview
Khaled Abdulrazzaq Al Khaled, Vice-Chairman and CEO, Boursa Kuwait Company
TBY talks to Khaled Abdulrazzaq Al Khaled, Vice-Chairman and CEO of Boursa Kuwait Company, on the takeover of the Kuwait Stock Exchange and the role the bourse plays in both the privatization of government entities and as a source of capital for family businesses.
read articleInterview
HE Essam Abdul Mohsen Al-Marzouq, Minister, Oil & Minister of Electricity and Water
TBY talks to HE Essam Abdul Mohsen Al-Marzouq, Minister of Oil & Minister of Electricity and Water, on cooperation with other ministries, the private sector's role in energy, and upcoming regulations.
read articleInterview
Ghalib Shlash Safouq, Assistant Undersecretary for the Construction Projects Sector, Ministry of Public Works
TBY talks to Ghalib Shlash Safouq, Assistant Undersecretary for the Construction Projects Sector at the Ministry of Public Works, on Kuwaiti companies, the country's healthcare facilities, and the role of international companies.
read articleInterview
Khaled K. Al Mashaan, Vice-Chairman & CEO, ALARGAN International Real Estate Company
TBY talks to Khaled K. Al Mashaan, Vice-Chairman & CEO of ALARGAN International Real Estate Company, on drivers of growth, operating throughout the region, and real estate prices in Kuwait.
read articleInterview
Tawfiq Ahmed Bin Sultan, Chairman, Middle East Telecommunications Company (METCO)
TBY talks to Tawfiq Ahmed Bin Sultan, Chairman of the Middle East Telecommunications Company (METCO), on e-government potential, the future of the economy, and the state of technology uptake in Kuwait.
read articleInterview
Sheikh Yousef Abdullah Sabah Al-Nasser Al-Sabah, Director General, Kuwait Ports Authority (KPA)
TBY talks to Sheikh Yousef Abdullah Sabah Al-Nasser Al-Sabah, Director General of Kuwait Ports Authority (KPA), on his operational plans for the near future and turning Kuwait into a regional logistics hub.
read articleInterview
HE Khaled Nasser Abdullah Al-Roudan, Acting Minister, State for Youth Affairs
TBY talks to HE Khaled Nasser Abdullah Al-Roudan, Acting Minister of State for Youth Affairs, on e-platforms and blended learning programs, developing ICT skills, and preparing young people for tomorrow.
read articleInterview
Eng. Ali Hussein Al Youha, Secretary-General, National Council for Culture, Arts and Letters
TBY talks to Eng. Ali Hussein Al Youha, Secretary-General of the National Council for Culture, Arts and Letters, on the activities of the Council and works to preserve and enhance Kuwait's cultural heritage.
read article
