IN the gloomy 1980s, Irish companies such as Avonmore and Dawn Meats created hundreds of jobs by operating a successful but unusual business in the Mayo town of Ballyhaunis: the slaughter of cattle according to the rules of Sharia law. Imams said their prayers as the cows were killed according to the rules laid down by the Koran.
Today, in the middle of another recession, the differences between Islamic and Christian beliefs offer another chance to a new generation of Irish people to create jobs, this time in Dublin's financial services sector.
The Department of Finance, the Revenue Commissioners and some of the country's leading accountants are already looking at ways to tap into the trillion dollar Islamic banking industry, which caters to a fifth of the world's population, according to a position paper drawn up by the department last month.
Islamic beliefs create two different opportunities for businesses in Ireland: the opportunity presented by the often well-off Muslim business people and doctors who live here and the opportunity presented to the Irish Financial Services Centre (IFSC) to become the European home to Islamic banks and investment funds.
The IFSC is already home to a few Sharia funds and the Financial Regulator set up an ad hoc team to specialise in the authorisation of Sharia funds and to foster familiarity between the regulatory system here and in Arab countries, Financial Regulator spokeswoman Jill Forde said this week. The Irish Stock Exchange also recently listed its first Islamic investment product -- a sort of Islamic bond -- but the market remains largely untapped despite Dublin's potential to become the European base for Islamic banks who want to offer funds, bonds, general banking and treasury services to Islamic companies.
"Starting from scratch is not a problem," says Jim McDonnell, a tax partner at PriceWaterhouseCoopers. For Ireland to succeed, we will need to make minor adjustments to the tax code and extend the network of double taxation agreements to countries in the Middle East, he adds. Ireland signed such an agreement with Bahrain recently and is in talks with Egypt, Saudi Arabia and Kuwait.
We must also be nimble. The biggest Islamic banks are in the Persian Gulf -- Dubai Islamic Bank, Kuwait Finance House and Saudi Arabia's al-Rajhi Bank -- but several other countries, notably Britain and Malaysia, are gearing up to be take a slice of the same cake. British Prime Minister Gordon Brown called two years ago for London to become the global centre for international Islamic banking and the country's Islamic banking sector is already bigger than Pakistan's and likely to expand further. Britain has six fully Sharia-compliant banks and 17 financial institutions such as the Qatar Islamic Bank have set up special branches or firms.
Some of these banks cater for Britain's large Muslim community, while others look after the sort of investment funds that the Government and Revenue Commissioners would like to see coming to Ireland.
While the Muslim community here is much smaller than Britain's (32,500 according to the 2006 census) it is expanding rapidly; jumping 70pc between 2002 and 2006 to become Ireland's third largest faith group after Catholics and Protestants. That community requires tailor-made banking that will either be provided by existing banks or by new institutions.
Non-Muslims in other countries have also been attracted by Islam's take on banking after the existing Western model was so discredited in the past two years. But despite the rising popularity of retail Islamic banks elsewhere, it remains difficult for Ireland's burgeoning Muslim population to access financial services here. Not one the 10 financial institutions listed on the Muslim Survival Guide for Northern Ireland and the Republic of Ireland website is based in the island of Ireland.
A seminar at the Islamic Cultural Centre of Ireland in the Dublin suburb of Clonskeagh last year urged local financial institutions to start offering mortgages and other financial services. Representatives from British-based Islamic banks gave presentations, but Dublin-based theologian Ali Selim emphasised the need for local institutions. It's an offer than has not yet been taken up, although Permanent TSB did consider such a move in the past.
To allow personal finance products for Muslims, we probably need changes in the rules governing lending here. The Sharia system for home buyers differs from the usual way of doing things here; rather than lend money to a home buyer and collect interest on it, an Islamic bank buys the property and then leases it to the buyer for the duration of the loan. The client pays a set amount each month to the bank, then at the end obtains full ownership. The payments are structured to include the cost of the house, plus a predetermined profit margin for the bank. Another popular financial services product is the credit card and here too the industry is coming up with solutions for Muslims living outside Ireland, but not inside the country. Muslim credit cards differ because the full balance must be paid off at month's end. The banks have devised a kind of commercial paper known as sukuk, which generates a predetermined return that is called a profit, not interest. It is tied to a specific asset such as a building and conveys ownership.
In Britain, Steven Amos, the Islamic Bank of Britain's head of marketing, recently told the London-based 'Times' newspaper that his bank is prospering as High Street banks alienate existing customers. "Our core business will always be Muslims, but the numbers of non-Muslims are really picking up. We've had massive interest -- and that's down to a number of reasons, all of which have kept us insulated from the credit crunch," he told the paper.
Those who have been working in Islamic banking for a long time feel vindicated. "The current financial collapse is an opportunity. The ugly side of Wall Street is exposed; it's always been there but covered by a layer of glamour that is now stripped away," according to Amr al-Faisal, a board member of Dar al-Mal al-Islami.
"We are more conservative and sober in our investments. That used to be considered a handicap. Now it's considered the height of wisdom."
Achampion of Islamic banking was the late Eddie George, who was governor of the Bank of England from 1993 and 2003. Nicknamed 'Steady Eddie' for the way he dealt with the aftermath of Black Wednesday in 1997, Lord Eddie George, as he became, is also remembered fondly by many in the Islamic finance industry in Britain for his determination over many years in pushing Sharia-compliant finance. In 2007, George recounted how he had been touched by the plight of one Muslim couple in Britain who had not been able to find a mortgage because of their religious beliefs, saying: "I couldn't think of any rational reason for this." It was under his promptings that the Bank of England began to consider how Islamic principles could fit with British law.
George was also instrumental in setting up a working committee, the Islamic Finance Advisory Group, to examine the challenges surrounding the introduction and expansion of Sharia-compliant finance in Britain in conjunction with a charity and the Union of Muslim Organisations in the UK and Ireland which helped to set the scene for Britain's rapidly expanding Islamic banking sector.
A pleasing example of how altruistic attempts to help ordinary Muslims get mortgages have repaid rich dividends for those who took the trouble to help their fellow citizens cope in a largely Christian society. It is also perhaps a lesson for George's newly appointed counterpart in Ireland, Professor Patrick Honohan, as he looks at ways of helping the struggling financial services industry.