EU launches debit cards for refugees in Turkey

Yahoo – AFP, September 26, 2016

European Commissioner for Humanitarian Aid and Crisis Management Christos
 Stylianides (L) delivers a speech next to Turkey’s EU Minister Omer Celik (R)
during a joint press conference following their meeting on September 26, 2016
(AFP Photo/Adem Altan)

Ankara (AFP) - The European Union on Monday launched a scheme worth almost 350 million euros providing mainly Syrian refugees in Turkey with pre-paid debit cards, the biggest project yet under a landmark deal between the bloc and Ankara.

EU Humanitarian Aid Commissioner Christos Stylianides, in Ankara for the start of the programme, said the debit cards will help give vulnerable refugees a "sense of normality" in their lives.

The refugees will be able to use the cards in shops or institutions to pay for food, education, housing and clothing or also to withdraw cash from ATMs.

Each card will be automatically topped up with 100 Turkish lira ($33.50) a month, giving people the chance to choose their own purchases.

Stylianides said the programme was an "unprecedented response" to an "unprecedented crisis".

"This (scheme) is, in our humanitarian field, a game-changer in the delivery of humanitarian aid. Refugees can choose what they spend money on."

Turkey is home to some three million refugees, most of them Syrian. The vast majority live in cities without direct support from non-governmental organisations and aid groups.

Supported with 348 million euros ($392 million) from Brussels and its member states, the scheme will be rolled out by Turkish Red Crescent and the UN World Food Programme supported by the Turkish authorities.

Applications will start in October for the scheme. Families who have children going to school will receive more cash. All refugees registered in Turkey, including Iraqis, are eligible to apply.

Stylianides suggested that the programme would also benefit Turks.

"The money will be spent in local shops, boosting local businesses and encouraging social cohesion between citizens and refugees."

The project is part of a six billion euro ($6.75 billion) deal struck in March between Brussels and Ankara to curb the migrant influx into Europe, which saw more than a million arrive in the EU last year.

There have been fears the deal could collapse with President Recep Tayyip Erdogan complaining that the promised money was not handed directly to Turkey.

In exchange for cutting the flow, Brussels also offered Turkey visa liberalisation for its citizens to visit EU countries in the Schengen area as well as accelerated membership talks.

But Ankara has threatened to withdraw from the agreement if Europe does not allow visa-free travel for Turks by next month, though the numbers coming to Europe have dropped significantly since March.

Indonesia prays for Islamic banking boom

Yahoo – AFP, Sam Reeves, 27sep 2015

Indonesia has a Muslim population of around 225 million but this huge number

of faithful has not translated into success for sharia banks (AFP Photo/Adek Berry)

Indonesian teacher Nina Ramadhaniah hopes for "blessings from Allah" by opening a sharia bank account -- the sort of pious customer the world's most-populous Muslim-majority country is praying for as it launches an Islamic finance drive.

Indonesia, Southeast Asia's biggest economy, has a Muslim population of around 225 million but this huge number of faithful has not translated into success for sharia banks, institutions required to do business in line with Islamic principles.

Bank Indonesia mosque, pictured

 on the first day of the holy month of 

Ramadan, in Jakarta, in 2013 (AFP

Photo/Adek Berry)

Now regulators have launched a plan aimed at growing the sector, which currently accounts for less than five percent of banking assets, compared to a quarter in neighbouring, more developed Muslim-majority Malaysia and around half in Saudi Arabia.

Authorities believe it is a good moment, with many Indonesians getting wealthier after years of strong economic growth and an increasing trend towards piety across broad sections of society.

Many of those without bank accounts, estimated at about 40 percent of the population, are soon expected to open one.

"The situation is an opportunity for the Islamic banking business to get bigger," said Nasirwan Ilyas, a senior official from the Islamic banking division of the Financial Services Authority (OJK).

The OJK is spearheading the drive, and unveiled a five-year roadmap earlier this year that included plans to educate the public about sharia lenders and the establishment of an Islamic finance committee to better manage the sector.

'Interest is haram'

Key features of sharia banking include the prohibition of interest on loans or customer deposits, and a ban on investing in "non-Islamic" businesses, such as those involving pork or alcohol.

For teacher Ramadhaniah, who has an account with Indonesia's biggest Islamic lender, Bank Syariah Mandiri, the ban on interest is a key attraction.

Key features of sharia banking include the prohibition of interest on loans

or customer deposits (AFP Photo/Bay Ismoyo)

"Charging interest is haram (against Islam), ill-gotten gains that will not bring me any blessings from Allah," the 44-year-old told AFP. "I don't want to live in sin."

Sharia accounts often work on a "profit-and-loss sharing" model, meaning customers get a windfall when the bank does well but can lose out when it does badly.

There are obvious disadvantages. Sharia lenders generally offer lower returns on investments and their modest size often means they provide fewer services than larger, conventional peers -- many shops are not equipped to accept their debit cards.

Nevertheless, Islamic banks have proven popular in recent years, with the sector expanding on average more than 40 percent a year between 2008 and 2012, according to the OJK.

The growth came after laws were changed to make it easier to establish an Islamic bank, and there are now a plethora of standalone sharia lenders, Islamic banking units attached to conventional banks, and smaller Islamic financial institutions in the countryside.

Growth in the sector has lost steam due to a broader slowdown in the economy, which is expanding at six-year lows -- giving authorities another reason to launch their drive.

Islamic mega-bank

Central to the overhaul is a plan to set up a National Islamic Finance Committee this year, to oversee the sector by bringing together representatives from different government agencies and act as a contact point for potential foreign investors.

Currently responsibility for the sector is spread around different bodies, such as the OJK, the central bank and the finance ministry, according to the OJK's Ilyas.

It is modelled after similar bodies in other countries, such as the International Islamic Financial Centre in Malaysia, where the sector is already far more developed as the government started supporting it some years ago.

In addition to the OJK roadmap, the government has announced plans to merge the Islamic banking subsidiaries of four state-owned banks to create an Islamic mega-bank, which should be able to provide better services than the current Islamic lenders.

Sharia lenders generally offer lower returns on investments and their modest

 size often means they provide fewer services than larger, conventional peers

(AFP Photo/Bay Ismoyo)

While observers have broadly welcomed the plans, they concede that many difficulties remain.

Khalid Howladar, Moody's global head of Islamic finance, said it would be "quite a challenge" to grow the sector to a substantial level.

"The market is growing faster than conventional but from a very low base," he said, adding Islamic banks in Indonesia did not offer "substantive competition" to their non-sharia peers.

But for Ramadhaniah and a growing army of devout Indonesians with new-found spending power, Islamic banks remain the only choice.

"I really don't care that I'm not earning anything or getting lower returns on my investments," she said. "I can live in peace."

Space tech provides Africa's first Islamic insurance for herders

Sapa-AFP, 01 april, 2014

Image by: ©Vladimir Wrangel/shutterstock.com

The son of a camel herder, Hassan Bashir knows how tough traditional life in Kenya's arid north is, where pastoralists rely on livestock herds surviving boom and bust cycles of drought.

But Bashir is also an astute entrepreneur, developing Africa's first livestock insurance scheme to make payouts compliant with Islamic law, by bringing together Muslim scholars and number-crunching agricultural experts using NASA weather satellites.

"I've come from the community, and I understand its needs," said Bashir, a sharp-suited businessman respectfully greeting elders dressed in traditional flowing robes in his hometown of Wajir, where goats and donkeys wander the dusty streets.

Bashir, 48, set up Takaful Insurance of Africa three years ago, which unlike ordinary insurance schemes prohibited by Islam, takes only a management fee from clients.

"It is a fair and ethical way to protect pastoralist's livestock assets from natural hazards," said Bashir, whose 80-year old father was one of the first to receive a payout this week for his herd of 50 cows.

Payments are assessed not according to deaths of individual animals as it would be impossible to provide proof, but according to an index drawn up by experts at the Nairobi-based International Livestock Research Institute (ILRI), using satellites to measure vegetation coverage and thus the severity of drought.

The company is named after the Islamic concept of takaful, in which risks are shared among the community, rather than insurance where policy holders effectively gamble risks against the company.

Any surplus money after payments are made is distributed equally to remaining policy holders.

"It is a cooperative welfare basket for the community," Bashir added, who was inspired to switch from regular insurance broking to the Islamic system after "hot discussions" with his family who refused his "unethical" money.

"I wanted to do something to develop the people here," he said.

In 2011, fierce drought here in northeastern Kenya decimated herds with a devastating impact, and spiralled into famine in nearby war-torn Somalia.

Like elsewhere in the Horn of Africa, vast numbers of livestock are kept as a form of savings account. But these living investments face natural hazards.

"The animals are our lives," said 65-year old Abdi Aden Bulle, who lost some 40 of his 50 cows, and eight of his 10 camels in the 2011 drought, a key driver in his decision to join the scheme.

"We sell the animals to get food, to pay school fees, pay medical expenses."

Takaful made the first payouts this week in Wajir to 100 policyholders.

On the bottom end, one herder who had insured three goats and paid a premium of $5 six months ago, received a payout of $7.

At the higher end, a herder who paid some $940 to insure 50 cows received $720 in recompense, less than what he put in due to assessments of the severity of the drought suffered in that area.

Rains were several weeks late this year.

"It's been very, very dry," said herder Khalif Mohammed, who lost three of his 15 goats this year.

Once cash payouts are made, herders say they will use it to restock animals, pay school fees or daily domestic needs.

Animals hold enormous cultural and emotional value and underpin society here.

"People can be made almost crazy when they lose animals in the drought, they would be seen talking to themselves," said Wajir governor Ahmed Abdullahi.

But the economic potential is also huge: here in Wajir country, a scrubland region where most live in traditional huts, government estimates value livestock at some $550 million (400 million euros).

Across Kenya, the pastoral livestock sector is valued at around $5 billion (3.5 billion euros).

Organisers -- backed by some $6 million (4.5 million euros) from Australia, Britain and the European Commission -- hope it can strengthen the ability of fragile communities across the region to cope during droughts, and reduce reliance on food aid.

"It is an innovative product with the possibility to replicate it elsewhere in Kenya and other nations," Dominique Davoux from the European Commission said.

With few of the semi-nomadic people holding bank accounts, insurance premiums are even payable via mobile telephone money transfers using text messages.

Across the Horn of Africa, over 70 million people live in pastoralist areas, regional governments estimate, supplying some 90 percent of all meat.

The ILRI-designed system is already being taken up by insurers in other northern Kenyan regions and southern Ethiopia, totalling some 4,000 policyholders, with numbers growing.

Takaful is eyeing up possibilities in Somalia, especially the more stable self-declared Somaliland in the north.

But the scheme faces challenges ahead, as when drought hits, all members are paid.

The scheme will need to spread the risk by rolling it out to different areas to give it the size and geographical diversity needed "to create a stable insurance scheme", Bashir said.

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