Abstract

Finance and investment in accordance with Islamic Shariah Law have been on the rise worldwide. In addition to wealthy Muslim individuals in oil rich countries in the Middle East, the wealthy and middle class in countries with large Muslim populations such as Indonesia, India, Nigeria, Pakistan and Turkey are seeking Shariah-compliant securities in which to invest. Muslims represent about 22 per cent of the world population (July 2012 estimates in the CIA World Factbook) and therefore a large potential market even if currently many of them live in poverty in developing countries (See the GDP per capita column in Table 25.1). To keep matters in perspective, one must keep in mind that the vast majority of financial transactions in Islamic countries are conventional rather than Shariah-compliant transactions. Table 25.1

Country

Population in 2011*

GDP per capita in 2011 (Current US$)*

Audit report states compliance with IFRS**

Use of IFRS**

Note**

Muslim population percentage

Muslim population

Albania

3,215,988

4,030

IFRSs not permitted

No stock exchange

70%

2,251,192

Algeria

35,980,193

5,244

IFRSs not permitted

No stock exchange

99%

35,620,391

Benin

9,099,922

802

IFRSs not permitted

24.40%

2,220,381

Burkina Faso

16,967,845

600

IFRSs not permitted

60.50%

10,265,546

Cote D’Ivoire

20,152,894

1,195

IFRSs not permitted

38.60%

7,779,017

Indonesia

242,325,638

3,495

IFRSs not permitted

86.10%

208,642,374

Iran

74,798,599

(4,526 in 2009)

IFRSs not permitted

98%

73,302,627

Malaysia

28,859,154

9,656

IFRSs not permitted

Intends full convergence with IFRS

60.40%

17,430,929

Mali

15,839,538

669

IFRSs not permitted

90%

14,255,584

Mauritania

3,541,540

1,151

IFRSs not permitted

No stock exchange

100%

3,541,540

Niger

16,068,994

374

IFRSs not permitted

80%

12,855,195

Pakistan

176,745,364

1,194

IFRSs not permitted

95%

167,908,096

Senegal

12,767,556

1,119

IFRSs not permitted

94%

12,001,503

Syria

20,820,311

(2,893 in 2010)

IFRSs not permitted

90%

18,738,280

Togo

6,154,813

584

IFRSs not permitted

20%

1,230,963

Tunisia

10,673,800

4,297

IFRSs not permitted

98%

10,460,324

Turkmenistan

5,105,301

4,722

IFRSs not permitted

89%

4,543,718

Uzbekistan

29,341,200

1,546

IFRSs not permitted

88%

25,820,256

Brunei-Darussalam

405,938

(31,008 in 2010)

IFRSs permitted

No stock exchange

67%

271,978

Gambia

1,776,103

625

IFRSs permitted

No stock exchange

90%

1,598,493

Guyana

756,040

(2,994 in 2010)

Yes

IFRSs permitted

Companies may choose full IFRSs or IFRS for SMEs

7.20%

54,435

Maldives

320,081

6,405

Yes

IFRSs permitted

100%

320,081

Suriname

529,419

(8,292 in 2010)

Yes

IFRSs permitted

19.60%

103,766

Turkey

73,639,596

10,498

Yes

IFRSs permitted

99.80%

73,492,317

Uganda

34,509,205

487

Yes

IFRSs permitted

12.10%

4,175,614

Yemen

24,799,880

1,361

IFRSs permitted

No stock exchange

100%

24,799,880

Bahrain

1,323,535

(18,184 in 2010)

Yes

IFRSs required for all

Including unlisted companies

81.20%

1,074,710

Bangladesh

150,493,658

735

IFRSs required for all

Except IAS 29 and IFRS 9

89.50%

134,691,824

Egypt

82,536,770

2,781

Yes

IFRSs required for all

90%

74,283,093

Iraq

32,961,959

3,501

Yes

IFRSs required for all

Including unlisted banks

97%

31,973,100

Jordan

6,181,000

4,666

Yes

IFRSs required for all

92%

5,686,520

Kuwait

2,818,042

62,664

Yes

IFRSs required for all

Including unlisted companies

85%

2,395,336

Kyrgyzstan

5,507,000

1,075

Yes

IFRSs required for all

Including unlisted companies

75%

4,130,250

Nigeria

162,470,737

1,452

?

IFRSs required for all

From 2012. Audit report to be determined

50%

81,235,369

Oman

2,846,145

25,221

Yes

IFRSs required for all

Including unlisted companies

75%

2,134,609

Qatar

1,870,041

92,501

Yes

IFRSs required for all

77.50%

1,449,282

Sierra Leone

5,997,486

374

Yes

IFRSs required for all

IFRS for some, IFRS for SMEs for others

60%

3,598,492

Tajikistan

6,976,958

935

Yes

IFRSs required for all

Including unlisted companies

90%

6,279,262

Azerbaijan

9,168,000

6,916

Yes

IFRSs required for some

For banks (listed and unlisted) and large state-owned enterprises. For others, IFRSs permitted

93.40%

8,562,912

Kazakhstan

16,558,459

11,245

Yes

IFRSs required for some

For all banks, joint stock companies, and other significant public interest companies, including extractive industry companies and companies with Governmental ownership)

47%

7,782,476

Lebanon

4,259,405

9,904

Yes

IFRSs required for some

For financial institutions. Not permitted for others

59.70%

2,542,865

Libya

6,422,772

(9,957 in 2009)

IFRSs required for some

For banks and listed companies, but practice has yet to apply IFRSs

97%

6,230,089

Morocco

32,272,974

3,054

Yes

IFRSs required for some

For banks/financial institutions IFRSs. Other listed companies maychoose IFRSs or Moroccan GAAP

99%

31,950,244

Mozambique

23,929,708

535

Yes

IFRSs required for some

For banks (from 2007), large unlisted (from 2010), and medium-sized unlisted (from 2011)

17.90%

4,283,418

Saudi Arabia

28,082,541

20,540

Yes

IFRSs required for some

Banks and insurance companies listed on the Saudi Stock Exchange must use IFRS. IFRS not permitted for others

100%

28,082,541

United Arab Emirates

7,890,924

45,653

IFRSs required for some

For listed companies and banks, for unlisted companies IFRSs are permitted

96%

7,575,287

Afghanistan

35,320,445

576

Unknown

99%

34,967,241

Cameroon

20,030,362

1,271

Unknown

20%

4,006,072

Chad

11,525,496

823

Unknown

53.10%

6,120,038

Comoros

753,943

809

Unknown

98%

738,864

Djibouti

905,564

(1,203 in 2009)

Unknown

94%

851,230

Gabon

1,534,262

11,114

Unknown

1%

15,343

Guinea

10,221,808

502

Unknown

85%

8,688,537

Guinea-Bissau

1,547,061

629

Unknown

50%

773,531

Palestine

Unknown

Unknown

Unknown

Somalia

9,556,873

Unknown

Unknown

100%

9,556,873

Sudan

34,318,385

1,234

Unknown

100%

34,318,385

*

Source: World Bank Website (Accessed on 6 September, 2012)

**

Source: IAS Plus Website (Accessed on 6 September, 2012)

***

Source: CIA World Factbook Website (Accessed on 6 September, 2012)