Saturday, October 16, 2010

Building Institutions - A Path To Racial And Social Integration For Muslims In The American Society

Building Institutions - a path to racial and social integration for Muslims in the American Society

Institution - An established organization or corporation (as a bank or university) especially of a public character

Suddenly, in fall of 2005 the Muslim community in the blue color city of Birmingham found itself at odds with its non Muslim neighbors. This came as a big surprise to many, as most of the Muslims living in this city were 2nd or 3rd generation British born and raised. They paid taxes, lived and worked next to there non Muslim neighbors and sent there children to public schools. So why after living in a country and in a community for decades did they find themselves alienated and targeted? One can spend many hours debating over the evidence, but the one fact remains, it happened, and It shouldn't have surprised us at all; as mere residency in a society is not necessarily a sign of Cultural or Social integration. I believe that in order for a sub community to fully integrate itself; it must at least perceive to have a stake in the overall process and the ability to influence it. The creation of local institutions facilitates and helps communities organize in an influential manner. These give the community a sense of ownership and stake, allowing its members to participate and influence the overall agenda. To be effective these institutions need to be diverse and varied; spanning cultural, financial, religious and political boundaries.

For the American Muslim community, the current landscape is fairly bleak. There are very few world class Muslim institutions, and the ones that do exist, provide the most fundamental and rudimentary services to its constituents. The existing infrastructure consists of mostly religious hubs such as Mosques and Islamic schools; these are the first to mushroom in any new community and help regulate the basic needs of its members, e.g. prayers, marriages, religious education, funeral services etc. In all major US metro areas these have flourished and service levels have improved over time.

Over the last decade the Islamic education sector has seen rapid growth, this is largely due to significant demand for quality primary education by mostly professional and affluent Muslim parents. Larger schools, focusing not just on primary but secondary and High School education are also starting to appear at an accelerated pace throughout major metropolitan suburbs. In principal these schools are structured similar to the Catholic school system and focus on teaching standard curriculum with additional focus on Islamic education. The growing economic disparity between the urban lower middle class and there fellow suburban dwelling professionals is alarming, and as a result, the larger more established schools find themselves catering mostly to the affluent Muslims; leaving the urban families with limited options.

Although a few Muslim Universities and Colleges exist, they are still very few and far apart. On this front, some geographic areas have done better than others, for example the Chicagoland community has made progress with the establishment and rapid growth of East West University. An institution started over two decades ago now boasting enrollment of close to 2000 students, mostly non Muslims. Offering Liberal Arts and Engineering curriculum, East West University is an excellent example of a simple idea turning into a local institution, serving not only its original constituents, but a much larger community by evolving into a seamless local institution. Even with these sporadic successes a tremendous amount of work still needs to be done on the education front in other locations and communities.

Living in the United States it is difficult to go to a US city, town or village without running into a Muslim doctor. Associations such as AAPNA and others boast thousands of members, all Muslim doctors. Even with these large numbers, it is hard to find a single reputable large medical institution started or run by members of the Muslim medical community. This situation is counter intuitive; with so many Muslim doctors shouldn't we have an abundance of institutions? I believe in this scenario the dilemma exists due to the lack of management expertise amongst Muslim doctors. Doctors are arguably the most affluent Muslim community in the US and have the opportunity to take a leadership role in the institution building process. So far they have dropped the ball on this front. Organizations such as AAPNA, with an established member community and access to funds should prioritize efforts to help identify and support candidates who can be developed into business leaders via education and training.

For any community to flourish the availability of capital for consumer and commercial purposes is paramount; for this reason alone the lack of Islamic financial institutions in the US is of significant concern; having institutions that serve the special needs of the Muslim community by providing Shariah compliant financial products and offerings is a necessary step forward. Activities such as home buying and business investments increase an individual's stake in the community, and this impact is almost more important than all others; this in my opinion is the seed that allows individuals to take an interest in there surrounding environment and participate in the community at a heightened level. Development of Islamic financial institutions would allow Muslims in America to be on a path of integration and participation in the American society. A tremendous amount of progress has taken place in the Islamic finance arena and countries such as Malaysia, Bahrain, U.A.E and Pakistan are at the forefront of this effort.

It is estimated that there are between 4-7 Million Muslims living in the United States (depending on whose numbers you believe), but unfortunately with the exception of a few first efforts, Islamic finance is still in its infancy. In order to avoid paying interest many successful Muslim families don't participate in homeownership and other interest related activities. The ones that forgo this hesitancy usually do so with feelings of guilt. Over the last five years Guidance Financial has started offering home mortgage products to the US Muslim community. The effort has been met with a fair amount of success and is a good start, but consumers will benefit from additional players entering the market.

Unfortunately, on the commercial front, Shariah compliant lending institutions are no where to be found. There are some local institutions such as Devon Bank in Chicago and University Bank in Michigan that are starting to dabble with commercial lending, but being small community banks they are limited in there resources. Additionally, the absence of a Secondary market to resell these loans as Mortgage Backed Securities (MBS) threatens to choke any growth in this effort. The lack of a developed Islamic secondary market forces many institutions to carry the loans for the duration of the term, which creates a liquidity problem. Even though some examples exist of portfolio sales to Freddie Mac and Fannie Mae (Government funded Secondary markets for conventional/interest baring loans), the development and creation of a more permanent secondary market for Islamic/Shariah compliant loans is essential for any future growth in the US. This one activity alone could breathe new life into the Islamic financial markets and would most likely embolden other institutions to accelerate product development efforts.

Islamic finance is currently estimated to be a $400 Billion business worldwide, and according to the UK-based Islamic Finance Information Service $16.9 billion in Islamic bonds (Sukuks), were issued in the first 10 months of 2006 - 43 percent more than all Islamic bonds issued in 2005. The success of Shariah compliant financing instruments in the UK serves to strengthen and validate the market worldwide. For the US market the creation of additional institutions and products is a necessity, Credit Cards, Bonds (Sukuks) Auto financing, equipment and inventory financing and construction loans are some of the areas that need development and investment.

Middle East based Investment banks and Private Equity companies have also started to open offices in the US, Arcapita (owners of Church's Chicken and Caribou coffee chains), Kingdom Holdings and Unicorn Investment Bank are examples of such companies. Some of these institutions especially Kingdom Holdings has been involved in taking positions and doing deals for over 10 years, but these overseas companies do little to engage the local communities in the US and therefore tend to have very little impact on the local landscape. Any future dialogue leading to collaboration at the local level could benefit both sides.

As the above mentioned examples illustrate, some preliminary work is being done to build institutions by the Muslim community, but unless the urgency is felt on a broader scale, these efforts will continue to be "test cases" and "one off" scenarios. The diverse Muslim community in the US is comprised of entrepreneurs from all over the world and many of the community members are actively involved via there jobs in helping others build and run the same kind of institutions. There is certainly no lack of expertise; but I believe a lack of inspiration and guidance; with community support and guidance the Muslim intellectuals and entrepreneurs could certainly create world class institutions, but only if they have the courage to dare.

That is why the Muslim community in the U.S must learn to recognize there superstars and engage actively and collectively to develop them into leaders. As the events in Birmingham, England indicate, it is paramount for the Muslim community in the US to avoid a similar fate, if they succeed, they will redefine there role in history and if they fail, history will surely define them.

As we sail thru the year 2007 it is encouraging to see sparks of innovation and leadership all over the country, and there is some hope for the future, but it is a bit indulgent for the Muslim Americans to believe that there future generations will be able to fulfill their dreams. I fear that if Muslim professionals don't set examples now, and fail to create leadership icons today, they will also fail to inspire the future generations


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