Muslim customers worldwide, though culturally diverse and geographically scattered, are driving a coherent $2 trillion market opportunity across a variety of lifestyle goods and services, driven by ethical needs inspired by Islamic faith, and collectively known as the "Islamic Economy." The study was published in 2013 and describes Islamic economy as "sectors whose core products/ services are structurally influenced by Islamic ethics and law," driving the faith-inspired ethical consumption needs of the 1.8 billion Muslim consumers worldwide.
This Islamic economy, also known as the halal economy, impacts the following seven industries directly: food (halal), finance (Islamic), clothing (modest), tourism (friendly to Muslims), media and entertainment (Islamic), pharmacy (halal) and cosmetics (halal) education (Islamic theme) and philanthropy (zakat, waqf) are other fields.
The users of the Islamic economy are predominantly Muslims but do include those who hold common beliefs outside the Islamic religion. Common market habits influenced by Islamic principles include halal (lawful) food consumption, islamic banking, modest clothing, family-friendly travel, as well as other facilities with special restrictions on gender relations and religious practices. The market also applies to corporate activities seeking the finance, investment and insurance services of Islamic industry. As a community the Islamic economy generates value for customers and the economies involved. This also has tremendous potential to contribute to global well-being through the socially responsible ethic underlying this. We'll know how latent demand for these goods and services in the Islamic economy is growing across the globe. We will highlight the already emerging business ecosystem that is beginning to serve this sector and we will also highlight the wide gaps and opportunities that remain in that sector.
However, it's important to understand the main drivers that form this growing global Islamic economy before we present these findings. There are several factors shaping the global Islamic economy across the four main stakeholders – consumers, companies, governments and investors – as customers seek to spend more on lifestyle goods and services that meet their faith-inspired ethical needs, as governments in primarily OIC (Organization of Islamic Cooperation) countries seek to diversify their economies, as companies seek to achieve more revenue and consumers increasingly expect a halal, ethical approach driving a dedicated business ecosystem.
Let's take a deeper insight into these factors-
According to the Pew Research Center's Forum on Religion & Public Life, the global Muslim population is projected to rise from 1.7 billion in 2020 to 2.2 billion by 2030 (+29.4 per cent), rising at about twice the pace of non-Muslims, with an estimated annual growth rate of 1.5 per cent for Muslims and 0.7 per cent for non-Muslims.
Muslims are growing more prosperous globally, with total OIC GDP expected to rise at a compound annual growth rate (CAGR) of 6.2 percent by 2023, compared with expected global growth of 5.8 percent CAGR, with GDP per capita rising at 4.3 percent CAGR.
Stepping up Religious Similarity
Globally, Muslim customers are steadily pressing for halal goods and services, with a Pew Research Centre survey of over 38,000 Muslims in 2011 finding that 76.3% of Muslims consider faith to be 'very significant' and 96% of Muslim travelers consider halal food to be essential based on a COMCEC survey in 2016. Halal is a significant dietary restriction across regions for 48 percent of consumers in the Middle East and Northern Africa (MENA) region, 12 percent in the Asia Pacific region, and 1 to 4 percent across other regions, according to a Nielsen Survey, which drives a start-up ecosystem that addresses their needs. While Muslim customers are not homogeneous with varying shades of commitment in their religious preferences, there is a wider trend for lifestyle goods and services to better serve faith-inspired needs.
A demand for realistic, digital Islamic finance solutions is growing, driving a robust ecosystem of digital Islamic solutions spanning Islamic finance, halal food and goods, modest fashion and Islamic lifestyle, with 15 of the top 50 countries ranked according to smartphone penetration being OIC countries.
Growing Value of Ethical Consumerism
The sectors of Islamic Economy meet the wider ethical needs of Non-Muslim customers. Ethical concerns are becoming increasingly relevant for all customers, with 66 per cent of consumers willing to pay more for higher quality, ethical goods, leading to halal organic brands such as Saffron Road, and ethical micro-finance platforms such as Ethis Crowd and Blossom Finance, serving a wider ethical market segment.
Investors are under enormous pressure to invest large capital volumes and sustain high returns. The Islamic economy seeks higher returns and is an increasing field of interest
Institutional investors are under immense pressure to spend the collected funds. Although the volume of private equity transactions rose in 2018, extreme competition and rising asset prices decreased the number of dealers worldwide in 2018 by 13 per cent to 2,936. Around the same time, uncalled money reached a high of $2 trillion across all forms of funds in December 2018.
The Islamic Economy offers a strong opportunity to invest in high-growth enterprises and to develop globally sized enterprises in all sectors of the Islamic Economy. As outlined in the section on Islamic Economy Investments, there is now clear traction on investments from food, finance to lifestyle categories and across all rates of investors, companies, VCs, private equity and sovereigns across the Islamic economy sectors.
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Using community collaboration software, such as CollabDeen, will enhance the digital environment for members of the organization, group employees or both. In problem-solving circumstances, CollabDeen’s key community-driven feature, Circles, put together Jemaah and the group team in. While not being physically expected to attend any service, Jemaah is also able to participate, discuss and interact with the group and stay informed. This digitalization of Islamic organizations breaks stereotypes and aid’s the Global Halal Industry to use technology to drive more and more revenue, contributing to the Global Islamic Economy.
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