KARACHI, 13 November 2006 — As we evolve as a society — or begin undoing pieces of our recent regression — The Second World Islamic Economic Forum (WIEF) entrepreneurship roundtable has predicted the modern entrepreneur will be driven by broader goals.
Entrepreneurship will be propelled by those who yearn to make sustainable change, predicted Lord Michael Hastings, global head — corporate social responsibility, KPMG International.
“An entrepreneur will be driven by passions beyond those of personal or financial gain,” he said. Brilliant ideas can liberate people — the new wave of entrepreneurs will capitalize on that, taking on the risk inherent in implementing novel concepts. The future entrepreneur’s focus will not be only on how to get rich, but on how to become significant. “Islam encourages people to take risk,” said Saleh Kamel, president of Islamic Chamber of Commerce and Industry and one of the leading Saudi entrepreneurs.
Islamic history can offer an alternative perspective. Although in some cases, the infringement of intellectual property rights qualifies as theft, in others the protection of IP is a form of knowledge hoarding. Often the IP protection corporations seek is in direct contradiction with a key reason for such forums: to share learning and best practices. However, in our existing capitalist systems, if IP protection were not provided, corporations would eventually lose the incentive — or feasibility — to invest in research and development (R&D).
Venture capital could provide seed funding, but most Islamic countries do not have an accessible or widespread platform.
The solution offered by Muslim history was that the state encouraged and funded research. It was the Islamic state’s responsibility to sponsor anything that could potentially be for the public good. Government-sponsored research also addressed the most widespread obstacle voiced by entrepreneurs of all size which is the lack of funding.
Currently, governments use public funds usually only to sponsor defense-related research and development. Given our present collateral-based modes of financing, an entrepreneur with limited capital or assets has little choice but to avail existing micro-financing options that usually charge steep interest rates. Nonetheless, the rates charged are lower than those charged by the informal money-lending sector.
The system we see in Islamic history also potentially fostered an acceptance of failure — the current social and financial threshold for failure is low, as highlighted by a Malaysian delegate.
The state however understood that only a limited number of scientists or ventures it funded would make a discovery. Additionally, the Islamic state does not charge taxes. In current capitalist systems, large corporations know the loopholes required to avoid paying significant taxes should they be inclined not to pay them. The reality is that small businesspeople form the bulk of corporate taxpayers.
This discourages entrepreneurs because they know they may start making profits but their investment would not be recouped before they would be compelled to pay corporate taxes.
The entrepreneurship roundtable itself, referred to as The Young Muslim Leaders (YML) initiative, also generated several proposals applicable in existing systems. Among suggestions: To start a common banner under which entrepreneurs feel a sense of belonging such as YML; A website for Muslim entrepreneurs to share best practices and learning as this is among the most expeditious and accessible forms of communication; and an undertaking to identify and recognize efforts and intellect of individuals in Muslim history so that minds, not just sponsors, are credited and hence motivate Muslim youth in particular.
Pakistani designer Amir Adnan also suggested establishing a skill-based mentoring “college” akin to a university hospital, where rural population would upgrade their core skills to meet modern market demands. The trainees would then transfer learning with others in their hometowns, creating a strong multiplier effect while becoming entrepreneurs in their own right. In its pilot phase, the project has trained about fifty master trainers building upon five rural skill-sets such as handloom materials or silver craft. Adnan’s initiative, for example, worked with women from two villages. These women in turn have in turn trained 32 more women. Their average daily income has increased 75 percent to Rs.275 per day — although their compensation remains well below the market price for the final products that their work goes into. Since they sell their work directly to fashion designers, they avoid dealing with middlemen.
Until formal leadership for the entrepreneurship roundtable is assigned, Nazir Razak, group chief executive, CIMB Berhad, Malaysia and Omar Ayub Khan, Pakistan’s minister of finance and chairman of the newly-established Competitiveness Support Fund — both panelists on the roundtable — will circulate suggested terms of reference and mechanics for implementing the proposals. By Nov.19, they will circulate the paper to participants of the entrepreneurship roundtable.
The immediate and voluntary commitment of these leaders to initiate the action-taking process bodes well for the WIEF and Muslims in general. Muslim political and economic leadership have the added advantage of implementing best practices from their Islamic heritage, in addition to lessons learned from current entrepreneurial success stories. Learning can be as much from history as from current models.
