The German economy is considered the strongest in the Eurozone [15-country bloc that uses the Euro currency] and the level of German exports surpassed China for the fifth year running in 2007, achieving a record export of 969 billion. Its imports amounted to 770 billion, giving Germany a trade surplus of 198 billion. According to the German Foreign Ministry, the Eurozone is Germany’s number one economic partner, and Eurozone imports and exports constitute two-thirds of German trade figures.
Germany managed to acquire this position thanks to its geographical location at the heart of Europe allowing it to attract international companies. Berlin was awarded the title of ‘City of the Future’ in 2006/07 by the fDi [Foreign Direct Investment] magazine affiliated to the Financial Times Group. The award is given annually to the European region or city that offers the best opportunities for foreign investment. Germany is also renowned for the number of its scientific research centres that encourage creativity and innovation. Companies with distinctive brand-names such as Daimler-Benz, BMW, and Siemens invest 250 million into scientific research and development on an annual basis. Due to this cooperation between economic activity and scientific research, Berlin ranked second in the European Innovation Index. The city is also renowned for its social stability and rule of law.
According to the 2007 census, the number of Muslims in Germany amounts to 3.4 million, and constitutes 4.1% of the German population of 82 million. This makes Islam the second largest religion in Germany, after Christianity, and Germany has recently demonstrated its responsiveness to the Islamic faith with an average of one man and one woman converting to Islam per week.
Germany went down in Islamic banking history as the first European country to issue sovereign Sukuk when in 2004 the German federal state of Saxony-Anhalt issued Islamic Sukuk worth 100 million. Islamic financial services had begun even before that in Germany with Commerzbank launching the Al Saqur investment fund targeting the Gulf region. However, this fund was later closed after its assets declined from an initial 40 million in 2000 to just 4 million in 2005. The largest private bank still active in this area is Deutsche Bank, which offers five Shariah-compliant mutual funds in Dubai, although they are not German-market orientated.
In addition to this, some insurance companies also offer Islamic Takaful insurance services outside of Germany. The Hannover Re Group is considered the first European insurance company to offer full Takaful insurance to Islamic Takaful insurance companies. Therefore, we can see that all the Islamic financial services offered by German financial companies target foreign markets, especially the Gulf States and Malaysia. This leaves the Muslim community in Germany, which owns a high capacity of savings, lacking Islamic financial institutions offering services like Islamic banking and Islamic insurance.
Due to Germany’s geographical location and its economic potential, Islamic financial institutions, which will develop in Germany without doubt, will serve both the German Muslim community, as well as the Muslim community of the entire Eurozone, the population of which is estimated at 18 million.
As a result of the global financial crisis, perhaps the world has become more open-minded towards an Islamic financial system.
Perhaps now is the time for Islamic financial institutions and Muslim investors to make their move.