OVERVIEW OF THE HALAL ECONOMY
The Halal economy has in recent years emerged as one of the most dynamic sub-sectors of the global economy with a powerful transformative force for socio-economic development. It has also become a leading component of economic growth, employment, trade, innovation and social cohesion in most advanced and emerging economies.
According to the State of the Global Islamic Economy Report 2022, an annual industry report produced by Thomson Reuters, the burgeoning Halal economy is growing at nearly double the global rate. The report states that the total value of the Global Halal economy in 2021 is USD$4.831 trillion, and it is forecasted to reach USD6.854 trillion by the year 2025. The annual value of the Halal Food sector alone totalled about US$1.27 trillion in 2021, representing 17% of the total global food market, and projected to grow by 7.0 in 2022 to reach US$1.67 trillion by 2025 at a 4-year CAGR of 7.1; Islamic banking and finance assets totalled US$3.6 trillion in 2021 and are expected to grow by 8.0% in 2022 and reach US$4.9 trillion in 2025 at a 4-year CAGR of 7.9%, representing 1.27 of the total global market; Travel and Tourism was valued at US$102 billion in 2021, representing 11% of the total global market and is expected to grow by 50.0% in 2022 to US$ US$154 billion and reach US$ U189 billion in 2025 at a 4-year CAGR of 16.5%; Modest Fashion was valued at US$295 billion in 2021, representing 11% of the global market and projected to grow by 6.0% in 2022 to US$313 billion and reach US$ 375 billion in 2025 at a 4-year CAGR of 6.1; Media and Recreation was valued at US$231 billion in 2021, representing 6% of global market and it is projected to grow by 7.5% in 2022 to US$ 249 billion, and reach US$308 in 2025 at a 4-year CAGR of 7.5%. Halal Pharmaceuticals was valued US$100 billion in 2021, representing 7% of global market and was projected to grow by 6.7% in 2022 to US$106 billion and reach US$129billion in 2025 at a 4-year CAGR of 6.7%. Cosmetics was valued US$70 billion, representing 7% of Global market and it is projected to grow by a further 7.2 in 2022 to reach US$75 billion and reach US$ 93 billion in 2025 at a 4-year CAGR of 7.4%. In 2013 alone, Sub-Saharan African consumers spent an estimated US$114 billion on halal food (halal meats, halal franchises, and prepared meals, canned, frozen, and instant foods).
What is astounding is that this impressive growth performance was recorded at a time the world economy has been undergoing through turbulent times, affecting all regions and countries as a result of the COVID-19 pandemic. This indicates that Global trade in halal goods and services remained robust at a time when overall level of international trade fell.
From the foregoing growth figures, this segment emerges as one of the biggest opportunities for Africa. With more than 60 percent of the world’s arable land, agriculture accounting for 32% of its robust GDP growth, and over 1 billion populations with considerable purchasing power, Africa possesses an enviable market for halal goods and services, and a tremendous untapped market potential in the global Halal market. In addition to the domestic market, Islamic economy offers to African countries a feasible option and new opportunities to leapfrog into emerging high-growth areas of the global economy. No doubt, with its vast natural resources, Africa possesses an enviable Halal potential, and a tremendous untapped market potential in the global Halal Market.
The global halal market of 1.8 billion Muslims and 0.2 billion non-Muslims is no longer confined to food and food related products. It has since assumed multi-sectoral dimensions covering sectors and products ranging from:
- Agribusiness, Food & Beverages
- Non-food consumables sector which comprises: fashion, pharmaceuticals, toiletries, healthcare products and cosmetics.
- Services sector which comprises: finance and banking, real estate, hotels, travel and tourism, Renewable Energy & Environment
- Spin-off and ancillary activities such as: research & development, logistics & transport, print and electronic media, branding and marketing, packaging & handling, audit, & certification.
OPPORTUNITIES & BENEFITS
In spite of the word ‘halal’ (permissible) being associated with Islam, a halal economy ultimately benefits the entire community. Most of the founding principles of a Halal economy are naturally aligned with the universally recognized values of ethics and sustainability. As a result, halal products and services are attractive to non-Muslim consumers, particularly in the light of current global sentiments where the demand for ethical and socially-conscious product offerings are on the rise. It should be emphasized that the halal market is non-exclusive to Muslims, and has gained increasing acceptance among non-Muslim consumers who associate halal with ethical consumerism. As such, the values promoted by halal – social responsibility, stewardship of the earth, economic and social justice, animal welfare and ethical investment – have gathered interest beyond its religious compliance.
The popularity of, and demand for, halal certified products among non-Muslim consumers have been on the rise as more consumers are looking for high quality, organic, safe and ethical products.
In lieu of the paradigm shifts on global issues such as sustainability, environmental protection and animal welfare, the potential growth of the halal industry has made it a lucrative market to be tapped into or representing a major global opportunity. Players from every sector of the industry, from the huge multinationals down to small enterprises, are looking to capture their share of this growing market. In the last decade, the halal industry has undergone further evolution as a market force when governments have started to look at halal in terms of policy formation for developing their own economies.
Countries such as South Korea have in the last one decade adopted strategic initiatives to grow their participation in the global halal market. For instance, South Korea plans to boost its halal exports by a third to over US$2 billion by 2020. This growth is being facilitated through the establishment of the Korean Institute of Halal Industry in 2014 which, with the help of JAKIM (a Malaysian Halal food standards body), has established the Korean National Halal Food Standard. By 2018, over 500 South Korean companies had been certified.
It is in this context that the Africa Islamic Economic Foundation has launched the Halal Economy Initiative as the silver bullet to help meet Africa’s key and large-scale human and social development needs. With many losing faith in the efficacy of the conventional economic and financial systems, particularly during the current global economic crisis, the potential role of the Halal Economy in providing a complementary or alternative framework for development efforts is being encouraged by the Initiative. For Africa, the Initiative comes at an important juncture. It comes as the current Global economic climate has hit Africa’s public finances, driving difficult spending decisions but also creating opportunities to reframe and reinvent for Africa to chart its own course and shape its own success.
Times of crises, they say, offer an opportunity to look at newer options, approaches, and strategic directions. While the Islamic economy is not in itself a panacea, it does potentially offer more resilient inclusiveness and environmentally viable paths to economic growth. Even if there is no one-size-fits-all prescription, we believe that African governments can play a catalytic role by putting in place the policies, regulation and institutions needed to strengthen their Halal economies.
Overall, the Halal economy sector can contribute a lot to growth and prosperity, especially for African countries seeking to diversify their economies and build resilience to future economic crises.
HALAL ECONOMY INITIATIVE
The Halal Economy Initiative is Africa’s primary platform for knowledge sharing and collaboration on the Halal Economy. It advances its work through publications, collaboration and networking, virtual and in-personal events. The Initiative works directly with Governments and enterprises in their efforts to attract investment, increase trade and foreign exchange earnings, and gain access to new markets.
It places strategic emphasis on agriculture, manufacturing and industrialization as the basis for economic structural change in Africa. The development of Halal Special Economic Zones, Export Processing Zones, Agro-industrial Parks, Free Trade Zones & Logistics Hubs is at the heart of the Initiative, and support Rural Transformation Centres, therefore, is central to this strategy.
While providing country and corporate – specific solutions, the Halal Economy Initiative is a distinctively international program in structure, personnel and experiences, which consists of experts representing private engineering firms, inter-governmental development institutions, academics, businessmen, legal and policy consultants, and government officials engaged in evaluating, promoting and developing, the Halal Economy in Africa. Its professional portfolio includes the world’s top Islamic economists and professors measuring the impact of the Halal economy on investors; on global, regional, and domestic markets; and on the residents and communities, and challenging us to consider bold and innovative uses and implementations of Halal economy projects.
By engaging and deploying its collective knowledge, the Initiative remains a major force guiding the development of the Islamic economic model as a new academic discipline and analysis of the functionality of its policy designs in poverty reduction and developmental relevance in the 21st century. The projects of the Initiative will always have a function as a testing-ground and pilot for beneficial reforms that are not yet politically possible on a national, regional, or international level. As Africa’s leading Islamic Economy Initiative, it will continue to shape the implementation and evolution of sustainable and commercially viable Halal projects through formulating international best-practice standards and providing strategic technical assistance and training. Through this efforts, the Initiative we will lead the way in expanding opportunities for both investors and workers and in promoting the sustainable development of economies, people, and environments in Africa.
- To research, discuss, publish and present information to support and improve the utility and effectiveness of the halal economy and related policy platforms, including through sustainable and responsible practices;
- To encourage, foster and stimulate investment, trade and economic development, through the Halal Economy and related programs and projects;
- To obtain and distribute reliable information and promote cooperation and exchange between countries and businesspeople involved with the Halal Economy; and
- To acquaint and inform the public and various governmental agencies of the benefits of the Halal Economy and related policy platforms.
Last, but not least, the Initiative will bring the following first-hand practical knowledge to public and private sector entities, donor agencies, organizations and individuals in all the sectors of the Halal Economy.
- Value Chain Analysis
- Food Security
- Agribusiness Development
- Halal Special Economic Zones, Export Processing Zones, Agro-Industrial Parks, Free Trade Zones & Logistics Hubs
- Improving Access to Credit
- Cold Chain & Cold Storage Development
- Trade Promotion
- Field Surveys
- Warehouse Receipt Systems
- Commodity Exchanges
- Environmental & Social Impact Assessment
- Impact Evaluation
- Training & Capacity Building
- Strategic Planning
- Policy Analysis
- Audit & Certification.
FUNDING HALAL ECONOMY THROUGH VIABLE ALTERNATIVE MODELS
The Initiative applies innovative and ethical business and financial models, public private partnerships that combine industry with private-public investments to support the development of its Halal economy programs. Furthermore, the Initiative helps to structure and raise financing from a host of international lenders, including Islamic commercial banks, multilateral and bilateral lending institutions, export credit agencies, and ethical capital (Sukuk) markets to develop the projects of its clients or partners.
TERMS OF REFERENCE
Relevant regional/state or national governments, public and privates intending to join the Initiative will NOT have to pay any fee to do so but they will commit to:
- Provide data and profile of the partner state/region or country according to the methodology agreed for the project;
- Cover their share of the costs related to the project, which are mainly the documentation work, hosting the international team of experts, local experts, honorarium for resource persons, workshops and capacity buildings and local transport during the mission;
- Attend all scheduled meetings and events and if necessary nominate a replacement;
- Share all communications and information with the project partners;
- Make timely decisions and take swift action so as to not hold up the project;
- Notify members of the Team of International Experts, as soon as practical, if any matter arises which may affect the development of the project;
- Open and honest discussions, and Involve all relevant stakeholders;
- Ongoing ‘health checks’ to verify the overall status and ‘health’ of the partnership
HOW CAN WE SUPPORT YOUR HALAL PROJECT?
To help us better understand your project or business idea, and identify ways we may be able to support you, please fill out the form below. We will review your submission, and if there may be potential to work together, we will get in touch.