Mr. Bond

Andrew White meets Nasser bin Hassan Al Shaikh, the man behind the world’s first Islamic savings bond scheme.

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By  Andrew White Published  March 12, 2006

|~|Picture-003-200.jpg|~|QUICK WIN: Al Shaikh’s scheme, starting in May, will see savers given a safe investment option, as well as the chance to win millions.|~|Andrew White meets Nasser bin Hassan Al Shaikh, the man behind the world’s first Islamic savings bond scheme. “It’s not a lottery, it’s not gambling,” says Nasser bin Hassan Al Shaikh, with a firm gaze. For the vice chairman and chief executive officer of National Bonds Corporation (NBC), this is a well-worn phrase and a point he must surely be tired of making. “To encourage you to save more we have introduced prizes, because the more bonds you have, the greater your chances of winning. But it’s your money at all times, so you’re not actually gambling with your money. It’s not the lotto.” Launched last month in a blaze of publicity, the UAE’s National Bonds are a world first — a Shari’a compliant national savings scheme. The product offers anyone with AED100 (US$27) the chance to set aside some funds for a rainy day, and do so within a system carefully attuned to Islamic law. However, in stark contrast to the somewhat uninspiring nature of a typical savings account, bondholders will be offered the opportunity to win big. Every month, one lucky winner will walk away a dirham millionaire, and thousands more will celebrate less hefty windfalls. In addition, 10% of NBC’s annual profits will be redistributed amongst randomly selected bondholders, further repaying the faith of those who choose to invest in the scheme. “Yes, we are accountable to our shareholders,” he claims. “But the whole project was constructed with one thing in mind — we are accountable to the bondholders.” Al Shaikh’s formidable reputation was established during his work as head of finance and administration at The Executive Office of His Highness Sheikh Mohammed bin Rashid Al Maktoum, during 2001. He gained standing as an elite professional — and one as equally skilled at embracing the stiff challenge of developing new financial concerns, as he was in the fine art of restructuring established, but inefficient, institutions. His star rose even higher when, in 2002, he was appointed chief financial officer at the Dubai Office (Government of Dubai), and was charged with the reconditioning of its financial and administrative operations. “I have been associated with a number of start-ups here in Dubai, and they have perhaps become my speciality,” he says, with no hint of conceit. “With National Bonds, we’re creating an entity from scratch, we’re creating a scheme from scratch, and we’re creating a product from scratch.” This particular project was inspired by the success of established comparable schemes in other countries. However, NBC’s venture has taken a step further than any of its predecessors, becoming the world’s first such initiative that also happens to be Shari’a compliant. “Premium Bonds in the UK caught our eye a few years ago, and we thought that the product might work well out here in Dubai,” he says. “We looked at other comparable schemes such as Prize Bonds in Ireland, and Bonus Bonds in New Zealand. In each case it was clear that they were savings schemes — people were not risking their money. So we thought, why can’t it be Shari’a compliant?” The Shari’a element of NBC’s product is, Al Shaikh insists, what marks it apart from a raft of similar schemes worldwide. This uniqueness is NBC’s key selling point, and one that was energetically embraced by Dubai’s leaders. “When we presented it to His Highness Sheikh Mohammed, he was very enthusiastic about the product,” he says. “The first Islamic bank was established here in Dubai in the 1970’s, and His Highness saw this product as a way of again taking Islamic finance to another level. “The prize element of the scheme is just to encourage people to save,” he stresses. “Our unique selling point is that now people have a well-regulated, credible vehicle where they can place their savings. Their money is in good hands, they know the shareholders — including Dubai Bank, Dubai Holding, and Emaar Properties — and all funds will be placed in Shari’a compliant investments so that the product is Shari’a compliant inside out. This is a very important thing to us.”||**|||~||~||~|A Shari’a Supervisory Board will perform key duties for NBC. Chaired by Dr. Hussain Hamid Hassan, it will be responsible for ensuring that all aspects of the company’s operations and investments are in compliance with Shari’a law. So what sets National Bonds apart from a standard Islamic savings account? “Possible returns,” Al Shaikh smiles. “The prize structure is to encourage people, and it makes things more interesting. It’s not like a normal savings scheme where you get minimal returns on your savings account — you can hit it big, too. “We’re starting with more than 16,000 prizes — 16,318, to be precise — so every month we’ll have a number of winners. They, in turn, will be good for the product, as they subscribed to the scheme and won, so they will promote our product to others.” While he freely admits that people will be tempted by “the opportunity to live their dreams” through the prize draws, Al Shaikh also clearly believes that a certain weight of social duty lies upon his, and NBC’s, shoulders. At the launch he spoke of nurturing “a culture of savings responsibility”, and again he warms to this theme. “So far, no entity in the country has played the role of increasing awareness of savings,” he says. “We are living in excellent times now, in a cash society, but logic dictates that you must start saving when you are doing well. You might save but never need your savings, in which case you leave them to your kids, but it’s always better to have them in case you need them. It gives you comfort.” This comfort, he insists, would be of immense benefit to those potential customers who currently operate outside the banking system — to those, he says, who keep their money “under the mattress”. “When you look at Dubai you have a huge percentage of the population that is a non-banking population,” he says. “These are labourers and housemaids who don’t own bank accounts, so we’re definitely keen to get them, indirectly, into the banking system. Our product talks to everyone, with an entry level of AED100 (US$27). Who can’t spare AED100?” This sense of responsibility should also be reflected in NBC’s investment choices, which will be vetted by an investment committee, as well as the Shari’a board. Al Shaikh insists that UAE society will be the primary beneficiary of NBC’s investment operations. “The priority will always be to look at opportunities within the country,” he says confidently. “If you look at your kids’ savings, your wife’s savings under the mattress or whatever, they are stagnant funds. We are mobilising these funds and re-injecting them into the community, and so creating jobs and participating in the boom. “In addition, and this is one of the beauties of Shari’a compliance, 2.5% of our earnings must be given away to charities and to the needy,” he explains. “We’d actually like to see more than that given away to charities, and will look at ways to increase our donations. However, I think that from whatever angle you look at it, we will be contributing to the community.” With the first prize draw just months away, and a distribution network numbering over 100 points across the UAE, it will be hard to escape National Bonds come May. For Al Shaikh and his team, however, this is just the beginning of a project that they believe could catch on across the Gulf region. “We would like to create a scheme that will outlive us,” he insists. And with Al Sheikh at the helm, you wouldn’t bet against it.||**||

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