SARDOR KOSHNAZAROV– Managing Director Silk Capital
ISFIRE 2021 has a new format for Personality Interviews. From the February issue, we shall include 15 questions to be answered by some leading personalities in Islamic banking and finance (IsBF). The objective is to have our readers look into the minds of successful people in IsBF or any other related business/profession. Our first ISFIRE Personality of the Issue for the new year is Sardor Koshnazarov, Managing Director of Silk Capital.
ISLAMIC BANKING AND FINANCE – IN ONE SENTENCE – WHAT DOES IT STAND FOR, FOR YOU?
It is a better way to develop financial relationships and create wealth, though still a widely misinterpreted and neglected area.
YOU MAY TAKE MORE SENTENCES TO SHARE WITH US YOUR FRANK VIEWS ON ISLAMIC BANKING AND FINANCE – IS IT SOMETHING YOU FIND REALLY DIFFERENT FROM THE MAINSTREAM BANKING AND FINANCE?
Yes, it is different. Unlike the mainstream banking and finance, Islamic banking and finance does not consider money as a commodity, therefore it does not consider interest as a cost of money, and both the risks and rewards are shared by the lender and the borrower. Since Islamic banking does not create money and debt is generally discouraged, the industry is still relatively small albeit growing from low base. Just one bank, the MUFG of Japan has more assets than all Islamic banks combined. At the same time, I am hopeful that this low penetration would open a wide avenue for growth for the industry in the future.
WHAT ROLE CAN ISLAMIC BANKING AND FINANCE PLAY IN YOUR COUNTRY?
With over 34 million Muslim majority population, the largest in Central Asia, and the former Soviet Union territory, Islamic banking and finance should be a natural way forward to develop the country’s financial system for economic growth and sustainable livelihoods. At par with the population of Saudi Arabia or larger than that of Malaysia, Uzbekistan is well-positioned to enjoy the advantages offered by Islamic banking and finance and to create tens, if not hundreds, of billion-dollar Shari’a-compliant financial asset classes. Without compromising on faith values, businesses and individuals can take advantage of these alternative financial services to fund their projects during the existing high cost of capital and underdeveloped financial and capital markets.
HAVE YOU PERSONALLY BENEFITTED FROM ISLAMIC BANKING AND FINANCE? TO BE VERY CLEAR, HAVE YOU ACHIEVED SUCCESS IN ISLAMIC BANKING AND FINANCE ON A PERSONAL LEVEL WHILE WORKING IN AN ISLAMIC FINANCIAL INSTITUTION OR UNDERTAKING A PROJECT IN THE FIELD?
To a certain extent, yes. Our firm was planning to launch a Shari’a investment fund for businesses in Central Asia back in 2009. Unfortunately, due to the global financial crises we had to postpone it. I think now is the time to explore this option. The President of Uzbekistan, Shavkat Mirziyoyev, during his address to the Parliament on December 29, 2020, indicated the same when he said: “The time has come to develop Islamic finance in the country”.
WHAT HAS BEEN YOUR MOST-PRICED ACHIEVEMENT SO FAR?
Uzbekistan has enormous potential in Islamic banking and finance, as many businesses, both large corporates and small firms, as well as wealthy individuals, are keen to have financial arrangements based on Shari’a principles. A growing network of Shari’a investors, scholars and the business community are eager to do business in a market of over 30-million Muslims.
AS A MANAGING DIRECTOR, WHAT THREE CONCERNS ABOUT THE ORGANISATION’S FUTURE KEEPS YOU UP AT NIGHT?
Firstly, a regulatory framework forthe development of Islamic banking and finance needs to be introduced in the country. Without the legal support, it is not easy to develop the Islamic finance business. Good news is that the local regulator, the Capital Market Development Agency, has initiated several steps, particularly in developing a regulatory base for issuing sukuk domestically. Along with other donors, the Islamic Development Bank, is also advising the ministries and agencies on developing the Islamic finance industry in the country. Our firm is looking forward to these initiatives being implemented soon.
Secondly, convincing the foreign and local Shari’a investors to invest in Uzbekistan is not easy either. The country has been under the radar of the international investor community, including the Islamic finance sector, for a long time. Foreign Islamic banks and Islamic investment firms will need to learn about this new market, and we still have to gain the investors’ confidence regarding business opportunities in the local market.
Thirdly, we would have to build and expand a team of professionals, from among the locals specialised in Shari’a financing. This area of financial services is still new to the country, and therefore there is a lack of local talent. We would have to attract people from the international market and train the local talent simultaneously.
WHAT FACTORS (PERSONAL, FAMILY, EDUCATION, MENTORS, ETC.) HAVE CONTRIBUTED TO YOUR SUCCESS?
I had the opportunity to work under the mentorship of industrial leaders with extensive experience in developing markets. It helped me in my private investment advisory business career. My personal on-the-ground experience in several frontier markets at their early market opening stage has enabled me to acquire the ability to understand and participate in financial deals with various complexities.
WHAT DO YOU FIND MOST REWARDING IN YOUR CURRENT ROLE?
Managing a leading investment advisory firm in Uzbekistan. It is a new frontier market with a considerable growth potential.
WHAT ARE THE FAILURES IN YOUR CAREER THAT YOU CHERISH THE MOST?
From the global financial crisis of 2008 to the commodity crisis, sanctions and trade wars, all impacted our business badly, but made us wiser at the same time.
HOW DO YOU DEAL WITH DIFFERENT PERSONALITIES IN THE WORKPLACE?
By respecting their individuality. Every personality is unique and have the potential to offer different and out-of-the-box solutions.
THE READERS WOULD LIKE TO KNOW ABOUT SOMETHING YOU STRUGGLED WITH EARLY ON IN YOUR CAREER AND HOW YOU OVERCAME IT.
During the early years of my career, I had to deal with the dilemma of principles. The organisation I worked for required me to do. things that contradicted my values. It took me several years to realise that life is too short to give up on one’s principles. Since career is an integral part of life, it should be spent within the bounds of principles or beliefs.
Passion is important for growth, so of course one has to enjoy what one does.
IF YOU HAD MULTIPLE PROJECTS AND LIMITED TIME, HOW WOULD YOU MANAGE YOUR PRIORITIES?
I would start with the most urgent ones. At the same time, I would seek the client’s comfort and consent if their project’s timeline was rescheduled to a later date. In case of insufficient resources would either hire or outsource the work to other partner firms. All this would be done with the client on board.
TELL US ABOUT A CHALLENGE YOU FACED AND HOW YOU HANDLED IT.
I noticed that most of the emails we sent to our firm’s partners, investors, and clients on the latest developments in Uzbekistan were rarely checked. Sending mail to a large clientele was a time-consuming engagement that required almost 24/7 involvement of the IT colleagues. On realising that most of our contacts had accounts on social media, I started engaging them there and posted short country updates. I saw an immediate surge in views, feedback and new contacts. This efficient use of time helped me expand my network.
WHO IS YOUR ROLE MODEL AND WHY?
I have no role model but have tried to develop certain personal and professional qualities such as balancing work and life, excelling in leadership qualities, remaining positive, improving time management, and motivating others.
IF YOU COULD GO BACK FIVE YEARS, WHAT ADVICE WOULD YOU GIVE TO YOUR YOUNGER SELF?
I would spend more time with my family and do more good deeds towards my parent, community and the country while promoting Islamic banking and finance.
