Beehive P2P Finance - based in the UAE - has been accredited by the Shariyah Review Bureau (SRB). Beehive is thought to be the first P2P platform to have sharia compliant operations independently certified. The SRB review - which was conducted over several weeks - contained end-to-end transactional assessments in which SRB's Sharia scholars reviewed all operational processes, documentation and relationship management on Beehive's Islamic platform.
Yasser S. Dahlawi - CEO of SRB - commented:
“We are pleased with the confidence Beehive has placed in our comprehensive Sharia supervisory services and we look forward to helping them further develop their Islamic finance offer."
Under Sharia law, money must be used in a productive way and returns must be generated in a legitimate and ethical trade. Earning interest on money is seen as effortless and is forbidden - as is investment in unethical industries. Any investment that is not Sharia compliant is not open to Sharia compliant investors.
As a result, Beehive uses Murabaha transactions - which are non-interest bearing loans. Beehive uses the funds to trade commodities on the “DMCC Tradeflow” exchange - an exchange used to provide liquidity to the Islamic finance industry. As AltFi understands the process: the platform buys the commodity on the exchange for cost price and sells the commodity to the customer for cost plus profit, but payment is deferred. At the same time, the customer agrees to sell the commodity back to Beehive at cost price. In this way, the customer receives immediate funding and pays a surplus back to the platform at a later date. This surplus can be paid back in instalments – providing an outcome not dissimilar to interest.
AltFi spoke to Craig Moore - CEO and founder of Beehive - to discuss the implications of this announcement.
“As the first certified P2P finance platform in the world, we are proud to offer Islamic investors the opportunity to ethically invest in some of the most innovative SMEs in the UAE. Dubai is recognised as a global Islamic finance leader, and we are proud to support this vision by offering smart, Sharia-compliant investment options to investors, that directly support economic growth and employment in the country. ”
Mr. Moore explained that the whole Beehive system was compliant before being certified, but the SRB announcement gives investors the confidence that a third party certification inevitably brings. Beehive hopes that this improved credibility will drive up demand for their services. The good news for Beehive is that the platform is the only non-equity alternative financer in the UAE - meaning that the potential to grow is significant. Furthermore, Mr Moore sees real potential to expand around the region. He told AltFi that the South East Asian region exhibits significant potential for Sharia compliant financing - demand that his platform is now in prime position to satisfy. Further down the line, it may be possible to expand into developed Western markets, where there are significant Islamic populations – many members of which will adhere to Sharia law – that are under-served by local finance providers.
Altfi recently reported on the emergence of niche lending, with a specific focus on sustainable construction financing in the US. Beehive’s news is another example of alternative finance expanding into more specialized areas. Beehive may be small at the moment – having financed AED 15 million (£2.67 million) – but its recent expansion into Thailand implies ambitious growth plans. We will have to wait and see what impact the new Sharia certification will have.