The HSE-Skolkovo Institute for Law and Development, implementing the AgroFinMost project, has finalized and entered into a memorandum of cooperation with the most respected experts in Islamic finance and law; the Sheikhs Usmani.
The purpose of the signing of the Memorandum is to consolidate the intentions of the parties to cooperate in order to attract Islamic investment into Russia through the issuance of sukuk securities, and to ensure the supply of Russian grain to the countries of the Islamic world. The Memorandum provides for the relevant consulting, communication, and organizational support of the project. Firstly, this is related to assistance in structuring and conducting transactions on advance payments for Russian grain supplies to the Gulf countries in accordance with Islamic law instruments. In the near future, special events are also to be held as part of the prestigious AAOIFI conference in Bahrain in November. AAOIFI is a key international organization, integral to the Islamic financial system, which develops and sets standards for the activities of Islamic banking, stock investment, and public organizations. The conference traditionally brings together leading Sharia scholars and Islamic financiers from around the world.
Mufti Muhammad Taki Usmani is perhaps the most authoritative scholar of our time in the field of Islamic economics and finance, as well as in other areas of Islamic erudition. He leads the Sharia councils of a number of major Islamic banks and ranks sixth in «The Muslim 500». His son, Dr. Imran Ashraf, is also widely known for his expertise in Islamic finance. He is the author of numerous publications, a visiting lecturer at leading universities around the world, and a Sharia council member at some of world’s leading banks. Both father and son will be actively involved in bringing the AgroFinMost project to fruition.
This spring, at the head offices of the National Research University Higher School of Economics (HSE), this project was announced. It was done so with the support of the Ministry of Agriculture and the Federal Antimonopoly Service of Russia and is designed to achieve the ambitious objective of increasing the export of Russian agricultural produce and, in the future, changing the balance of power in the global food market.
Russia cannot as yet boast of flourishing cases of attracting Arab investment in agriculture. Meanwhile, it is in the Islamic countries that the issue of long-term assurance of food security is acutely relevant, and the banks of Islamic countries have accumulated colossal available investment resources. AgroFinMost will finance the Russian agricultural complex by using the funds raised via the issuance of Russian long-term supply securities on the stock exchanges of Islamic countries.
Alexey Ivanov, Director of the HSE-Skolkovo Institute for Law and Development: «AgroFinMost is an absolutely unprecedented project for the domestic agricultural industry. The conclusion of the agreement with the revered Usmani father and son essentially opens the gate to us to a reasonably hermetic Islamic world. Russia has the potential, both intensively (through increasing crop yields) and extensively (through increasing sown areas), to boost the production of grain and leguminous crops. Putting into circulation 6 million hectares of land (50% of the potential) can give an increase in gross harvest at the level of 15.2 million tons to 17.5 million tons per year. The development of the Russian agricultural sector is hampered by the absence of „long money“, with the help of which it would be possible to increase production by putting arable land into play, introducing the latest technologies and modernizing the infrastructure. The potential for export growth is very high. We assess the possibility of issuing commodity bonds under the sukuk salam model, worth $5-15 billion, and part of the funds raised will be used to expand the transport and logistics infrastructure.»