The growth of the Global Halal economy represents a significant market potential not only in Muslim countries but also in western markets with significant and growing Muslim populations among whom Halal observance is on the increase. Given that Halal is a vital component affecting the daily lives of 1.8 billion people, comprising 1.6 billion Muslims and 0.2 billion non-Muslims worldwide, the potential market is indeed massive.
In spite of the word ‘halal’ (permissible) being associated with the religion of Islam, a halal economy ultimately benefits the entire community. Most of the founding principles of a Shari’ah-compliant economy are naturally aligned with the universally recognised 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. Current consumer trend shows that worldwide demand for Halal products and services are not restricted as consumers also consist of people from diverse races and religious beliefs, thus providing a huge boost to the halal industry.
According to the State of the Global Islamic Economy Report 2019/20, an annual Halal industry report produced by Thomson Reuters, Global Halal Economy is valued at US$ 4.7 trillion, representing US$2.2 trillion across the food, pharmaceutical and lifestyle sectors that are impacted by Islamic faith-inspired ethical consumption needs. This spending reflects a healthy 5.2% year-on-year growth and is forecasted to reach US$3.2 trillion by 2024 at a Cumulative Annual Growth Rate (“CAGR”) of 6.2%. In addition, the total assets of Islamic finance was reported to have reached $2.5 trillion in 2018 and forecast to reach $3.5 trillion by 2024.
Food and Beverage alone was valued at $1.4 trillion in 2018 and forecast to reach $2.0 trillion by 2024, followed by the apparel and footwear sector which is estimated to be worth $283 billion in 2018 and is projected to grow to $402 billion by 2024. Muslim spend on media and recreation was valued at $220 billion in 2018 and is forecast to reach $309 billion by 2024. Muslim spend on travel was valued at $189 billion in 2018 and is forecast to grow to $274 billion by 2024. While spending on pharmaceuticals was $92 billion in 2018 and is projected to grow to $134 billion by 2024 the cosmetics industry was valued at $64 billion in 2018 and is forecast to reach $95 billion by 2024.
The Halal economy has shown it is in tune with the latest developments in technology and investment. Companies have adopted block chain technology for payments, to confirm halal compliance, or track food, cosmetics and pharmaceutical products from the manufacturing facility to the retailer. In Islamic finance, block chain and automation is expanding access to financial services.
Smart technologies are being incorporated into clothing, such as the smart hijab, to GPS systems that show the closest prayer spaces. Equally, investment is taking place in artificial intelligence (AI), virtual reality (VR) and the internet of things, showing a readiness to cater to the needs of Muslims in the 21st century.
The Halal economy is also tapping into the growing trend for ethical products and services. It is a trend that the Islamic economy is perfectly aligned with, from Islamic finance based on ethical, shariah-based principles, to halal food that heightens trust between producer and consumer – from the farm to the fork. Blossom Finance is a perfect example, with its blockchain solution to help SMEs raise sukuk finance.
Islamic companies are equally tapping into the growing trend for natural and vegetarian products, from organic halal cosmetics to halalopathy, to life-saving vaccines free from animal components.
With more than 60 percent of the world’s arable land, with agriculture accounting for 32% of its GDP of US$2.19 trillion (2017), and over 1.307 billion population with considerable purchasing power, Africa possesses a tremendous and enviable untapped Halal market potential, and source of raw materials for the global Halal Economy. In addition to the domestic market, Halal economy offers to African countries a feasible option and new opportunities to leapfrog into emerging high-growth areas of the global economy.