Businesses earn more profit as consumer spending doubles. STOCK IMAGE
While some may think of Ramazan as simply slowing down the pace of business, research to-date indicates that the reality is much more complex.
Entire Muslim economies in fact change during this month. It is a powerful lesson in the inherently dynamic and interdependent nature of human, social, spiritual and economic behaviour.
A report by economists at the University of Leicester, for instance, showed that on average stock market returns in Muslim countries were almost nine times higher in Ramazan.
The stock markets were also far less volatile than they were during other times of the year.
The economists attributed this ‘Ramazan effect’ to the rituals associated with this sacred time of year. These practices tend to incite positive emotions, thus encouraging investors to take more risk and buy more stocks.
Acts of charity, for instance, tower taller than life in this month like no other. Pakistanis contribute an estimated Rs650 billion in charity every year, according to a nationwide study on charity trends conducted this year by the Pakistan Peace Collective - a research body of the Ministry of Information, Broadcasting and National Heritage.
The majority of this is likely donated during Ramazan as the study found that 68% of Pakistanis give charity during Ramazan.
Ramazan this year also witnessed Prince Alwaleed bin Talal, 60, pledge his entire $32 billion fortune to charity. Having already donated $3.5 billion, this places him well ahead of other business leader-cum-philanthropists.
Of peaks: spending and sharing
It is perhaps such trends of largesse that spur other positive economic indicators during this month. Spending increases dramatically around both Ramazan and Eid (crisp new Eidi bills, anyone?).
“Consumer spending will, at the very minimum, double,” shared a marketing leader with a global electronics and appliances manufacturer.
In 2010, Nielsen Indonesia, for instance, recorded a 9.2% growth in consumer goods sales, from all income levels during Ramazan.
A 2011 study by Dinar Standard found that short-term declines in productivity are promptly compensated by increased levels of productivity after Ramazan. Moreover, the economic and manufacturing frenzies preceding the holy month usually mean that in most Muslim countries, Ramazan is exceptionally profitable.
Businesses ranging from food-based to electronic manufacturers plan year round to meet soaring demand during this month.
Certain product-lines are Ramazan-dependent, making 100% of their sales around the holy month. The dried vermicelli eaten akin to cereal, Pheni and layered crisp-fried bread, Khajla, catering to the pre-dawn Sehr meal, are stark examples in Pakistan.
Given that many Iftar treats are fried, edible oil imports also shoot up in preparation. In 2013, Pakistan imported 2.2 million tons of edible oil - it is the third largest importer of palm oil.
In some Middle Eastern countries, for example, cordial and drink concentrate companies too seem to be Ramazan-dependent for over 90% of sales.
They spring to life for that month, pushing a stream of un-ignorable advertising and taking up large areas of prime retail space. All this fuss, only to recede, with an almost sudden silence to a few inches of shelf-space dormancy thereafter.
The Ramazan bonus
It is a common trend in some Muslim countries to offer employees Ramazan bonuses - or other tokens of appreciation such as Ramazan baskets or vouchers.
Along with the Muslim belief that spending and consumption during the holy month is unlikely to spiritually count against them, there’s likely a correlation between this one month salary bonus awarded by some companies and the generous spending patterns therein.
Shifts of various sorts
Part of the dynamic adaptation process Ramazan makes such an intriguing case study of, is a shift in business day timings in most Muslim countries. This in turn shifts economic patterns.
People in Muslim countries often work fewer hours per day, worship more and spend less time - but ironically spend more money shopping.
Muslim countries reduce up to two hours per working day as part of their adaptation to this month of fasting. This six-hour workday reduces about 40 hours of the work-month during Ramazan, facilitating the faithful in their pursuit of a more balanced lifestyle.
The writer is a leading sustainability specialist and winner of both the CSR Europe and CNN Young Journalist awards
Published in The Express Tribune, July 13th, 2015.
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