The approximately US$2 trillion Islamic finance industry has seen significant growth over the past 20 years. According to Thomson Reuters, in the past decade alone, the Islamic finance industry has averaged double-digit growth. Even though the Islamic finance industry currently is going through a consolidation phase due to low oil prices, it is still estimated to continue on a positive growth trend and by 2020, it is expected to reach US$3 trillion according to some projections or US$6 trillion according to others. MUJTABA KHALID scrutinizes the Islamic finance education landscape.
This is indeed very heartening for all proponents of the Islamic finance industry but this also poses a unique risk – a lack of qualified human resource capital. According to The Islamic Outlook Report 2016, a survey of high-profile Islamic finance practitioners from the Middle East North Africa and Southeast Asia (MENASEA) region, revealed that almost 80% thought that there was limited or very scarce availability of qualified human resource capital. When asked about the threats facing the Islamic finance industry, the biggest internal threat cited was a shortage of qualified personnel.
This is where Islamic finance education and training comes in where in order for the industry to progress in the short to medium term, professional qualifications and specialized short courses are the answer as opposed to a Master’s program or a doctorate. Thus, this report will also look at the developments in the Islamic finance professional training space during 2016, with an emphasis on new developments and innovations in the market.
Review of 2016
A major development in Islamic financial training came from Pakistan (the second-largest Muslim country in terms of population), when the State Bank of Pakistan, backed by the UK’s Department for International Development set up three Centers of Excellence in Islamic finance education in the cities of Karachi, Lahore and Peshawar. This was a major step forward in the promotion of Islamic finance in Pakistan and is viewed favorably by the industry. From the three centers, the one set up in Karachi in partnership with the Institution of Business Administration seems to be the most active and relevant.
Another major development seen in the professional Islamic finance qualification space was the Bahrain Institute of Banking and Finance (BIBF) and the University of Bolton MBA Islamic finance progression route agreement – the first of its kind in the world. The BIBF is the training arm of the Central Bank of Bahrain and prides itself in launching the first-ever Islamic finance professional qualification, the Advance Diploma in Islamic Finance (ADIF), in 2001. According to the progression route agreement between the BIBF and the University of Bolton, ADIF graduates need to spend four intensive weeks at the University of Bolton UK campus. They will also have to submit an applied thesis, upon completion of which, they are awarded an MBA in Islamic finance from the University of Bolton.
2016 also witnessed a shift by major Islamic finance organizations toward online courses and programs. The IDB’s Islamic Research and Training Institute (IRTI) signed an agreement with edX, an online learning platform founded by the Massachusetts Institute of Technology and Harvard University, to deliver massive open online courses in Islamic economics, banking and finance through edX. The IRTI offers through the edX platform free online courses for capacity development under a project aimed at expanding access to knowledge in Islamic economics, finance and banking to support the development of a dynamic Islamic finance sector.
We also saw the IFSB launch its Standards e-Learning Portal which aims to facilitate the implementation of IFSB standards. The portal complements the current implementation activities being conducted by the IFSB, including the FIS Workshop Series and technical assistance which are aimed at increasing the understanding and adoption of the standards, guidance notes and technical notes issued by the IFSB.
2016 also saw Islamic finance’s most prominent standard-setting body, the AAOIFI, partner with the BIBF to bring all AAOIFI standards onto an e-learning platform. The BIBF inaugurated the portal in November 2016 at the AAOIFI Conference in Bahrain. The first phase of the launch is planned to be in January 2017 and shall see all Shariah standards in English put on an online e-learning platform followed by accounting, auditing and governance standards.
Preview of 2017
The next year will see more students and professionals opt for high-quality online e-learning. This is also in line with the general global trend in education. According to the e-Learning Report 2014-16, the fastest-growing markets in this space are Malaysia and Vietnam. The report states that Africa and the Middle East are seeing the highest growth percentage increase in e-learning in the world. All these are mostly Muslim-majority jurisdictions and will have a huge positive impact on Islamic finance training as well as the entire industry as a whole.
Although there is an acute skill gap in the Islamic finance space, it is very pertinent to understand that there is no lack of graduates with Islamic finance degrees or qualifications. These graduates unfortunately are of little value to Islamic financial institutions as they need to spend time and resources to bring new hires up to speed on the actual applied and operational side. As someone who has been part of the industry as well as the training and education side of Islamic finance, I strongly advise educational and training institutes to concentrate on applied hands-on teaching rather than a heavily theoretical curriculum. Going forward, I would like to see more of this mindset permeate into our system.