Could you provide a brief journey of how you arrived where you are today?
Two major factors prompted my interest in Islamic finance. The first one was my professional interest in growth-enhancing policies, and the related importance of financial services in promoting growth and social inclusion. The second one was the potential of Islamic financial services in increasing financial penetration, given its growing presence in the financial landscape both at country and international levels.
What does your role involve?
It involves providing policy advice to governments, market participants and think-tanks on financial systems development and stability, including the potential for Islamic finance to contribute to financial penetration, stability and inclusion. It entails: analysis and assessment of regulation and supervision, markets and products; development and maintenance of partnerships with concerned international organizations; shaping views and recommendations to promote efficient, stable and inclusive financial intermediation, notably where Islamic financial services can play a significant role.
What is your greatest achievement to date?
Others will be better judges. I believe I have contributed to sensitizing international financial organizations, notably the World Bank Group, to the increasingly significant role of Islamic finance and to mobilizing support for the orderly development of Islamic financial services. .
Which of your products/services deliver the best results?
The World Bank supports countries’ development programs and notably their efforts to introduce a regulatory and institutional environment that promotes the stable and efficient development of financial services. It does so with diagnostic assessments, advisory services, technical assistance and financing facilities. These services are deployed in support of country-led programs and generally developed in partnership with other international agencies. Effectiveness is greatest when the country is leading the effort.
Islamic financial services benefit greatly from the work of the Islamic Financial Services Board (IFSB), the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the International Islamic Financial Market (IIFM), and the Islamic Development Bank group (IDB). These are critical players for the efficient development of Islamic financial services. Together with international standard setters and international financial organizations, such as the World Bank, the International Monetary Fund (IMF) and the Bank for International Settlements (BIS), they can contribute to a better international financial architecture and the mainstreaming of Islamic financial services.
What are the strengths of your business?
The strength of the World Bank is the high concentration of human capital focused on development issues. In addition, it combines a global perspective with the ability to draw international comparisons on successes and failures. Furthermore, the essence of the work combines microeconomic and project-specific work with macro analysis providing multiple perspectives on issues for a better design of recommendations and actions.
What are the factors contributing to the success of your company?
The foregoing strengths are a definite advantage. While there is no sure way of always finding the right solutions, the approach of having the beneficiary lead and own, with the Bank’s support, provides a better opportunity of success.
What are the obstacles faced in running your business today?
The still limited appreciation of the size of Islamic financial flows and their potential impact on development, stability and inclusion among members of the international financial community. There is a need to address systematically and professionally Islamic financial issues in the same way conventional finance issues are dealt with. It requires dedicated resources to a foundation or international institute that would provide a professional focus on Islamic finance.
Where do you see the Islamic finance industry, maybe in the next five years?
Ultimately, market behavior in response to demand should determine the prospects of Islamic financial services. In the last few years, they have developed tremendously in response to wholesale, retail and investment demand, as well as the explosion of liquidity associated with the rise of hydrocarbon prices. The ability of providers of Islamic financial services to respond efficiently and in compliance with Shariah to the demand will determine markets’ recourse to Islamic modes of financing. Policy-makers and regulators should ensure a level playing field that is not prudentially lax or stifles market vibrancy.
Name one thing you would like to see change in the world of Islamic finance?
Let me point out three areas where I see the need for change, some of which are being addressed by market participants, policy-makers and regulators. The first area is the ability to conduct a monetary policy that is adapted to Islamic finance and does not create distortions between conventional and Islamic financial services providers. A second is the development of some consensus across regulatory bodies on approaches to governing the industry. Thirdly I would put improved risk management practices relying on professional skills and adapted technology.
The World Bank is made up of two unique development institutions owned by 185 member countries – the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).
The views expressed in this article are those of the author and do not necessarily reflect those of the World Bank.