2. 14 December 2016
SECTOR REPORT
Mujtaba Khalid currently heads the Islamic Finance
Center at the BIBF which comes under the Central
Bank of Bahrain. He can be contacted at mkhalid@
bibf.com.
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
The Islamic finance education landscape
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.
EDUCATION
Chart 1: Growth trend of Islamic finance industry
Total: US$1,689,469 F US$46,309 S US$251,453 O US$87,160` T US$31,617 B US$1,272,931
Total: US$1,649,282 F US$52,310 S US$279,660 O US$85,251 T US$30,465 B US$1,201,596
Total: US$1,814,086 F US$55,794 S US$295,094 O US$83,916 T US$33,390 B US$1,345,891
Total: US$2,000,171 F US$60,258 S US$309,849 O US$87,272 T US$35,394 B US$1,507,398
Total: US$2,206,986 F US$65,078 S US$325,341 O US$90,763 T US$37,517 B US$1,688,286
Total: US$2,436,936 F US$70,285 S US$341,609 O US$94,394 T US$39,768 B US$1,890,880
Total: US$2,692,706 F US$75,907 S US$358,689 O US$98,170 T US$42,154 B US$2,117,786
Total: US$2,956,126 F US$81,980 S US$376,623 O US$102,096 T US$44,683 B US$2,350,742
Total: US$3,246,862 F US$88,538 S US$395,455 O US$106,180 T US$47,364 B US$2,609,324
Projectedaveragegrowthof10%peryear
3.5
3
2.5
2
1.5
1
0
Total Islamic finance assets (US$ million)
Islamic funds (F)
Sukuk (S)
OIFI (O)
Takaful (T)
Islamic banking (B)Source: ICD - Thomson Reuters Islamic finance development report 2015
2012
2013
2014
2015
2016
2017
2018
2019
2020
Chart 2: Availability of qualified Islamic finance professionals
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2.2% 16.1% 63.5% 18.2%
Source: Survey from Islamic Finance Outlook Report 2016
by Finance Forward
Abundant Adequate Limited Very scarce
3. December 2016 15
SECTOR REPORT
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.
e-Learning
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.
Conclusion
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.
EDUCATION
Source: Survey from Islamic Finance Outlook Report 2016
by Finance Forward
Chart 3: Biggest threats facing Islamic banks
Internal
threats
External threats
27%
29%29%
5%
17%
28%
21%
21%
20%
10%
Internal threats
External threats
Political uncertainty
Economic condition
Regulatory issues
Disruptive technologies
Lack of liquid markets
Shortage of qualified personnel
Shariah compliancy issues
Customer/employee mobility
Rising operational costs
Access to capital
Chart 4: The e-learning industry
e-learning industry
Money spent on self-paced
eLearning across the globe
it’s going
to double
by 2015
US$35.6 billion
US$56.2
billion
2011 2013 2015
Asia 17.3%
Middle East 8.2%
Revenues by 2016:
US$560.7 million
Africa 15.4%
Revenues by 2016:
US$512.8 million
Western Europe: 5.8%
Revenues by 2015:
US$8.1 billion
The world’s most rapidly growing
eLearning markets are:
Malaysia and Vietnam
Source: http://elearninginfographics.com/
elearning-statistics-2014-infographic/
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