The Banker's Middle East editor talks to the chief executive of Malaysia's Inceif about its efforts to address the human resources challenge facing the global Islamic finance industry. 

While the performance of the conventional banking industry continues to be weighed down by the prevailing global financial crisis, the Islamic finance sector has maintained its upward march on growth over the past few years.

Total assets at sharia-compliant institutions grew by 8.67% from $1166bn in 2012 to $1267bn in 2013, according to The Banker’s Top Islamic Financial Institutions report published in November 2013. This marks the seventh consecutive year of growth and translates to a compound annual growth rate of 16.02% since the first report was published in 2006. 

Such growth is of course throwing up enormous opportunities but also considerable challenges, and foremost among them is the supply of adequately trained human resources in the field of Islamic finance. The existing dearth of qualified personnel is already hampering new product development and preventing the industry from realising its full potential. This is especially the case for Malaysia which is home to the world’s largest and most sophisticated centre for Islamic finance.

Talent shortfall  

Given its rapid growth, it is estimated that Malaysia will require an extra 40,000 qualified Islamic finance practitioners by 2020, according to a study published by Dzuljastri Abdul Razzaq, head of the finance department at International Islamic University Malaysia in mid-2012. Meanwhile, Indonesia will require 17,000 additional practitioners by 2017, according to a survey published by the country's central bank in late 2012.

Conscious of this looming problem, Malaysia’s central bank, Bank Negara Malaysia, established Inceif (the International Centre for Education in Islamic Finance), in 2005 as a global university dedicated to offering academic and professional qualifications in Islamic finance. Inceif offers three postgraduate programmes – the Chartered Islamic Finance Professional (CIFP), a masters in Islamic finance and a PhD in Islamic finance.

It also offers industry-focused and customised executive education programmes. Meanwhile, its research unit carries out academic and commercial research, which provides trend analysis, economic growth indicators and specific cross-border business strategies.

The university’s success to date can be measured by the fact that its first intake in 2007 comprised 32 CIFP students from nine countries – today, it has 2200 students drawn from over 80 countries across the world.  

Collaborative approach

In addition to growing and nurturing talent at home, Inceif has also embarked on strategic collaborations in various countries over the past couple of years so as to spread its expertise around the world. In April 2012, Inceif signed an agreement with the World Bank to co-develop education and executive programmes in Islamic finance. In May 2012, it signed a memorandum of understanding with the Islamic Financial Services Board (IFSB) to collaborate in providing training and education in Islamic finance. It has subsequently developed executive programmes on governance, takaful and risk management, with courses in the latter starting in April 2013.  

In September 2012, Inceif partnered with BNP Paribas Malaysia Berhad to launch the BNP Paribas-Inceif Centre for Islamic Wealth Management – a joint initiative dedicated to supporting the growth of the Islamic wealth management industry, asset management and capital markets.

Education is now playing an integral role in the development of technical expertise around sukuk – more than 50% of executive programmes delivered by Inceif in the 12-month period to June 2013 have been focused on sukuk. This trend is expected to increase in line with the growing demand for such instruments.

Going global

Inceif has also been noticeably expanding its geographical footprint through collaborations in various markets. It has developed three executive programmes tailored towards certain regulatory bodies in Turkey and it is now working with Borsa Istanbul, Turkey’s sole stock exchange, on research projects, as well as the exchange of students and faculty staff.

“We are collaborating on a joint [academic conference] with Borsa Istanbul, along with other players such as the World Bank and the Turkish central bank,” says Daud Vicary Abdullah, president and chief executive of Inceif. “We also foresee a considerable pipeline of work in the Gulf Co-operation Council countries. We have already helped deliver executive programmes at the Central Bank of Oman and continue to work with them in other areas. At the same time, we are currently pursuing an educational collaboration with the Bahraini Institute for Banking & Finance and we are working with the Hamdan Bin Mohammed e-University, which is the designated institution for Islamic finance education in Dubai.”  

In January 2013, the government of Dubai announced a strategic plan for the emirate to become the “global capital of the Islamic economy” within three years in the areas of banking, food and regulation. The wide-ranging plan will include a sharia council to oversee standards in Islamic finance, an arbitration centre to resolve disputes in Islamic contracts and a drive to boost production of halal food within Dubai. The plan also aims to enhance Dubai's market for sukuk, which stood at just over $51bn in 2013.

Inceif is also carrying out work in Africa. In September 2012, it signed a memorandum of understanding with the Islamic Corporation for the Development of the Private Sector (ICD) and the Centre Africain D’Etude Supérieure en Gestion (Cesag) to impart training and education to west African French-speaking countries.

“We are working in collaboration with the ICD and Cesag to establish a regional Islamic finance academy which will be based out of Dakar in Senegal, with a three-year plan currently under development,” says Mr Vicary. “We are also due to launch an Inceif diploma programme for the Common Market for Eastern and Southern Africa countries, which will initially be based out of Nairobi.”

Important acceptance

On June 1, 2013, Inceif was accepted as eligible for accreditation from the Association to Advance Collegiate Schools of Business (AACSB) – the body which provides internationally recognised, specialised accreditation for business and accounting programmes at the BA, MA and doctoral level. Inceif is now under a period of review and assessment whereby areas for improvement will be identified by the AACSB.

“This is an important step as it means that Inceif won’t just be benchmarked locally but also globally, and also against some of the most respected institutions in the world,” says Mr Vicary. “This is the same international business school accreditation that the likes of Insead, Harvard and Wharton have.”  

Even so, Mr Vicary believes that the Islamic finance industry needs its own global accreditation body, and that this is important for two key reasons. “The first is the portability of qualified staff between jurisdictions, and the second is the application of international standards, whereby the public and the industry know that employees in the Islamic finance industry are appropriately qualified to accredited professional standards. This is similar to having a recognised international accounting professional qualification.

“This not only gives assurances to stakeholders that their staff are properly qualified, but it means that the staff themselves are also assured that they have an internationally recognised certificate of practice.”

Mr Vicary believes that the importance of a global form of standardisation extends to other aspects of the Islamic finance industry such as regulation, and is not just limited to professional qualifications and education.

Going forward, Inceif wants to capitalise on the opportunities afforded by the rapidly growing online education market and is therefore investing in its faculty and technological capabilities in order to be able to do so. 

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