Bahraini group that sets standards for Islamic finance in 45 countries is helping universities start courses in Sharia-compliant business practices to avert a shortage of experts in the US$1 trillion (Dh3.67tn) market.
The industry will need 15 per cent more personnel over the next five years and 25 per cent more in a decade, said Khairul Nizam, the deputy secretary general of the Accounting and Auditing Organisation for Islamic Financial Institutions. Pakistan is offering its first doctorate in Sharia banking, while the UAE has introduced an Islamic Masters of Business Administration.
“There is a shortage of people in the industry at the entry level,” Mr Nizam said. “We will need to make sure there are enough heads in the future.”
Sharia-compliant bonds returned 6.9 per cent this year, according to the HSBC/Nasdaq Dubai US Dollar Sukuk Index, outpacing the 5.9 per cent jump in emerging-market debt, data compiled by JPMorgan Chase shows. Countries including Nigeria, Thailand, Australia and France plan to introduce legislation to facilitate Islamic financing, moves that will boost demand for scholars to certify that the products meet requirements on no interest payments.
“If you don’t have quality people, then growth in the industry won’t be sustainable,” said Azahari Kamil, the chief executive of the Asian Finance Bank based in Kuala Lumpur. “Governments and central banks should encourage universities to come up with more professional courses.”
The Canadian University of Dubai is offering a UAE-accredited MBA in Islamic banking, while the International Islamic University in Islamabad, Pakistan, started its doctorate course in Sharia banking to compliment its Masters programme in August.
Experts in Singapore are also setting up an association focused on Sharia-compliant investments to foster links between bankers, lawyers and investors in the Gulf and Asia, Raj Mohamad, the managing director at Five Pillars, a consulting firm in the city-state, said on Wednesday. Mr Mohamad will be the secretary of the new body.
The Accounting and Auditing Organisation, known as AAOIFI, has more than 200 members and its standards are used in Islamic finance in Bahrain, Jordan, Lebanon, Qatar, Sudan and Syria, according to its website. The organisation may issue 35 Sharia standards for Islamic institutions next year, according to a September 7 statement, citing Mohamed Nedal Alchaar, the secretary general.
Under Islamic law, the charging or receiving of interest on a loan or bond is banned and investment in businesses that deal in tobacco, gaming or alcohol are prohibited, making conventional stock and bond indexes off limits to those wanting to invest in accordance with Islamic principles.
“We have been speaking with a few universities to help them introduce some courses on Islamic finance and we are helping other universities to improve the courses they offer,” Mr Nizam said. “We are also offering our own courses.”
Assets that are Sharia compliant are estimated to almost triple by 2015 to $2.8tn, according to the Islamic Financial Services Board, a standards-setting body based in Kuala Lumpur.
Global sales of sukuk have risen to $17.4 billion this year, from $10.7bn in the same period last year, according to data compiled by Bloomberg News. Issuance reached a record $31bn in 2007.
Islamic banking assets in Malaysia, which pioneered financing along religious guidelines 30 years ago, have grown an average 20 per cent annually since 2006 to 350.8 billion ringgit (Dh350.7bn) last year. The South East Asian nation accounts for 66 per cent of global sukuk outstanding, according to the central bank’s annual report issued in March.
Australia and Thailand are pushing through legislation to remove tax barriers on Sharia-compliant products that would pave the way for issuance of Islamic bonds. Nigeria’s Stanbic IBTC Bank, a unit of South Africa’s Standard Bank Group, has been issued with a preliminary licence to offer Islamic banking services. Stanbic would be the African nation’s second lender to gain approval.
The International Islamic University of Malaysia offers postgraduate and PhD courses in Sharia-compliant banking and finance, according to its website. The UK’s Durham University also offers Islamic finance courses, while Harvard University in Massachusetts runs an Islamic legal studies programme through its law school, according to data on their websites.
The French Institute for Islamic Finance, based in Paris, in partnership with the French Institute for Management, is providing vocational training in Sharia-compliant finance through 15 programmes.