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Islamic finance education in Pakistan – challenges and growth

Islamic finance industry in Pakistan has witnessed a strong growth in Pakistan over the last decade, with the share of Islamic banking sector reaching 14.8% of the total banking market and share of Islamic mutual fund industry capturing 30% market share depict a strong demand at the grass root level. In addition to it, Takaful (Islamic insurance) sector has witnessed higher growth in the last few years especially after the introduction of Takaful Windows in Pakistan and all major insurance companies has started offering Takaful based products. The stagnant Mudarabah sector has also shown positive results after the strengthening of their Shariah governance framework by SECP.

011In Pakistan, the strong growth of Islamic banking is evident with 5 full-fledged Islamic banks including Meezan Bank, Dubai Islamic, BankIslami, Al Barakah and MCB Islamic Bank and in addition it already 17 conventional banks have started Islamic banking operations. According to latest SBP figures of June 2018 the branch network for Islamic banks has crossed 2,685 mark and is projected at 3,300 branches by the year 2020.

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AHMED ALI SIDDIQUI (Director, IBA Centre for Excellence in Islamic Finance)

According to conservative estimates the Islamic finance industry currently employees over 25,000 professional. Based on a projected 30% growth of Islamic financial sector and SBP vision to take Islamic banking share to 20% by 2020, the annual demand of qualified and trained Islamic finance professional is projected around 3,000 to 4,000 professionals for the next five years. Further to this demand, the need of qualified and skilled Islamic finance experts in the industry including professional accountants and auditors can be estimated at 500 per annum after the development of All Share Islamic Index at PSX and income tax rebate announcement by FBR for Shariah compliant listed companies.

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According to industry expert, one of the factors that can limit growth of Islamic finance industry is lack of awareness of Islamic finance among young business graduates and limited availability of trained and qualified human resource. Furthermore, it is also crucial to enhance the skill set of existing finance and banking professionals and provide them much needed reorientation to the skills related to Islamic banking, product development, risk management, Islamic accounting and auditing standards and Islamic capital markets to keep them relevant to the modern and emerging financial practices.

According to Islamic Finance Country Report published by IBA CEIF and Thomson Reuters, 76% of the Islamic finance industry executives believes that the number of entry-level trained professionals in the current market is not sufficient and it highlighted the gap that the educational system throughout Pakistan provides information largely about the conventional financial framework and is still lags behind in providing the right academic framework about Islamic financial system.

Demand of Islamic finance education at different levels:
Job Nature/Titles Expected Qualification/Degree Requirement
Front end staff, Branch Managers, Sales team, Relationship Officers Basic Islamic Finance Certification/DiplomaBachelors/Masters Degree with Islamic finance courses
Corporate Relationship Manager, Credit and Risk Specialist, Investment Bankers, Product Development experts, Shariah Compliance Officers, Shariah Auditors, Capital Market experts, Fund Managers, Financial advisors Advance Certification/Diplomas in Islamic Finance, Islamic Capital MarketsBachelors/Masters Degree with specialization in Islamic Finance

Professional Certification in Shariah & Islamic Accounting & Auditing standards.

Shariah Advisors, Shariah Board Members, Muftis, Shariah Scholars Specialized Certification in Shariah StandardsMasters degree in Islamic Jurisprudence, Islamic Commercial Law, FiqhulMuamlaat or equivalent

Diploma/Certification in Banking, Accounting and Finance

Researchers, Academics Masters Degree/MS with specialization in Islamic FinancePhD in Islamic finance

Professional Certification in Shariah, Accounting & Auditing Standards

Certification in Islamic Commercial Law, Jurisprudence and FiqhulMuamlaat

Board Members, Group Heads, C-Level Executives Certification in Islamic Finance, Shariah Governance, Islamic Capital Markets, Islamic Finance Risk ManagementProfessional Certification in Shariah, Accounting & Auditing Standards
Current landscape of Islamic finance education

If we review the current landscape for Islamic finance education in Pakistan, significant gaps exist at the level of education providers. Leading universities and business schools need to increase their effort to catch up the ground. In the last few years, Islamic finance related course are being introduced as part of elective in top universities like IBA, LUMS, NUST, Comsats, KSBL, IoBM to name a few. Some universities in Pakistan have also taken lead to incorporate Islamic finance as part of the core requirement for their business degrees. Universities like IMS Peshawar, IIU Islamabad, UMT Lahore, Comsats have also started offering Master level specialized programs. In 2017, IBA Karachi also started its first MS Islamic Finance Program, a very comprehensive and in-depth program covering theoretical and practical aspect of Islamic finance. LUMS has also started offering PhD in Islamic Finance.

In the area of professional education NIBAF, IBP, IBA Centre for Excellence in Islamic Finance (CEIF) and Center for Islamic Economics are playing active role by offering different level of certification programs, professional development program, post graduate diplomas and short courses for existing finance professionals, bankers and academics.

Establishment of three centres for excellence in Islamic finance

In 2015, with a targeted approach to develop Islamic finance talent, State Bank of Pakistan has supported the establishment three Centres for Excellence in Islamic Finance (CEIF) at Institute of Business Administration (Karachi), IMS Sciences (Peshawar) and Lahore University of Management Sciences in 2015. This strategy has been proved successful in enhancing the focus on executive learning and academic programs within renowned business schools in three major cities of Pakistan. Specially IBA Center for Excellence in Islamic Finance (CEIF) has emerged as a leading regional centre for promotion of Islamic finance and is playing its role actively to support the Islamic finance industry by its specialized programs, awareness sessions, industry forums and research.

A review of the professional qualification program offered by bodies including ICAP, ACCA, ICMA and CFA, reveals a larger gap in terms of promoting Islamic finance education. At present these important qualifications does not include enough coverage of Islamic finance, which creates a knowledge and expectation gap in the students and industry respectively.

 

It is now high time that Islamic finance is considered as a core element of any finance and accounting related academic program and professional qualification. According to industry experts a degree in finance and accounting in the modern world will be ‘incomplete’ if the candidate is not exposed to concepts and framework of Islamic finance and the employability of such candidates can be lower than those who are entering the job market with Islamic finance skills.

If we review the curriculum development guidelines of finance related program from Higher Education Commission of Pakistan, a strong need is felt that HEC must introduce Islamic finance related topics as part of the mandatory requirement for accreditation of any finance related academic programs.

In provision of Islamic finance education among the young scholars and Ulemas graduating from the traditional Madaris, with the exception of few renowned Madaris like Jamia Darul Uloom, Jamia Tur Rasheed, Jamia Naeemia Karachi to name a few, a vast majority of these religious schools also lack behind in equipping their graduates with the concept, application and theological background of modern Islamic financial system.

At present the curriculum at the Matric, Intermediate, O & A Levels does not provide any coverage to basic or foundation level concept of Islamic finance and need to be updated by the relevant boards.

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Role played by IBA CEIF in promoting Islamic finance

IBA CEIF aims at providing a world class platform for discovery, enhancement and dissemination of knowledge in the field of Islamic finance. The Centre has established strong linkage with the industry through its Board of Management that includes CEOs of major market players and regulators under the leadership of Dr. Ishrat Husain as its Chairman.

IBA CEIF has adopted a multi-pronged approach towards addressing the demand for Islamic finance in the country. It has launched intensive professional training programs to hone skill set practitioners, a degree program to cater to the demand for new graduates and seminars/general awareness sessions to enhance awareness amongst the masses. Additionally, the Centre is focusing on research to stimulate product development and instill global best practices in the local industry. In the last three years, 1800 plus industry participants went through these rigorous training program and they were well received by the market.

To provide practical insights to its students, IBA CEIF has established strategic relationships with international as well as local financial and infrastructure institutions in a short span of little over two years including Meezan Bank Dubai Islamic Bank, Pak Qatar Takaful and Al Baraka Bank at the local front and with International Center for Islamic Finance Education, Malaysia (INCEIF), Islamic Research and Training Institute (IRTI) Jeddah, International Shariah Research Academy (ISRA), Malaysia and Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), Bahrain.

Another important initiative to promote high quality research in Islamic finance, IBA has launched a very comprehensive MS in Islamic Banking and Finance program with the collaboration of INCEIF, Malaysia.

Recommendation and conclusion

Keeping in view the demand of qualified Islamic finance professional, it is strongly recommended that Islamic finance related course offerings should be enriched across all major universities in the country to reach out to a wider audience and coverage of Islamic finance to be made part of mandatory course offering in business and accounting degrees. Efforts are also needed to introduce Islamic finance concepts right from the secondary education level and in religion school curriculum. The culture of research needs to be promoted by encouraging faculty and students to focus on the growth areas of Islamic finance and linkage needs to be developed with international centres of excellences. Additionally, frequent mass awareness campaigns through social, print and electronic media will be essential to familiarize the masses with this asset class. All stakeholders including academicians, regulators, industry players, media and Shariah scholars needs to join hands to achieve the above mentioned objectives.

Written by Ahmed Ali Siddiqui (Director, IBA Centre for Excellence in Islamic Finance) aasiddiqui@iba.edu.pk

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