Islamic finance boom calls for increase in human capital

Islamic finance boom calls for increase in human capital
Updated 25 December 2016

Islamic finance boom calls for increase in human capital

Islamic finance boom calls for increase in human capital

JEDDAH: In the fast-growing industry of Islamic finance, the lack of specialized, trained human capital in the field continued to be a challenge, said Saudi Arabian Monetary Authority (SAMA) Gov. Ahmed Al-Kholifey.
The industry is booming in member states of the Gulf Cooperation Council (GCC) and internationally, in Muslim and non-Muslim countries alike.
This growth suggested that Shariah-compliant banking had more to offer than simply being a way to serve the needs of the 1.5 billion Muslims around the globe, according to Al-Kholifey.
This situates education and training in Islamic finance among the top priorities to keep up with developments in the industry and guarantee steady growth.
“The fast-growing Islamic banking industry requires qualified and well-trained people in many disciplines and at various levels,” said Al-Kholifey at the World Islamic Banking Conference (WIBC) in Bahrain earlier this month.
“We urgently need to focus on that. More efforts need to be coordinated among regulators and banks in order to specify the areas where there is scarcity of human capital.”
Being home to the largest Islamic banking market in terms of assets, representing 34 percent, Saudi Arabia can further strengthen its position when it comes to offering specialized training in Islamic finance.
Al-Kholifey added that SAMA ensured an operating environment that supports Shariah-compliant products.
“We have ensured the availability of specialized training of bank staff as well as our own staff in Islamic banking,” he said.
The expected growth in the Islamic finance customer base will reach 250 million in 2020. This necessitates bridging the gap between what the industry demands and human capital by providing proper education and training.
“Saudi Arabia can enhance and deepen its position in the Islamic finance world and become a global center of excellence,” John Sfakianakis, director of economic research in Islamic finance at the Riyadh-based Gulf Research Center, told Arab News. “Deepening training and human capital is essential toward that goal.”
Talat Hafiz, secretary-general of Saudi banks’ Media and Banking Awareness Committee, told Arab News that among the factors behind the lack of specialized education in Islamic finance is that it requires in-depth knowledge of both conventional banking and jurisprudence of transactions.
“Finding professionals who can combine knowledge and understanding of both banking and jurisprudence of transactions is very difficult,” he said.
The Bahraini experience
Bringing conventional banking and Islamic finance training together has already shown improvement, according to some institutes that offer training and education to those interested in Islamic finance.
The interest is not limited to those who come from a Muslim background. It includes those from countries that have included Islamic finance and banking in their economic development plans.
Bahrain is one of the main hubs in the region when it comes to Islamic finance education and training.
The Bahrain Institute of Banking and Finance (BIBF) is one of the not-for-profit organizations that offer training in Islamic finance in Manama. The education is customized according to the needs of employees.
“Islamic banks hire people from conventional banks. They may be very capable in doing tasks they used to do in a conventional bank, but they lack the knowledge in Islamic banking,” said Ahmed A. Hameed Al-Shaikh, deputy director of the BIBF. “So there is no synergy between him and the team in the Islamic bank.”
The assessment center at the institute conducts training-needs analysis to evaluate the knowledge level of clients, assess the outcome they are expecting and accordingly come up with a teaching proposal. This depends on the prior background of the applicants.
The institute receives students interested in the field from countries worldwide, and the interest is increasing.
“There is a spike in international students, especially in the GCC, but our plan is to grow it internationally beyond the GCC in the next year as a distance-learning program,” said Mujtaba Khalid, head of the Islamic Finance Center at the BIBF.
The goal is to create a base of human capital that caters to the Islamic finance industry locally, regionally and internationally.
“We want students to rise up to international standards so they can find jobs not only in Bahrain, but in the whole GCC as well,” said Al-Shaikh.
The Advanced Diploma in Islamic Finance (ADIF) at the BIBF started in 2000/2001. It was mainly for people who had no prior knowledge of Islamic finance.
“Now we get a mix of clients. A lot of young people are getting into the Islamic finance industry,” said Khalid.
“Initially, the model was to work at a conventional bank then shift into Islamic finance. Now we are seeing that even fresh graduates are coming into Islamic banking.”
The employment rate is 95 percent after graduation as there are many local graduates based in Bahrain, where demand is significantly high.
“We work with professionals in Islamic finance as well. We get high-level trainers, not only in-house staff,” said Khalid.
The BIBF provides staff training to major banks in the region, including Saudi Arabia. “We provide training to most of the top banks in Saudi Arabia, such as the National Commercial Bank (NCB) and Al-Bilad Bank,” Al-Shaikh said.
“They have trust in our quality, and we are a non-profit organization. This is where we gain trust. The revenue we get, we inject back to improve the quality of our education. Making revenue is not our main objective. Even after their employment, clients come back to do short courses or customized training as needed by the bank,” he added.
The BIBF falls under the supervision of the Central Bank of Bahrain (CBB) to ensure that the education and training the institute provides will graduate talents that can contribute to the advancement of the banking industry in Bahrain.
CBB Gov. Rasheed Mohammed Al-Maraj plays the role of the chairman of the board of directors.
The CBB requires employees pursuing a career in Islamic banking to hold an Islamic Diploma.
The ICD experience
The Islamic Corporation for the Development of the Private Sector (ICD), a multilateral development financial institution that is part of the Jeddah-based Islamic Development Bank (IDB), created the Islamic Finance Talent Development Program (IFTDP) in 2011.
The IFTDP is a training program designed to develop leadership within the Islamic finance industry. It serves students and trainees from the ICD’s 53 member states from the Muslim world.
“Getting into the IFTDP is very competitive,” said Sulaiman Ali Al-Sultan, acting director of corporate support at the ICD.
“When we first started the program, we received 500 applications. Last academic year we received 2,000, but we only accept 12 candidates per year. We want to make sure the people we select are the best for this program.”
The program not only trains individuals who aspire to a career in Islamic finance, but also focuses on identifying the skills needed to create leaders in Islamic finance institutions.
“We found from the first three batches of students that people are more in need of leadership skills, so we added this part when we designed the master’s degree in Islamic finance with IE Business School in Madrid,” said Senior Program Manager Samah Souri.
Khaled Al-Aboodi, CEO of the ICD, said: “Graduates have great opportunities to work in financial institutions, whether at the ICD or other financial institutions. We believe our program has the potential to lead Islamic finance institutions in the future.”
He added: “One of the reasons is that it lets participants take part in a wide range of projects across different countries. It offers on-the-job training and a master’s degree in Islamic finance leadership.”
The growth of Islamic finance has led to an increased demand for the ICD to provide a wide range of Shariah-compliant solutions to meet the various needs of customers and businesses in the global economy.
According to SAMA, the 12 local licensed banks operating in Saudi Arabia offer Shariah-compliant finance, as do several branches of foreign banks in the Kingdom. Introducing Islamic banking was a gradual process that started in the 1990s.
“Saudi Arabia was a pioneer in shifting gradually from conventional banking to Islamic banking,” said Hafiz.
“Some countries shifted overnight and the outcome was negative. We in Saudi Arabia started moving steadily since the 1990s. We succeeded in moving without negatively affecting customers’ dealings.”
John Sfakianakis, director of economic research in Islamic finance at the Riyadh-based Gulf Research Center, says Islamic finance is a mature and developed industry in Saudi Arabia, representing about two-thirds of total bank financing at the end of the first half of 2016.
Islamic banks accounted for about 43 percent of the sector during that period, up from 36.6 percent in the first half of 2015 and 42 percent at the end of 2015.
The Islamic windows of conventional banks were 24 percent, up from 18.6 percent in the first half of 2015, but remained unchanged from last year.


Global chip shortage offers silver lining to KSA’s local industry

Global chip shortage offers silver lining to KSA’s local industry
Updated 01 March 2021

Global chip shortage offers silver lining to KSA’s local industry

Global chip shortage offers silver lining to KSA’s local industry
  • The shortage has pushed chip stocks to record highs, and analysts expect that chips will continue to be in short supply at least through the end of 2021

RIYADH: A global semiconductor chip shortage as a result of the coronavirus disease (COVID-19) pandemic has increased the need for the Kingdom to boost its local production so it is less dependent on foreign manufacturers, a Kingdom-based IT expert said.

The shortage has pushed chip stocks to record highs, and analysts expect that chips will continue to be in short supply at least through the end of 2021.

Maribel Lopez, principal analyst at San Francisco-based Lopez Research, told MarketWatch the chip industry is facing “a perfect storm” of demand and supply issues that is unlikely to resolve soon.

“Unless we have a major economic meltdown, which is obviously possible, one of the things that’s happening right now is that almost anything you buy is going to have a chip in it,” Lopez said.

Reuters reported that chip prices could increase by up to 6 percent this year, but the delay has also seen production cut short. Carmaker Ford said it could see production cut by 20 percent as a result of the shortage of supply. Last week, US President Joe Biden announced $37 billion in funding to address the situation.

“The importance of semiconductors cannot be ignored due to their massive need in the Internet of Things, computers, smartphones, and consumer electronics devices. However, the global semiconductor scarcity and its unprecedented demand amid the pandemic have aggravated the situation for a wide array of industries. It has forced automotive, defense, industrial and other manufacturers to cut production and even shut down assembly lines,” Dr. Muhammad Khurram Khan, professor of cybersecurity at King Saud University and founder and CEO of the Global Foundation for Cyber Studies and Research in Washington, told Arab News.

He added: “If the current situation persists for the next few months, there are higher chances that the Kingdom may also observe a price hike for electronic items. So, it is better for local importers, businesses, and consumers to plan accordingly.”

The professor said that the current global supply shortage could be the catalyst for Saudi Arabia to invest more in this sector and develop its local capabilities.

“This would reduce dependence on imports, meet the local manufacturing demands, boost the economy, and create job opportunities in the Kingdom as per Saudi Vision 2030,” he added.


Saudi Arabia to allow Boeing 737 MAX to return to service

Saudi Arabia to allow Boeing 737 MAX to return to service
Updated 28 February 2021

Saudi Arabia to allow Boeing 737 MAX to return to service

Saudi Arabia to allow Boeing 737 MAX to return to service
  • Boeing 737 MAX aircraft was grounded globally in March 2019
  • National carriers do not operate the Max model

LONDON: Saudi Arabia’s civil aviation authority announced on Sunday that the Boeing 737 MAX plane would be allowed to return to service in the Kingdom.
The General Authority of Civil Aviation (GACA) said the decision came after completing a review, taking the necessary measures, and completing all required tests by the US Federal Aviation Administration, the European Aviation Safety Agency and other civil aviation authorities around the world.
Boeing’s top-selling MAX was grounded globally in March 2019 after two fatal crashes involving the same model in five months.
The authority said that national carriers do not operate the Max model, but several foreign airlines operate flights to and from Saudi airports, and several flights cross their airspace with the same model.
GACA said the temporary suspension was lifted after “close coordination with the international civil aviation community, regarding changes, licensing and training, to ensure the highest level of safety.”
The civil authority also published a navigational notice permitting the MAX model to return to service. 
(With Reuters)


KPMG: 98% of Saudi CEOs set to invest in cloud technology in 2021  

KPMG: 98% of Saudi CEOs set to invest in cloud technology in 2021  
Updated 28 February 2021

KPMG: 98% of Saudi CEOs set to invest in cloud technology in 2021  

KPMG: 98% of Saudi CEOs set to invest in cloud technology in 2021  
  • Artificial intelligence, robotic process automation and 5G also set for more investment, according to survey
  • 88% of Saudi-based CEOs see technological transformation as an opportunity rather than a threat

JEDDAH: Senior company executives in Saudi Arabia are embracing the digital revolution, with 98 percent planning to raise their investments in cloud computing this year, according to a new survey.
Cloud computing is at the top of the technology agendas for CEOs in the Kingdom, with investments in artificial intelligence, robotic process automation and 5G also popular, according to the global consultancy firm KPMG’s 2020 CEO Outlook survey.
While technological advances can bring security challenges, 88 percent of Saudi-based CEOs see technological transformation as an opportunity rather than a threat.
“The pace of technological adoption has quickened this year as organizations react to the new working reality. Most of the CEOs believe the pandemic has accelerated the creation of a seamless digital customer experience and [that the] creation of new digital revenue streams has advanced during the pandemic,” said Mazhar Hussain, chief disruption officer at KPMG in Saudi Arabia.
“Nonetheless, the pandemic has seen an uptick of cyberattacks, which has increased awareness and investment into cybersecurity. The number of vulnerabilities in most organizations’ operations has increased with remote work. Hence, companies must resist the urge to direct budget cuts toward preventative cyber measures and [view] the sharp increase in global cybercrime as a reason to keep advancing their cyber defenses,” he added.
At the same time, the pandemic has shaken CEO confidence in global economic growth, according to the KPMG survey. Almost 32 percent said they are less confident about global growth prospects in the next three years than they were at the beginning of the year.
While cloud computing investment is a priority, a survey in January by German business software company SAP found that while more than four-fifths (89 percent) of Saudi senior public sector executives agreed that data sharing helped them to improve on how they connected with citizens, many had not invested in training to implement this.
SAP found that while 83 percent of respondents said data sharing improved their innovation in current goods or services, only 22 percent did this with partners. And when it came to training, only 33 percent of respondents had retrained employees on how best to analyze data. This skills shortage was cited by 61 percent of respondents as being a barrier to meeting strategic change initiatives.


Saudi fast-food chain Herfy expands in Bangladesh

Saudi fast-food chain Herfy expands in Bangladesh
Updated 28 February 2021

Saudi fast-food chain Herfy expands in Bangladesh

Saudi fast-food chain Herfy expands in Bangladesh
  • Herfy inaugurated its first branch outside the Middle East under a franchise system in Bangladesh in December 2017
  • Herfy Food Services Company was established in 1981, and the first Herfy restaurant opened in Riyadh that same year

JEDDAH: Herfy Food Services Company, Saudi Arabia’s largest fast-food chain, has opened its fifth restaurant in Bangladesh, following the success of previous branches in the capital city.
The financial impact from the opening will reflect in the first quarter of 2021, the company said in a Tadawul statement.
Herfy inaugurated its first branch outside the Middle East under a franchise system in Bangladesh in December 2017. 
According to an agreement signed with Bangladeshi private-sector company Greenland Services Ltd. in 2016, Herfy aims to open 30 outlets within “a few years.”
In 2020, Herfy reported an estimated annual net profit after zakat and tax of SR 53.6 million ($14.29 million), a drop of 73 percent year-on-year, as revenue for the year fell 16.6 percent to SR 1.074 billion.
Herfy was hit by the closure of its restaurants in malls and shopping centers. Moreover, working hours at stores had been reduced while administrative and general expenses had increased.
At its Bangladesh branches, Herfy offers training for employees and provides its franchisees with its own products, including meat, chicken and sauces — all made in its Saudi-based factories.
Herfy Food Services Company was established in 1981, and the first Herfy restaurant opened in Riyadh that same year. As of September 2020, the company owns a total of 40 restaurants and leases 345.


Huge surge in GCC demand for Ivy League university coaches

Huge surge in GCC demand for Ivy League university coaches
Updated 28 February 2021

Huge surge in GCC demand for Ivy League university coaches

Huge surge in GCC demand for Ivy League university coaches
  • Companies like Crimson Education coach students on how to improve their chances of being one of the few who receive an offer letter
  • Demand can differ from country to country, with those in the UAE preferring British institutions

DUBAI: Getting into a prestigious Ivy League university is no easy task. 
According to the latest figures, California’s Stanford University was especially picky, with a 2019 acceptance rate of just 4 percent. Columbia and Harvard followed with 5 percent, while Princeton and Yale were slightly easier with 6 percent of applicants getting offers.
The race to get these coveted places is also getting harder as the number of applicants has gone up and universities have become even stricter. Dubai-based Crimson Education has reported a surge in clients looking for help to gain access to institutions in the US, as well as into Oxford and Cambridge.
“The number of students who joined Crimson Education in the region over the past six months was 200 percent up from the same period the previous year,” Soraya Behesti, regional director for the Middle East and Africa at Crimson Education, told Arab News. “The company had a big push to hire new strategists in order to meet the surging demand. Crimson grew 250 percent from 2019 to 2020 and is projected to grow more than 150 percent this year.” 
The demand makes sense. 
A 2015 report from the US Department of Education found that the average salary of Ivy League graduates a decade after they finished university was $70,000 a year, compared to the average salary for non-Ivy League graduates of $34,000.
Companies like Crimson Education coach students on how to improve their chances of being one of the few who receive an offer letter, and Behesti said the acceptance rate among their clients was three times the global average.
There are also a number of trends which has seen demand for such services skyrocket in recent years.
“The number of students who applied early to Ivy League colleges skyrocketed in 2020, although the acceptance rate reached record lows,” Behesti added. “Applications to Columbia and Harvard’s early rounds increased from the previous year by 49 percent and 57 percent, respectively. Applying early to their top-choice university usually gives students an advantage but last year, the early round acceptance rate was closer to that of the regular round, with Harvard admitting just 7.4 percent of early applicants, from 13.9 percent in the previous year.”
Students have started enrolling for help earlier because of the increased competition, and Behesti said Crimson had seen a rise in demand from clients as young as nine.
“When we work with students from a young age, our sessions and objectives are not focused on universities per se, but building really strong foundations, developing a growth mindset, cultivating good study habits, learning entrepreneurial thinking and even developing core skills such as coding, debate or languages.”
Demand can differ from country to country, with those in the UAE preferring British institutions, while Saudi students show a preference for US ones, especially Columbia, Harvard and Yale. 
Having the right aptitude is good, but money also really counts. Crimson said that studying at an Ivy League university cost between $30,000 and $45,000 per year, although between 40 and 60 percent of students received some form of financial aid.
“For GCC students, governments offer attractive scholarships — but usually only for students who gain admission to the top 100 universities. We have worked with Emirati and Saudi students of all abilities, from A-grade academics to students struggling at school, to ensure their admission to the top 100 schools through academic tutoring, admissions support and extra-curricular coaching, thereby allowing them to receive government scholarships,” Behesti said.