Not surprisingly, in the absence of a globally recognized accreditation body for Islamic finance and business education, quality and standards are at best mixed, with some courses bordering on the ordinary and mediocre. At the same time, students who do graduate, complain that it is very difficult to find employment placements in the Islamic finance industry, sometimes even as internships.
In the UK, maintains Professor Simon Archer of the ICMA Center and the Henley Business School, Reading University, which offers Masters and PhD courses in Islamic Finance, "a number of universities responded to this demand for human capital development in the Islamic finance industry with varying levels of quality. Some of these responses it seems to me personally to be rather opportunistic. They saw this bandwagon and the chance of fees to be earned from new students, and decided to jump on. There are some very honorable exceptions to this, especially Durham University."
Indeed the IE Business School in Madrid earlier this month organized a seminar on Islamic finance and business education and the role of universities in its development and expansion, with Reading University, IE Business School, Durham University, Strasbourg University, King Abdul Aziz University in Jeddah and Casa Arabe in Madrid all participating.
The consensus was that there is a dearth of excellent text books on Islamic finance; research literature is somewhat sparse and where it exists it is spread out in a number of journals on Islamic finance which are not tremendously accessible.
Perhaps to some people's surprise, IE Business School, which is in the Top 10 of the FT Business School rankings, is spearheading education in Islamic finance and business and has the aspiration of becoming the Islamic finance education hub in Europe. Its campuses in the financial district of Madrid and elsewhere in the city are second to none, and it already offers Islamic finance as a subject or component of nits MBA and Masters in Finance degrees.
Next October, the IE Business School, according to Professor Ignacio de la Torre, academic director for Masters Program at the school, will introduce a first Degree in Finance "of which Islamic finance will be a key component." The school earlier this month also launched a credit and trading room to train students in the rubrics and dynamics of trading floor activity, including Islamic finance.
Professor de la Torre is also aware that education should also serve the wider interests of the economy and society. "In the business school environment, we have to make people aware of asset growth and bubbles and the dangers of too much leverage," he stresses. But he defers the responsibility of teaching financial literacy in schools, in the workplace and to housewives to the government. However, some 30 percent of IE Business School Masters in Finance students opt to study courses such as microfinance, including Islamic microfinance.
One of the big gaps in the market is job creation in the Islamic finance market. "There are not many jobs in Islamic finance going in Europe. Employers in general prefer students who have some experience — not necessarily in IF but in banking per se. It is a catch 22 situation. In the Middle East, jobs are more on the basis of personal contacts than market dynamics. It is important that industrial placement programs and internships are developed. At the same time executive education is also an important field - shorter courses for middle and senior managers. In Europe, France has the largest Muslim population and is a tremendous potential market. But, demand for such courses will depend on the perception that courses are of a required quality. This in turn will depend on the particular university," maintains Professor Archer.
In fact, there have been some important developments in industrial placements in recent weeks. The Kuala Lumpur-based International Centre for Education in Islamic Finance (INCEIF), the Global University for Islamic Finance, the Islamic finance education arm of Bank Negara Malaysia, last month signed a landmark agreement with the Islamic Corporation for the Development of the Private Sector (ICD), the private sector funding arm of the Islamic Development Bank, whereby the latter will finance a capacity building programme, the Islamic Finance Talent Development Program (IFTDP), for selected participants to be delivered by INCEIF.
The agreement was signed by Daud Vicary Abdullah, the new president and CEO of INCEIF and Khaled Al-Aboodi, CEO of ICD, in the presence of Zeti Akhtar Aziz, the chancellor of INCEIF. According to the two parties, the IFTDP aims to address the global shortage of Islamic finance professionals. INCEIF will educate postgraduates students selected by ICD from its 46 member countries through its Chartered Islamic Finance Professional (CIFP) program. In return ICD will offer corporate attachments to the participants within the ICD and IDB Group as well as ICD's investee companies globally. The 2-year work-and-study programme will commence in first quarter 2012.
According to Daud Vicary, the ICD is a perfect fit to INCEIF as both share a vision to develop talent for the Islamic finance industry. Al-Aboodi is confident that this strategic collaboration will be the catalyst in laying the foundation in addressing the talent shortage of Islamic finance professionals and serve as "building in the knowledge in-roads" to the growing interest in Islamic finance in Central Asia, Sub-Saharan Africa, Middle East and North Africa and other parts of the world.
There is a need for closer alignment between the industry and the providers of human capital development. "The Islamic finance industry," maintains Vicary, "continues to grow and develop apace and a standard-setting body, such as ACIFP (Association of Chartered Islamic Finance Professional) which represents the industry, needs to move further into this space and create appropriate industry standards for human capital development. The delivery against these industry standards would need to be independently accredited. We are still in the early days of development as an industry, but would envisage ACIFP taking on a global role such as CIMA and ACCA have in the accounting profession, for example."
INCEIF has and will continue to keep its channel of communication open with the industry players through, among others, focus group discussions and engaging the industry in enhancing our syllabus to keep it current with industry needs.
Vicary also believes that build on and to enhance quality of education is important because although Malaysia is one of the global front runners in Islamic Finance, "we are aware that others are playing catch-up. Therefore, we are always striving to improve, benchmarking ourselves against international standards not just on Islamic finance, but other encompassing aspects that make an organization world class be it services and product offerings."
There also has been important progress on the accreditation front. Earlier this year the Government of Prime Minister Mohd Najib Abdul Razak and Bank Negara Malaysia allocated RM3.17 million for the establishment of the Association for Islamic Finance Advancement (AIFA), which aims to be the main accreditation body for Islamic finance programs worldwide and will develop initiatives to ensure the quality, industry relevance and global recognition of Islamic finance education and its related areas.
AIFA will collaborate with international accreditation bodies such as the US-based Association to Advance Collegiate Schools of Business to develop the standards and curriculum for Malaysia's higher education institutions. AIFA is also cooperating with US publisher, John Wiley, to publish five standard textbooks related to Islamic finance and banking.
With these developments, Malaysia is fast emerging as a global cluster for Islamic finance and banking education spearheaded by the International Islamic University of Malaysia (IIUM) and INCEIF, which was last year accorded university status, and the numerous other training, educational and research institutes.
Indeed, IIUM is spearheading the AIFA initiative. "This year, we have already received 2,000 students locally and globally to undergo Islamic banking and finance courses in higher education institutions in the country and we are confident of getting 6,000 students next year. At the core of the cluster is a new comprehensive curriculum for Islamic banking and finance education while the existing programs will be expanded," explained Professor Mohd Azmi Omar, Dean of IIUM.
The target is to have 55,000 local students and 28,000 foreign students in Islamic finance and business education by 2020.
The AIFA initiative should also be seen in the context of Prime Minister Mohd Najib Abdul Razak's Economic Transformation Program for Malaysia (ETF), which aims to develop Malaysia into one of the world's leading Islamic finance education hubs. This sector is expected to contribute RM1.2 billion to gross national income and to create 4,300 related jobs by 2020.
