Bridging the skill-set gap

In the last decade, Islamic finance in Pakistan has witnessed strong growth. Today, the Islamic banking sector accounts for 14%, and Islamic mutual funds 30% of the market. This suggests strong demand at the grass-roots level. Furthermore, the Takaful (Islamic insurance) sector has witnessed high growth in the last few years and the once stagnant Mudarabah sector has also shown positive results after the strengthening of their Shariah governance framework by the Stock Exchange Commission of Pakistan (SECP).

With five full-fledged Islamic banks and 16 Islamic banking windows, the Islamic branch network has crossed the 2,300 mark and is projected to reach 3,300 by the year 2020.

According to conservative estimates, the Islamic finance industry currently employees over 25,000 professionals. Based on a projected 30% growth and the State Bank of Pakistan’s (SBP) vision to take Islamic banking’s share to 20% by 2020, the annual demand of qualified and trained Islamic finance professionals is projected to be in the region of 4,000 to 5,000 in the next five years. Furthermore, subsequent to the decision by the SECP to list companies that use Islamic banking as their accounting model, the need for qualified Islamic finance experts, including accountants and auditors, is estimated to be at 800 every year. In this regard, it will also be crucial to enhance the skill-set of existing finance and banking professionals and provide them with reorientation in terms of the skills required for product development, risk management, accounting and auditing standards’ compliance and Islamic capital markets.

According to industry experts, a degree in finance and accounting is ‘incomplete’ if candidates are not exposed to the concepts and frameworks of Islamic finance and therefore the employment prospects of such candidates may be lower than those entering the job market with Islamic finance skills.

According to a survey done as part of the Islamic Finance Country Report published by the Institute of Business Administration’s Centre for Islamic Finance (IBA/CEIF) and Thomson Reuters, 76% of Islamic finance executives believe that the number of entry-level trained professionals in the market is not sufficient. The survey highlighted the gap that exists in Pakistan’s educational system in terms of both conventional and Islamic financial frameworks.

Islamic finance education today

A review of Islamic finance education in Pakistan reveals significant gaps at the level of education providers, and this is something leading universities and business schools need to address. In the last few years, Islamic finance-related courses have been introduced as part of the electives in the top universities and these include Commission on Science and Technology for Sustainable Development in the South (COMSATS), Institute of Business Administration (IBA), Institute of Business Management (IoBM), Karachi School of Business and Leadership (KSBL), Lahore University of Management Sciences (LUMS) and National University for Science & Technology (NUST) among others. Some universities have taken the lead in incorporating Islamic finance as part of the core requirement for their business degrees. Universities such as Institute of Management Sciences (IMS) Peshawar, International Islamic University (IIU) Islamabad, University of Management and Technology (UMT) Lahore and Comsats have started offering Master level specialised programmes.

Keeping in view the demand for qualified Islamic Finance professionals and to reach out to a wider audience, Islamic Finance-related courses should be enriched across all major universities in Pakistan and made part of the mandatory offering in business and accounting degrees.

In 2017, IBA Karachi started their first MS Islamic finance programme, while LUMS has started offering PhDs in Islamic Finance. In the area of professional education, National Institute of Banking and Finance (NIBAF), Institute of Bankers (IBP), IBA/CEIF and the Centre for Islamic Economics are playing an active role by offering different level certification programmes, professional development programmes, post graduate diplomas and short courses for existing finance professionals, bankers and academics.

The establishment of three centres of excellence

In 2015, SBP supported the creation of three centres for excellence in Islamic finance at IBA/CEIF, LUMS and IMS Sciences in Peshawar. IBA/CEIF have also established strong linkages with the industry through their Board of Management which includes CEOs of major market players and regulators under the leadership of Dr Ishrat Husain. Additionally, the Centre is focusing on research to stimulate product development and instil global best practices in the local industry. To provide practical insights to students, IBA/CEIF have established strategic relationships with international and local financial and infrastructure institutions; these include Al Baraka Bank, Dubai Islamic Bank, Meezan Bank and Pak-Qatar Takaful on the local front, and the International Centre for Islamic Finance Education in Malaysia and the Islamic Research and Training Institute in Saudi Arabia among others. A review of the professional qualification programmes offered by bodies, such as the Association of Chartered Certified Accountants (ACCA), Institute of Chartered Accountants of Pakistan (ICAP), Institute of Cost and Management Accountants of Pakistan (ICMA) and Chartered Financial Analysts (CFA), shows a larger gap in Islamic finance education. At present, these qualifications do not include enough coverage of Islamic finance and this is creating a knowledge and expectation gap in the students and the sector respectively. In fact, it is high time that Islamic finance is made a core element of any finance and accounting academic programme and/or professional qualification. According to industry experts, a degree in finance and accounting is ‘incomplete’ if candidates are not exposed to the concepts and frameworks of Islamic finance and therefore the employment prospects of such candidates may be lower than those entering the job market with Islamic finance skills.

A review of the curriculum development guidelines for finance related programmes at the Higher Education Commission of Pakistan (HEC) reveals a strong need for the HEC to introduce Islamic Finance related topics as part of their mandatory requirements for accreditation to any finance related academic programme. Furthermore, with the exception of few madaris, such as the Jamia Darul Uloom, Jamiatur Rasheed and Jamia Naeemia (to name a few), the majority of religious schools are also lagging behind in equipping their graduates with the concept, application and theological background of modern Islamic financial systems. At present the curriculum at Matric, Intermediate, O and A Levels do not provide coverage in terms of foundation level concepts in Islamic Finance and they need to be updated by their relevant boards.

Recommendations

Keeping in view the demand for qualified Islamic Finance professionals and to reach out to a wider audience, Islamic Finance-related courses should be enriched across all major universities in Pakistan and made part of the mandatory offering in business and accounting degrees. Efforts are also needed to introduce Islamic Finance concepts at the secondary education level and in religious school curriculums. A culture of research needs to be promoted by encouraging faculty and students to focus on the growth areas of Islamic finance and linkages need to be developed with international centres of excellence. All stakeholders, including academics, regulators, industry players, media and Shariah scholars needs to join hands to achieve these objectives.

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