So many jobs, but so few experts for Islamic finance

Gulf Times:The swift rise of the Islamic finance industry could hit a wall in the coming years as the sector struggles to find enough experts to do the job, an industry official said yesterday.

Shariah banking’s sudden popularity has created a scramble for bankers, scholars and lawyers conversant in both conventional finance and Islamic economics, and produced a shortage that sometimes compromises the quality of products, experts say.
Many Islamic bankers are drawn from the conventional finance sector and have structured products which have drawn criticism that Shariah banking is little more than usury-based financing cloaked in Islamic dress.

The Islamic industry’s rapid growth has outpaced the rate at which the sector is able to churn out workers, said Agil Natt, chief executive of Kuala Lumpur-based INCEIF, which says it is the world’s only dedicated Islamic finance university.
“We want to bring the Islamic finance professionals closer to understanding Shariah principles and we want the Shariah advisers to be able to understand some of the problems of practitioners,” Natt said in an interview.“If you do not train the right kind of human capital, there is a risk that the growth of the industry can be stymied.”

About 30,000 Islamic finance professionals will be needed in the Middle East in the next 10 years, he said, citing figures from consultancy AT Kearney.
In Malaysia, another leading centre of Islamic finance, an estimated 8,600 Shariah bankers would be needed by 2012, almost double the 4,800 available now, according to the central bank.

The Islamic insurance, or takaful, industry would require just over 2,000 professionals by 2012, up from 1,250 now.The industry’s lack is especially glaring in commercial banking and takaful in the Middle East, retail banking in the US and fund management and investment banking in Malaysia, Natt said.

Modern Islamic banking, which has its roots in the 1970s oil boom, has been growing about 20% annually, driven mainly by a surge in Middle East oil revenues.
It aims to be a viable alternative to the conventional industry but with over 300 financial institutions worldwide and the sector valued at about $1tn, the size of the Islamic industry is still just a fraction of conventional banking.
The shortage of talent in the industry is creating a fierce competition for workers. Middle East institutions, in particular, are trying to draw in professionals by offering top dollar.

It has also driven up wages, with it not uncommon for Shariah bankers to draw higher pay than their conventional peers.The Islamic industry’s growth was not expected to stall despite easing energy prices, as the global financial meltdown and US housing crisis have put the spotlight on ethical investing, Natt said.

“There would be no drop in momentum simply because Islamic banking and finance has features which makes it appealing for even non-Muslims,” said Natt, formerly a top official of Malayan Banking, Malaysia’s largest lender.
The industry also faces a shortage of Shariah scholars, he said, estimating that there are about 200 such scholars worldwide.

All financial institutions that offer Islamic products must have a board of Shariah advisers who decide if instruments comply with Islamic law’s standards.
INCEIF, which was set up in 2006, is funded by Malaysia’s central bank and has over 1,800 students from 52 countries.