Skills shortage to test Islamic finance globally

Subject

Progress towards addressing the skills shortage in Islamic finance.

Significance

Islamic finance is fast growing, driven by a surge in interest for alternative markets. In 2014, it surpassed 2 trillion dollars in global assets. In order for an Islamic instrument to be permissible, it must be sharia-compliant. Sharia law typically prohibits paying and receiving interest (riba) and places restrictions on investing in certain types of 'haram' (non-permissible) activities, such as armaments, alcohol and pornography. Islamic finance focuses on developing financial products linked to the real economy, such as asset-backed bonds (sukuk). A skills shortage, one of the industry's bottlenecks, is being addressed by initiatives to develop human capital and provide qualifications for professionals in the sector.

Impacts

• The Islamic finance industry will require increasingly more finance professionals with specialist training.
• Education providers and market players in the United Kingdom and South-east Asia will aim to satisfy this demand.
• The industry will also require a commonly accepted definition of sharia-compliance, particularly across borders.
• The development of human capital in Islamic finance will make it a cost-competitive alternative to traditional financing.