ISLAMIC FINANCE GROWTH AND INTELLECTUAL CAPACITY BUILDING

The Way Forward

While strategic management is a cornerstone of any business program for graduation, it’s almost always taught from conventional theories and typically American case studies. This following book takes those traditional theories and interprets them from an Islamic perspective using more international case studies. Therefore the book  Strategic Management from Islamic Perspective  Text and Cases  published by John Wiley – co-authored by  Dr. R. Fontaine and I – is work of a team that has created an impact extensively on this subject.  Strategic Management serves not only as a text resource for business students; it is a useful reference for any Muslim business leaders who want to transform their business while keeping in sync with Islamic values.

It is also an insightful reference for non-Muslim business leaders with an intention to develop an alternative view of strategic management in the new global business environment. Our review of the literature, our explanations of the verses of the Qur’an that relate to strategy and our perspective will enrich the field.  This is a new perspective.  Not everyone would agree but it’s different and it has triggered some important questions and ideas. This kind of intellectual work is needed due to the existence of vast market potential and Muslims presence worldwide.

  • The Islamic world exists across Asia Pacific and North Africa and OIC countries in general;
  • The Pew Report reveals that there are 1.57 billion Muslims out of 6.8 world population of all ages in more than 200 countries in 2008;
    • The Muslim consumers in 2007 in all five continents include:Muslim Majority Countries vis-à-vis Muslims as Minorities in Non-Muslim countries.
  • The Muslims in OIC Countries: Asia–Pacific region alone are 972 million
  • The Muslims in OIC Countries: Indonesia has-13 % alone(203 millions)
  • The Muslims in OIC Countries: Middle East are only-20 %
  • The Muslims in countries like Pakistan, Bangladesh including India constitute-31%

The Non-Islamic world includes:

  • Muslims are found as minorities in European, American and other Non-Muslim Countries. China alone has 22 million Muslims more than total Muslims in Malaysia.
  • Russia has 16 Million Muslims, more than Jordon and Libya combined population (12 Million).
    • There are 38 million Muslims in Europe today;
    • Over 4 million Muslims reside in North/South Americas, and
    • Germany has over 4 million, France 3 million Muslims

The same Pew Report forecasted that currently the Muslims are 23 -24% of world market.The current birth rate of Muslims all over the world indicates that they will be 2/3 of global population in 3012 and fast rate of conversion to Islam will add numbers further to it?

This all provides opportunities as well as some challenges ahead for business communities to think about the economic growth opportunities available for Halal products’ brands and Islamic financing services. Besides economic development activities alone while not paying enough attention on improving the quality of human life particularly Muslims, could lead to negative impacts on human civilizations. The Creator of the universe Allah (s.w.t.) prohibiteduse of ribawi system but Muslim businesses don’t seem to bother at all.  It is therefore important that these negative impacts are addressed in a timely, comprehensive and Islamic manner must be an agenda of the EPP7 project life cycle on a proactive basis. In response to this, Islamic Financing (IF) is increasingly used by national governments and corporate sector not necessarily owned by Muslims alone but others too all over the world as a tool to ensure a balance between need of economic development in harmony with relationship of Allah with His vicegerent (human) on the earth, is a good sign. I consider it as Allah’s (s.w.t.) blessing in 21st century.  The challenge of real Islamization in financial management and financing servicesthat should beShariah compliant is therefore immense for Muslim intellectuals.

Over the years the legislative framework addressing Shariah compliant financial management has evolved, with the enactment of the Shariah Boards’ as advisory body, which is usually an umbrella entity guardian to shariah based investment, trade financing, risk management by using takafful and other banking sectors’ activities. But it depends on how much pie of the economic cake from petrodollars based resources coming forth.  This requires a framework providing various Policies, Acts, Notifications and Regulations and Rules to governance of Islamic Finance industry.  As a result, many national or central banks have a credible policy and legislations to foster Islamic finance (IF) sustainability.  However, gaps are evident in the institutional mechanisms – primarily in manipulations by certain quarters and lofty compliance, as well as tricky implementation tactics not in true sense of letter and spirit of mainstreaming of Fiqh issues and Maqasid shariah across various segments of the Islamic economy or Muslim countries would be disastrous.  The operationalization has not been as effective or at par with the evolution of shariah legislation and policy.  Beside this critic I would be failing if I don’t acknowledge what is achieved so faris great and alhamdulillah a great service to humanity in saving from the wrath of Almighty Allah(s.w.t.).  But more is needed towards an ideal situation, must be the ICIFE’s future direction and the way forward.

To begin with, there is a dearth of graduate level programs offered by IPTAs in area of Islamic finance dedicated to fulfilling the above long term needs and very little exposure of developing future Muslim specialists who may translate Islamic theories into practice, is need of the hour.  Whereas basic skills (among a moderate number of professionals) and specialized IF skills among the few (regulators and advisors) were seen to be sufficient a few years ago is not enough in future. To prepare and accept shariah compliance reports of future in very complex financing projects and programs, the complex business environment realities in future would mean that-

  • skills levels among the shariah professionals will need to improve;
  • the number of expert in Islamic finance professionals needs to be looked at.Building of Islamic financial professionals’ capacities should essentially address the stakeholder “ecosystem”.

Importantly all these efforts need to be carried out on a sustained and strategic outlook basis to ensure the mega trend of approximately 15-20 percent annual current growth rate of Islamic finance industry sustains in long-run.  Therefore, the establishment of ICIFE by the government of Malaysia under the patronage of ministry of education entrusted in human capital development would be only justifiable if strategic direction is to be pursued.

The formation of the International Council of Islamic Finance Educators (ICIFE) was considered timely and much needed for Islamic finance education to be made known and promoted worldwide.  As the first of its kind for Malaysia and the world, ICIFE as the “Global Body for Professional Certification and Accreditation for Islamic Finance Education” was officially launched by the Honorable Deputy Prime Minister as The Honorable Minister of Education (MOE) Malaysia during the Gala Dinner on 22August, 2014 held at the premises of Bank Negara’s Lanai Kijang” where ambassadors, company CEOs, Vice Chancellors and Rectors of local as well as international universities were invited to witness the birth of ICIFE

By | 2017-03-28T10:49:48+00:00 December 22nd, 2014|Categories: News|4 Comments

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4 Comments

  1. Prof. Dr. Md. Abu Sina February 4, 2015 at 7:12 PM - Reply

    Alhamdu Lillah. May Allah accept your initiatives for entering into Jannah.

    • Khaliq March 2, 2015 at 8:15 AM - Reply

      Jazakallah khairan katira… I wish and pray that Allah s.w.t.grants your wish and doa.
      Wassalam
      Khaliq

  2. There is certainly a lot to learn about this subject.
    I love all the points you’ve made.

  3. Zohra Jabeen April 23, 2016 at 7:48 PM - Reply

    Subhanallah! Very happy to read this. May we all Muslims who are individually striving for the same goal in our own corners of the world, unite, network and work together with synergy towards our common goals, the falah /betterment of the society, especially in Islamic business finance and distributive justice and waqf. Aameen

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