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Islamic finance – crisis for jobseekers

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Regular readers of The Islamic Globe will already know that we have decided to champion the cause of young Islamic finance graduates and job seekers. The educational industry is producing lots of raw talent – but they cannot find jobs.

This week we decided to turn our attention to what the Islamic finance industry itself had to say. The message that we received was not a positive one, in large part because the situation is not a straightforward one.

One senior Islamic banker based in the UAE had some very sobering words indeed: “In my view the key problem with the industry is a general lack of graduate training programmes and internships, even at large banks. Without such schemes, the industry will find it difficult to absorb the increasing number of graduates/job seekers.” Clearly this is a systemic issue that the institutions themselves would have to get grips with before students and job seekers can hope to see any improvement in their job prospects.

The same banker went on to say, “Most banks prefer to hire experienced staff that can hit the ground running and typically poach from other Islamic banks or more often than not, conventional banks. In this regard, product, credit and technical skills are valued more than Islamic/Shari’ah banking skills.  Given a choice between an experienced/well regarded debt capital markets banker and an Islamic banker with Sukuk expertise to head a Sukuk team, most banks would hire the debt capital markets banker.”

This confirms what bankers have been saying for many years: it is easier to teach an experienced banker Islamic finance than it is to teach an Islamic banker best practice. But it is not a comforting message for young hopefuls.

So what can students do? Our senior banker tells us, “Most students mistakenly believe that a degree/qualification in a particular field would automatically make them suitable for a job in that field, however the reality is that an employer looks for other attributes too e.g. did they undertake any internships/work experience during their studies, are they articulate, analytical, able to work in teams, interact with clients, have initiative, have technical finance/credit skills etc. Typically those who graduate in Islamic banking/finance do not have the same level of such skills compared to those who go through conventional programmes. This then points to a deficit in most Islamic banking/finance training which tend to focus more on the Shari’ah/’dogma’ aspects of banking and not as much on the technical/product/softer aspects of banking.”

There are some hard lessons in these words for the people responsible for putting together such training and educational programmes but are they representative of a global industry view? Unfortunately, it seems that the answer is ‘yes’.

Takaful guru Dawood Taylor, senior regional executive Middle East-Takaful for Prudential Corporation Asia told The Islamic Globe, “My experience is that these new Islamic graduates are not so much looking for work in their own countries but for jobs in the Gulf countries. These days this is never going to happen. Gulf positions are for either very experienced expats or newly graduated nationals. It is very rare that a position would open up for a newly graduated expat. Therefore the question has to be asked ‘are there openings available in the country of origin for newly qualified Islamic finance graduates’? 

My own experience has been one of such graduates seeking Gulf positions rather than positions in their home country. This is the problem I believe.”

So we have a chicken-and-egg situation that many graduates are only too well aware of: they can’t get a job because they have no experience – but they can’t get experience because they can’t get a job.

Is this a Gulf only problem, or is it global? Asad Ahmed, managing director of Gulf African Bank in Kenya told The Islamic Globe,  “In Kenya, Islamic banking is nascent and we were the first ones to start in 2008 and we have really been a training ground for many bankers who moved to us from conventional banking. Kenya has a vibrant labour force so expatriate employment is difficult and at GAB we have only two expats out of a total staff force of 263. We do our bit to hire new graduates and have also done a unique partnership with the Kenya School of Monetary Studies to not only promote Islamic banking but also offer prizes and employment to the best student. We are, as we speak, interning 10+ students from KSMS who are doing the diploma in Islamic banking and they are spending about three months with us as part of their course requirement.”

So, for job seekers happy to look to the emerging markets of Africa, it seems that there might be some bright spots on the horizon. However, Asad also sounds a cautionary note:  “Having said that, Kenya is not immune from youth unemployment which, like in most developing countries, is always higher than the general rate so yes I do suspect that ‘first jobs’ may be difficult”.

So what of Bahrain, once the Islamic finance capital of the Gulf and the financial centre for more offshore banks than any other Middle Eastern jurisdiction. Khalid Hamad, executive director - Banking Supervision for the Central Bank of Bahrain told The Islamic Globe, “The Bahrain market is still offering job opportunities but mostly for skilled resources. Also bear in mind the growth is not a double digit since the financial crisis.”

So again it seems that there are fewer opportunities and they are being offered to bankers with experience rather than newcomers. Finding a solution to the problem, however, is far from easy.

One experienced banker with some suggestions on how to fix the problem is Muhammed Ikram Thowfeek , a chartered accountant by profession and an Islamic banker by practice as well as founder and MD of MIT Global. He told The Islamic Globe, “Unfortunately, those who are seeking greener pastures or opportunities are knocking at the wrong doors or are ill equipped.  The global markets are opening up for Islamic finance… It’s not setting up banks and financial institutions that matter today, it’s all about the people, who need to be groomed to run these Islamic banks and Islamic finance institutions with passion, dedication and ready to go that extra mile in making a 'difference' in their lives and that of others. Not mere Job Seekers but Solution Providers.”

This begins to touch the core of the problem – it’s not just about getting a job, it’s about commitment. Thowfeek goes on to say, “We all talk about dearth of professionals in the industry - what are we doing about it and what knowledge we are acquiring - theoretical knowledge to run institutions in practice or need both theory and practical knowledge that are to be disseminated by the practitioners, thereby bridge the gap between the expectations and the current practices of the industry. If anyone wants to tap into the riches of this industry, first they must get equipped with the right knowledge and qualifications, and then get the exposure from the bottom up, to lead the industry passionately to provide solutions to global financial crises, where not only the Muslims benefit, even the non-Muslims benefits and will get attracted to the concept of Islamic banking and finance, not from a religious sentiment, but from a moral, ethical and social aspect of it.”