In December, Bahrain became the latest country to offer the Islamic Financial Qualification (IFQ), which was launched two months earlier in London as a joint venture between the British Securities and Investment Institute (SII) and the Ecole Supérieures Des Affaires in Beirut (ESA).
With religious feelings on the rise in the Arab world and the recent oil boom, Islamic banking services are being increasingly seen, as a natural alternative to traditional banking, and the IFQ reflects the growing interest in this particular field.
Initiated by the Banque Du Liban, the IFQ is already available in London through SII, in Beirut through ESA and in Bahrain through ESA Gulf. “The IFQ is an important development,” said London’s Lord Mayor, Sir Alderman David Brewer. “It is the world’s first ever global benchmark qualification to cover Islamic finance from both a technical production knowledge and a Shari’a aspect.”
According to Dr. Ahmad Jachi, vice governor at the Banque Du Liban, the Lebanese central bank, there are more than 250 Islamic financial institutions worldwide with a market capitalization in excess of $13 billion, total assets estimated at $300 billion and financial investments at $400 billion.
In 2002, $3.2 billion constituted the paid capital of Islamic Banks and financial institutions operating in the GCC area, according to the Lebanese central bank. Their total deposits, excluding restricted investment accounts, added up to $54.1 billion backed by $2.35 billion in reserves, representing 4.3% of total deposits. Total investments reached $35.5 billion, of which 58% represented investment in real estate.
Over the past decade, the average annual growth rate of the Islamic banking industry ranged between 15% and 20%. In Lebanon, the situation is different, as the industry is still in a nascent stage. “As of June 2006, there were four Islamic banks in Lebanon – namely, the Arab Finance House, Al Baraka, the Lebanese Islamic Bank and Blom Development bank. Boasting a 73% share, Murabaha is the most commonly used mode of financing,” said Jachi.
With those figures and the fast growth of the sector in mind, the IFQ is timely. It is aimed at those already working in Islamic finance or in the banking industry and prepares candidates for key positions in the areas of Islamic finance and Islamic insurance or Takaful. In Jachi’s view, financial specialists with such a qualification in hand will be able to better understand Shari’a principles applied to Islamic banking commercially, as well as to financial instruments, contracts and other transactions. “The candidate will also acquire practical insight into designing and setting up financial instruments such as Murabaha, Mudaraba, Sukuk, Musharakah, Salam, Istisna, Islamic funds and Takaful, as well as understanding and applying AAOIFI [Accounting and Auditing Organization for Islamic Financial Institutions standards],” he pointed out.
The specialization, which is delivered through several training sessions, delivered either in English or in Arabic, requires between 80 to 100 hours of personal study hours, before the candidate can sit for a computer based test called CBT. However, students can choose to work alone on the test, using a syllabus and a workbook (the first publication on practical Islamic Finance is available for order).
Training future experts
According to SII and ESA, public training for the qualification was held in November 2006 in London and Beirut simultaneously, with the IFQ becoming available worldwide via CBT starting March 2007. The technology also allows candidates to receive their results instantaneously. IFQ will meet level three qualifications on the UK classified National Qualification Framework (NFQ) and other levels within the qualification will be eventually developed.
Finally, the IFQ project originates from Al Multaqa, an international foundation for research in the field of Islamic Finance, existing under the ESA umbrella. The foundation is currently planning a database for Islamic finance as well as training sessions and lectures in the same field. This endeavor is carried out in collaboration with financial companies, banks, regulators and professional experts in the field of finance.