Demand rises for education in Islamic finance


Non-Muslim business students seek to understand Sharia-compliant deals

Jonathan Moules

Jeroen Tap, an energy contracts
manager for the Benelux region
at Dow Chemicals, acknowledges that he is among the “less obvious” students to enrol on an Islamic finance course as part of his self-funded executive MBA at London Business School. But the Dutch executive points out that this niche course, taught at the Dubai campus of LBS, has been among the most valuable subjects he took in terms of helping him to do his job. Recently he has been working on Dow Chemical’s joint venture with Saudi Aramco in Saudi Arabia.
“The Islamic financing discipline is underestimated,” Mr Tap says, noting that knowledge about how deals are structured to satisfy sharia law was vital to his work with executives at Saudi Aramco. The increasing economic importance of banks in Muslim-majority countries has made Islamic finance a useful skill. And the globalisation of business education means that many schools now have campuses in countries where Islamic finance is a significant part of the local banking sector.
The number of courses being offered by business schools are swelling partly as a result of this, but also to meet demand from students. The catalyst for introducing the Islamic finance elective at LBS was the opening of the school’s Dubai campus in 2006. Like many business schools, LBS had opened its overseas base to capitalise on the school’s brand value beyond Europe. But the faculty was also keen to teach courses of local relevance, according to Narayan Naik, who is course tutor and professor of finance. Applications have come from far and wide, he adds. Only a fifth of last year’s intake of 36 students — which arrived from 22 countries, including Peru, Hungary, Ireland, China and Bulgaria — identified themselves as Muslim.
LBS is planning to introduce a London-based course, possibly as an executive education programme, Prof Naik adds, noting that applications are up for this year’s Dubai-based course. One of the drivers of this increased demand is concern among finance students about finding a job after graduation, he says.
Specialist teams within banks, such as those dealing with Islamic finance, are regarded as relatively safe amid widespread cost-cutting by large financial services groups, Prof Naik adds. Deutsche Bank, for example, is in the middle of a cull of 9,000 positions across its global operations. “After the financial crisis, the traditional banking jobs around areas such as regulation are on the decline, which has made Islamic finance proportionately a more significant market,” Prof Naik says.
“Most of our students are mid-career and taking the course can be a way to make a switch or take themselves to the next level.” Even in the biggest markets for Islamic finance, it is a minority activity. Across the Gulf Co-operation Council states of Saudi Arabia, Kuwait, Bahrain, Oman, Qatar and United Arab Emirates, participant banks — as those offering Islamic finance are called — hold only a third of all banking assets. But it is now a sizeable sector in its own right.
Participant banks manage more than $920bn in assets, a rise of more than 16 per cent since 2010, according to a report published this year by EY, the professional services company. George Osborne, when he was the British chancellor, pledged to make London the world centre for the Islamic finance industry after the UK became the first country outside the Muslim world to issue an Islamic bond, known as sukuk, in 2014.
British higher-education institutions lead the non-Muslim world in the teaching of Islamic finance, with longstanding courses run by Durham, Aston, Bangor, Salford and Cass Business School. More than 60 institutions in the UK now teach Islamic finance, up from fewer than 10 a decade ago, according to the University of East London, one of the early adopters of the subject.
Only business schools in the Gulf, Malaysia, Pakistan and Indonesia rival the UK. London Metropolitan University is the latest UK institution to add an option to learn about the subject, relaunching its MBA in January with Islamic finance as one of four specialisms.
The university has run courses for the Commercial Bank of Qatar at Doha that involved a comparative evaluation of Islamic and conventional banking. The MBA is aimed at satisfying demand from would-be students, according to Hazel Messenger, MBA course leader.
Outside the UK, schools in financial services capitals also see the opportunity. Frankfurt School of Finance and Management has developed an online certification course for Islamic microfinance, which launched in September in partnership with the charity Islamic Relief Worldwide and the Islamic Relief Academy, a UK-based training body.
The course’s initial 31 students include those looking to become providers of sharia-compliant microfinance, as well as charity directors, who want to understand how such lending might work in a country where most people identify as Muslim.—Courtesy: Financial Times

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