Skills shortage fear for Islamic finance

A shortage of expertise and a lack of regulatory harmonisation among Sharia’a principles are the biggest obstacles for growth in the Islamic finance sector, according to a new report.

But accountants at BDO are predicting the sector will be embraced by London’s financial hub – more than half of executives in the Islamic finance sector believe it will grow by 10-20% in the next three years, as confidence in the conventional banking system has suffered a knock.

Just under a third of the executives believed that Dubai would be the leading financial centre for Islamic finance in three years, though London was also expected to be a major centre alongside Manama in Bahrain, BDO said.

The Accounting and Auditing Organisation for Islamic Financial Institutions, based in Bahrain, is seeking to improve the harmonisation of Sharia’a principles, and the major accountancy firms are involved in working committees that deal with accounting standards in Islamic finance.

‘As the business environment gets better so I would expect to see more Islamic financial institutions in London,’ said Mohammed Amin, head of Islamic finance at PricewaterhouseCoopers.

Amin said there is a shortage of expertise among Sharia’a scholars, the experts that are required to advise on the religious implications of Islamic finance. ‘The shortages are of people who are experts in religions and have the experience in finance,’ he said. ‘Sharia’a standards are produced by a panel of Sharia’a scholars, the main thing [the firms] can do there is to train these scholars to understand finance better.’