Our Interview 1 presents a chat between Muath Mubarak and Dr Humayon Dar recently published in Islamic Banker ASIA.
MM: As a Professor of Islamic Finance supervising numerous PhD students, a second-generation Islamic economist and the Founder of Edbiz Consulting, what are your aspirations and expectations for Islamic Finance in 2014?
HD: I have advocated Islamic banking and finance (IBF) throughout my life and as such I can only expect and work for growth of Islamic banking and finance in this year and beyond. I have the privilege of having access to different platforms throughout the world to influence the global Islamic financial services industry. In 2014, we hope to launch the first-ever Mudaraba in Pakistan to offer financing to individuals and businesses in agriculture sector. We are expecting to launch this new business after obtaining necessary approvals from regulators, which is expected to be sometime after Eid-ul-Fitr.
We shall also be holding our fourth Global Islamic Finance Awards (GIFA) in Dubai in October and are expecting it to be a huge success, as it has been on the previous occasions. These awards, along with our annual publication Global Islamic Finance Report (GIFR), attempt to promote best practices in IBF, and we trust that the industry continues to support such initiatives.
I have been engaged in Malaysia for very long time and shall continue to play a role there but from 2014 onwards I shall be spending a lot more time in Pakistan, which is fast emerging as an exciting market for IBF. State Bank of Pakistan (SBP) is now very active in promoting Islamic banking under able leadership of Deputy Governor Saeed Ahmed, and I would like to help SBP and other government bodies to develop IBF as a viable alternative to conventional banking and finance.
Edbiz Consulting has recently finished a huge project on quantification of demand for Islamic banking in Pakistan and I would like to see other countries hiring our services to map out demand for Islamic banking in different market segments.
MM: As the Founder Chairman of Edbiz Corporation and its subsidiary Edbiz Consulting, could you share with our readers its objectives, achievements and innovative initiatives.
HD: Edbiz Corporation is the holding company for different businesses in HD-Edbiz Group of Companies. All the companies in the group have one common denominator – advocacy and promotion of IBF. Edbiz Consulting, with offices in London and Islamabad, has emerged as a global think-tank for IBF. This is continuation of what I started at Dar Al Istithmar (a joint venture of Deutsche Bank, Russell Wood and Oxford Islamic Finance) and BMB Islamic. I learnt during my previous engagements that IBF can never be more than a fringe activity for Western financial institutions, including investment banks, law firms, consulting firms and other such businesses. Hence, I decided to set up an Islamic think-tank independent of Western institutions, specialising in IBF. I must clarify here that I still believe in active engagement of IBF with the Western financial institutions. It is only that I opine that these institutions do not have sufficient interest in playing central roles in IBF – for obvious reasons. Hence, it is better to have a business with Muslim stakeholders, which should play a lead role in Islamic financial advisory and advocacy of IBF. It will be wrong to claim that Edbiz Consulting is the only such institution. There are many more, but the real difference between Edbiz Consulting and others (like Accounting and Auditing Organisation for Islamic Financial Institutions, Islamic Financial Services Board and International Islamic Financial Market etc.) is that they are all supported by governments or some sort of endowments. Edbiz Consulting, on the other hand, follows a market approach, something similar to Mackenzie. We work for the global Islamic financial services industry and are supported by market players.
MM: In your view as a Professor who has been associated with Cass Business School, Durham University, UiTM and INCEIF, what are the challenges facing Islamic Finance education and what is required to meet such challenges?
HD: First thing is that the quality of Islamic Finance education is below par, where-ever it is being offered. When I founded the first-ever master programme offered by any university in the Western hemisphere (at Loughborough University), we didn’t have a lot of academically rigorous resources but Professor John Presley (my co-founder) and I ensured that we maintain the highest standards of quality in our offerings. Consequently, the programme produced some of the most accomplished Islamic bankers and Islamic finance experts in the world, although it short-lived as it was shut down due to political reasons. My students – the likes of Dr Asyraf Wajdi Dusuki from Malaysia – are playing lead roles in IBF. Most of the current programmes in IBF offered by universities around the world do not provide what I call “conclusive” education in IBF. Many of those involved in teaching of IBF want to remain “academically” correct. Academic correctness in Islamic Finance education implies offering a survey of literature in IBF, without necessarily emphasising upon what is right and what is wrong. Consequently, they end up confusing the students. Such teachers of IBF have no courage to “own” what they teach. They just teach what others have written about, and others – many of them – have written conflicting and confusing books and papers. For example, there are many books being used as part of curricula of IBF qualifications, which have diagonally opposing views on Riba – the prohibited interest. All these books are frequently used in different courses on IBF, and the teachers, especially the junior and non-Muslims, do not offer what is known as “preferred opinion” in Islamic jurisprudence. Consequently, they end up confusing their students more than educating them.
MM: Edbiz Corporation is also involved in setting up an International Islamic University in London. Initial work has already been done and you are in the process of receiving permission from relevant authorities in UK to operate as a university in the country. Could you brief about it?
HD: As a graduate of International Islamic University Islamabad, I have gone through a rigorous training in economics and Fiqh al-Muamalat al-Maliya. I believe that this is the right kind of mix for educating Muslim youth, as those who are educated in contemporary educational institutions have no proper understanding of Islam and those attending traditional Islamic seminaries are not properly exposed to modern sciences. Consequently, the religiously motivated youth graduating from contemporary schools and universities end up being extremists in their thought and actions, and the graduates of Islamic seminaries remain marginalised in the society. Obviously, this is not an optimum solution. On the other hand, graduates of Shari’a and law of International Islamic Universities in Pakistan and Malaysia, for example, are very successful practitioners and thought leaders in their respective fields. My own leadership role in IBF largely owes to my training at International Islamic University Islamabad. Convinced that this is the right model for Islamic education, I embarked upon the project of International Islamic University London. When set up, this will be the first modern mainstream Islamic university in the Western hemisphere.
MM: How do you see the progress of IBF globally? What are the pressing issues and challenges faced by the industry and how these can be met?
HD: IBF is soon going to be a 2 trillion dollars industry. With the increase in the size, the challenges facing the industry and the opportunities it may offer also increase. Regulation of Islamic financial services is a big challenge but perhaps an even bigger challenge is its identity. There are a number of people who have now started arguing for dropping the word “Islamic” from the identity of IBF. This apologetic view on IBF is potentially very dangerous. Those who advocate for dropping a reference to Islam or Shari’a are apologists and want to view Islamic banking aligned with the non-Muslim phenomena rather than emphasising on its pure Islamic character. This new trend perplexes me, as over 90% of the Islamic markets have yet to be tapped by Islamic banks and financial institutions and yet they want to serve traditional non-Islamic markets. It is simply wiser for them to leave IBF and go back to conventional banking and finance and serve those they care about the most. Islamisation of banking and finance for me is the most pressing challenge. We should now stop conventionalisation of IBF and focus on what is more important.
MM: You have authored many articles and presented research papers regarding the Islamic finance industry for the last two+ decades. What are the important issues faced by the Islamic finance research and development sector?
HD: The quality of research in IBF has certainly improved in the last two+ decades. Although the progress has rather been slow but I am happy with the quantity and quality of the new publications on IBF. Mainstream publishers keep on publishing new books in the field. Perhaps the most impressive work has come from International Shariah Research Academy (ISRA) for Islamic Finance. It produced a comprehensive textbook on Islamic Finance a couple of years back and is at a final stage of publishing another excellent textbook on Islamic capital markets. I would like to give credit to the leadership of ISRA for gathering a team of young researchers many of whom have come up with very interesting research papers on different aspects of IBF. Dr Akram Laldin the founding Executive Director and his first Head of Research Affairs, Dr Asyraf Wajdi Dusuki, deserve applause for initiating applied research in IBF.
I myself started Global Islamic Finance Report (GIFR) in 2010 in an attempt to publish a yearbook on IBF. Since then we have published 5 editions and the sixth is due in March 2015. GIFR remains the one and only publication of its kind in the world, which provides in-depth applied analysis of global practices in IBF. GIFR is a trend-setter, as many other reports on IBF are now being published by other players, but GIFR remains the market leader.
MM: Very recently you have founded Islamic Bankers Association. What is this organization all about and what made you to found this?
HD: Islamic Bankers Association (IBA) is our latest project. Launched earlier this year, IBA aims to become a global platform for Islamic bankers and IBF practitioners. This initiative follows the vision of David Cameron, Prime Minister of Britain, to develop London as a centre of excellence for IBF. Following his historic speech in November 2013, on the occasion of the 9th World Islamic Economic Forum in London, IBA was founded to provide a global platform for Islamic bankers and IBF practitioners, similar to what we already have for conventional bankers in UK, i.e., British Bankers Association. Since its launch, the interest has been great and the membership is fast increasing.
MM: Since 2011, you have been heavily engaged in recognizing the efforts of the people and institutions under the “Global Islamic Finance Awards”. Could you brief the journey of it and also the future plans?
HD: It is ridiculous that some of the awards-giving bodies have no in-depth understanding of even the basics of Islamic banking and finance and yet Islamic financial institutions take pride in receiving awards from such bodies. When we started Global Islamic Finance Awards (GIFA), there was no credible market-based award-giving body in the Islamic financial services industry. GIFA filled the vacuum. Global Islamic Finance Awards aim at promoting Shari’a authenticity, social responsibility and commitment to IBF. Our top award – Global Leadership in Islamic Finance Award – goes to a head of state or government (current or former) for their leadership role in promoting and advocating IBF. The previous winners – called GIFA Laureates – include Tun Abdullah Badawi (former Prime Minister of Malaysia), HRH Dr. Nazrin Shah (Sultan of Perak, Malaysia) and Mr Shaukat Aziz (former Prime Minister of Pakistan). These distinguished personalities received GIFAs for promoting IBF in their respective countries and jurisdictions. The GIFA has more than twenty categories and the winners are adjudged on the basis of a quantitative methodology developed by Edbiz Consulting.
MM: You have worked with many international organizations, universities and also received awards in the industry. Could you share your most memorable experience? What would you advise the stakeholders of the Islamic financial services industry? How do you intend to continue to contribute to this industry in the future?
HD: Firstly, most of my memorable experiences are personal and I don’t like sharing them in public. Secondly, I don’t think I have achieved or done something grand that must be associated with a memory. There are a lot of people who have served the industry much more than I have done and I shall leave you to ask such great personalities to share their memorable experiences with your readership. My advice to the players in the industry will be: commit, commit and commit to Islamic banking and finance. It is not just another way of doing banking and finance, it is Islamic way of banking and finance, and this is what you should commit yourself to. I shall continue to contribute to the industry through my advocacy role and different publications and services Edbiz Corporation and its subsidiaries are offering.