Posts Tagged ‘Tahseen Consulting’

Founded as a news weekly magazine in 1933, U.S. News and World Report is well known for its analysis of educational institutions in its annual college rankings. Tahseen Consulting is honored to have its work on Arab women studying and working STEM fields in the Arab World featured in two recent article in the U.S. News and World Report.

The State of Higher Education in the Middle East article references a Tahseen Consulting study in which we explored the barriers facing women in entering science, technology, engineering, and mathematics fields in the GCC in an article in Forbes Middle East. The original article is available at http://tahseen.ae/blog/?p=980.

U.S. News’ article More Arab Women Studying STEM features comments by Tahseen Consulting’s Wes Schwalje on competitions as a mechanism of exposing female students to STEM fields.

When it comes to news on economic trends and policies in the UAE, government and business leaders turn to the Abu Dhabi Council for Economic Development’s Economic Review. Tahseen Consulting is honored to have its work on building sustainable economies in the Arab World highlighted in the publication’s April issue. We have posted the full article below.

Tahseen Consulting’s Chief operating Officer, Wes Schwalje, spoke with representatives from the Abu Dhabi Council for Economic Development regarding his thoughts on the how the concepts of sustainability and knowledge-based economy are evolving into economic policies in the UAE. In a wide-ranging discussion, Schwalje discusses the UAE’s aspirations, its achievements thus far, and potential barriers to progress.

Abu Dhabi Council for Economic Development: What are the key factors to consider when creating a ‘sustainable economy’ that will support many generations to come?

Schwalje: The concept of sustainability as a policy goal is attractive to countries precisely because the concept lacks specificity and means different things to different stakeholders. As it applies to economic development, many countries have further equated the concept of sustainability with the equally imprecise concept of knowledge-based economy. The ambiguity of such terms have been used globally by governments to gain political consensus on large-scale economic reforms. In the Arab countries such concepts have become integrated into national visions and development strategies, such as the UAE’s Vision 2021, National Agenda, and Abu Dhabi Economic Vision 2030, to provide a shared overarching vision for economic development. Debates surrounding such policy objectives have highlighted and promoted policy dialogue on key development challenges that the Arab World faces and brought coherence to a variety of socioeconomic development discourses.

Because concepts such as sustainability and knowledge-based economy have become gradually contextualized to the case of the Arab World, the region has converged on several consistent themes that are closely associated with the term “sustainable economy.” While there is some country to country variation in the region, generally, sustainable economic development in the GCC countries concerns a variety of socio-economic factors: economic diversification to reduce dependence on commodities through entry into new and complementary industries; private sector development to improve the performance of small and medium sized businesses and encourage entrepreneurship; integration of nationals into the private sector workforce; strengthening the link between education systems and the labor market to reduce youth unemployment; increasing female labor market participation; strengthening innovation systems; attracting foreign direct investment; integration into the global economy; addressing national development imbalances and income disparities; environmental sustainability, protection of identity and language; and increasingly political participation and democratic reform.

Abu Dhabi Council for Economic Development: How far do you feel Abu Dhabi has come in this respect to date?

Schwalje: After a country has defined what they mean by sustainable economic development, the next challenge a country like the UAE faces in determining progress is devising appropriate indicators to measure progress. In advancing a set of National Key Performance Indicators associated with the National Agenda, the UAE has made an initial attempt at assessing progress towards sustainable economic development. National key performance indicators related to economic progress track measures such as non-oil GDP growth, GNI per capita, FDI inflows, global competiveness, national labor market participation and Emiratization rates, ease of doing business, SME contribution to GDP, entrepreneurship levels, innovation, R&D expenditure, and employment in knowledge-based industries. A key challenge remains whether a disparate range of objective measures can really provide a coherent overall picture of national well-being and progress. It will be essential for the UAE to increasingly complement outcome-based objective indicators of national progress with subjective well-being data that measure well-being across a variety of other dimensions such as education, health, income and wealth, and the environment. This will require the regular collection of nationwide data from large and representative samples to provide a coherent overall picture of well-being.

Abu Dhabi Council for Economic Development: What pitfalls must Abu Dhabi avoid when attempting to build a sustainable economy?

Schwalje: Many of the countries from which normative economic policy guidance has come from surrounding knowledge-based economic development now face unforeseen economic challenges. In many of the countries which the Abu Dhabi Economic Vision 2030 benchmarked, more education, more innovation, and policy and institutional reform have not necessarily led to higher levels of national well-being. For example, economic policy in Ireland has not ultimately produced high skills, high wage jobs for youth or adequately addressed socioeconomic development challenges. In fact, Ireland’s economic policies have led to record high youth unemployment and numerous social challenges for the country’s youth. Cases like Ireland suggest that a regional discussion on whether the economic prescription of the transition to knowledge-based economies remains the right course.

A key question is whether Arab economic development strategies based on the transition to knowledge economies have sufficiently taken into account the changing economic environment where knowledge is becoming cheaper and commoditized by emerging economies. Decreasing pressure on wages due the globalization of knowledge industries and growth in high skill, low cost talent in emerging countries challenges the assumption that more education, higher levels of skills, and national labor markets can provide prosperity to nations. Because competition for dominance in knowledge-based industries is now global and emerging countries are moving up the value chain to perform increasingly more sophisticated activities, plans to enter knowledge-based industries are susceptible to the globalization of low cost, high skill competition from beyond the region’s borders. What may look like a sector that can generate high skill, high wage jobs today may tomorrow be an industry that can be outsourced and performed by high skill, low cost knowledge workers elsewhere.

Abu Dhabi Council for Economic Development: How can Abu Dhabi encourage more entrepreneurship?

Schwalje: Many countries have geared their entrepreneurship policy interventions around international studies such as the Global Entrepreneurship Monitor, Ease of Doing Business Index, and Global Entrepreneurship and Development Index. However, while these frameworks are useful, they may not adequately capture the difficulties faced in the UAE. Much more qualitative research of existing entrepreneurs is required to advance this dialogue further. This dialogue must not be confined to emirate-level challenges but be broadened to involve country level policy interventions. The focus must be on UAE-wide policy interventions that are consistent across all emirates rather than emirate-level interventions that create a different playing field across the country.

Abu Dhabi Council for Economic Development: Which sectors do you feel offer the most potential for economic diversification in Abu Dhabi? And how can Abu Dhabi fast-track these?

Schwalje: The Abu Dhabi Economic Vision 2030’s focus on horizontal and vertical diversification into capital-intensive, export-oriented sectors sufficiently balances risk with the uncertainty created by globalization of knowledge industries. Recent declines in global commodity prices further support this relatively cautious approach to diversification and industrial development.

Abu Dhabi Council for Economic Development: Which countries might Abu Dhabi try to emulate when pursuing its ambitious economic sustainability program?

Schwalje: Abu Dhabi would be wise to broaden its current benchmarking strategy to define its economic sustainability program to include two types of countries: countries which generate a significant portion of their GDP from oil exports and countries which have economies that are reliant upon workforces imported from abroad. Normative economic policy should not just be drawn from rich, developed countries which have purportedly transitioned to knowledge-based economies but also incorporate developing country peer benchmarks in South America, Asia, and Africa. Non OECD peer benchmark countries may provide successful practices of economic development strategies that have focused on the export of low-cost, high-end knowledge-based services or the more traditional low-cost export-oriented manufacturing strategies while making incremental, evolutionary advances up the value chain. The experiences of countries such as Brunei, Equatorial Guinea, Trinidad and Tobago, Russia, Venezuela, Gabon, Kazakhstan, and Mexico could provide a more well-rounded rounded set of benchmarks of oil exporting countries from which to derive learnings. Looking at practices from labor importing countries such as Hong Kong, Switzerland, and Australia could also expand upon the analysis in the Economic Vision 2030.

Abu Dhabi Council for Economic Development: Is two decades enough time to build a fully diversified economy? If yes, why?.. and if no, why not?

Schwalje: It is difficult to establish what the end goal should be. In the GCC, economic diversification means reducing heavy dependence on the oil sector by developing a non-oil economy, non-oil exports, and non-oil revenue sources. It will also require reducing the role of the public sector by promoting private sector development. Based on rather sparse evidence, it seems likely that GCC economies will have significant difficulties in their diversification efforts. In the Arab World the gross value added of knowledge-based industries is the lowest in the world making up 39% of regional gross domestic product as compared to 74% in OECD countries. The contribution of value added to regional gross domestic product from knowledge-based industries has remained virtually constant over the last decade. From 2000 to 2009, the percentage share of employees in knowledge-based industries in the Arab World has increased by a compound annual growth rate of .8% in OECD countries with knowledge-based industries employing 77% of workers. Based on sparse data from 2000 to 2009 from 14 countries in the Arab World representing 70% of the region’s population, 61% of the population is employed in knowledge-based industries. Employment in knowledge-based industries has increased only negligibly over the last decade. These few crude measures provide evidence that economic diversification efforts have not necessarily produced meaningful sectoral shifts in gross domestic product attributed to knowledge-based industries or led to employment in knowledge-based sectors.

Schwalje outlines 5 key challenges that GCC countries must overcome to keep women in the labor force

One of the most widely reported challenges that GCC countries and companies now face is the retention of highly qualified female employees. Retention can be particularly problematic as women try to strike a balance between familial responsibilities and succeeding in the workplace. Schwalje asked the panel to reflect on five key challenges: overcoming social perceptions about occupations traditionally dominated by males, implementing female-friendly workplace policies, enabling work-life balance, developing family-friendly facilities, and articulating clear career trajectories for women.

Panel members included Khawla Al Mehairi, Vice President of Marketing and Corporate Communication, Dubai Electricity and Water Authority, Khaled Al Khudair, Founder, Glowork, and Deborah Gills, Chief Executive Officer, Catalyst.

A copy of Tahseen Consulting’s analysis supporting the importance of addressing the five panel focus themes is below along a with video that captures Schwalje’s thoughts on the way forward.


A key challenge to knowledge-based economic development faced by Arab countries is weak innovation systems. We are honored to have had our research on Arab innovation systems cited by Dr. Mongi Hamdi, former Head, Science, Technology, and ICT at UNCTAD and Head of the Secretariat of the United Nations Commission on Science and Technology for Development (now Tunisian Minister of Foreign Affairs) in his address to the Arab Forum for Scientific Research and Sustainable Development.

Dr. Hamdi cites Tahseen Consulting’s Arab World Research and R&D Situation Analysis and Options in which we highlight several serious challenges that Arab countries face in developing strong science, technology, and innovation systems:

  • R&D spending is significantly lower than in the developed world with very little private sector funding;
  • Regulatory frameworks do not protect intellectual property leading to low levels of patents and stifling private R&D expenditure;
  • Weak government policy making in research and innovation in spite of various studies which have shown that critical components necessary for innovation systems, research, market-oriented R&D, and entrepreneurship need to be concurrently fostered and linked in knowledge-based economies;
  • Weak institutions such as educational systems; institutions conducting basic, applied, and interdisciplinary research; business incubators; funding institutions; and professional societies;
  • Arab scholarly, scientific, and professional organizations generally operate at a low level of activity due to lack of funding;
  • Venture capital, research foundations, and technology transfer funds that promote research are only emerging now;
  • Few multinationals or regional companies have R&D centers in the Arab World. Incentives to promote private sector R&D, innovative research, and recognition of research achievements are limited;
  • R&D and education, especially graduate education, are strongly coupled. However, the research function has gradually been marginalized in Arab universities;
  • University research centers are few and do not have access to critical resources;
  • Research commercialization is depressed due to the lack of business incubators and disconnects between industry and academia;
  • While availability of scientists and researchers is higher than other developing regions, the number is significantly less than OECD countries and other R&D leaders;
  • Few Arab national or regional organizations or governments provide funding to promote international or inter-Arab research cooperation;
  • Absence of travel grants to attend academic meetings has stifled the formation of professional societies, dissemination of research, and international citation;
  • Individual Arab researchers who lack financial support instead increase their level of international collaboration while neglecting regional cooperation or co-authorship with other Arab researchers, or in extreme cases choose to brain drain.

With its second issue released in July, Forbes Woman Middle East is quickly emerging as a leading publication for female professionals in the Arab World. Rather than focus on beauty and fashion like many competing publications aimed at women in the region, Forbes Woman Middle East is aimed at professional women who are trying to make a mark on companies across the region.

Tahseen Consulting is honored to have its work on female technical vocational education and training and employment in the GCC featured in the July issue. We have posted the article below. In the article, Tahseen Consulting’s Chief Operating Officer Wes Schwalje speaks with Hannah Stewart Executive Editor from Forbes Woman Middle East regarding the barriers facing women in entering science, technology, engineering, and mathematics (STEM) fields in the GCC. In a wide ranging discussion, Schwalje explains the economic impact of the lack of women employed in STEM fields and what GCC countries can do to encourage more women to enter emerging technical fields.

Forbes Woman Middle East: How do the numbers of women working in the Science, Technology, Engineering, and Mathematics fields in the GCC compare to men?

Schwalje: The female labor force in the GCC is generally employed in fields such as public administration, education, and social work. In many of the GCC countries, it is not uncommon to find 70% or more of the female labor force concentrated in the public sector. However, differing labor market structures in GCC countries means that women are more willing to work in STEM fields outside the public sector in some countries than others. While the male labor force in the GCC is also heavily concentrated in the public sector, there has been a notable shift towards employment in more diverse STEM fields within the construction, transportation, petrochemicals, and extractive sectors.

Forbes Woman Middle East: Why are there so few?

Schwalje: The structure of GCC educational systems, gender-biased academic offerings, and lack of female faculty serve to dissuade females from enrolling in STEM programs and subsequently entering technical employment fields. Government and institutional decisions to offer select programs to women fail to fully cover STEM fields of importance to emerging knowledge-based fields in the region. In many GCC nations, women also do not have adequate opportunities for exposure to STEM at a young age which means they do not have an opportunity to develop an interest in STEM fields. Social and cultural norms are highly influential in motivating the occupational choices of females in GCC nations and limit the sectors in which females desire to work.

Forbes Woman Middle East: How persistent is this problem across the rest of the world?

Schwalje: Female students in the GCC make up only a small portion of students enrolled in secondary technical pathways that may lead to continuing their studies or seeking employment in STEM fields. Female enrollment rates at the secondary level are significantly lower than OECD countries. While females in GCC countries have much stronger TVET enrollment rates at the tertiary level that are on par with the OECD countries, many women who are trained in STEM fields ultimately wind up being employed in the public sector rather than in the fields they were trained in. The magnitude of these trends, though present in other countries, suggests a unique regional challenge regarding societal and labor market signals that presently push women towards a very narrow selection of socially acceptable employment fields in the public sector.

Forbes Woman Middle East: What are the main barriers holding women back?

Schwalje: The success of females in accessing higher education, in which females now make up the majority of enrollments in nearly all of the GCC countries, to some degree has masked the emerging regional challenge of attracting women to STEM programs and their subsequent labor market entry into emerging high skill, knowledge-intensive, STEM fields. However, many women who attend higher education receive degrees in fields which are not consistent with regional economic ambitions to grow technology and innovation-driven industries. The issue starts from a young age when girls lack exposure to STEM fields and are encouraged to pursue academic fields such as humanities, social sciences, and education. Socio-cultural beliefs and structural labor market features influence female higher education choices away from STEM fields and lead to occupational sorting into a limited number of occupations in the public sector.

Forbes Woman Middle East: What are the implications of low female presence in the STEM fields for societies and economies across the Arab world?

 Schwalje: When women are enabled to reach their full potential in the labor force, there are significant social and economic gains. Increased female participation in STEM fields can influence changes in gender role attitudes and can broaden labor market options for women. Low rates of female employment in STEM fields could have very negative implications for regional growth by depriving emerging knowledge-based industries of highly skilled labor. Although labor force participation amongst GCC females remains amongst the lowest in the world, there is potential to attract highly educated females into the labor market and high growth STEM fields in particular. Low rates of labor market participation make it more difficult for women to enter the labor market, particularly in STEM fields or companies with few women. Without a critical mass of other females in STEM fields, women face many barriers to success: they may not be able to create support networks; they may be viewed as invisible and powerless in their institutions; they may face difficulties working with male colleagues; and they may have difficulty advancing in their workplaces.

Forbes Woman Middle East: What can GCC countries do to amend the disparity?

Schwalje: Across the GCC, some STEM options are not open to women, including many advanced engineering sub-disciplines critical to regional development. Addressing the supply of TVET programs means not only increasing the number of options available to women but also ensuring that institutions are female-friendly and offer high quality programs attractive to females. To increase the number of females studying in STEM programs at the secondary and tertiary levels, GCC countries will have to address socio-cultural barriers to enrollment. Addressing these barriers will involve interventions and policies aimed at students and parents that positively influence persistent beliefs about the kinds of students who attend TVET and the post-graduation opportunities available to women. Ease of entry, effective labor market and social policies, and female-friendly workplaces are critical to attracting outgoing technically trained females from national education and training systems to employment in STEM fields. In several GCC countries policy experiments with training and wage subsidy programs have proven effective in incentivizing companies to hire more women.

Forbes Woman Middle East: Do you believe that more attention from faculty advisers might keep STEM women on the academic career track?

Schwalje: In many of the GCC countries, women are practically absent from STEM faculties. Within institutional faculty structures, female educators in the GCC also tend to be concentrated at the lower ends of the academic pyramid. While more attention from faculty advisers could potentially play an important role in increasing female enrollment and employment in STEM fields, research suggests that role models have the most powerful impact on students’ academic success when they share similar background characteristics with students. From this perspective, low numbers of female faculty might perpetuate beliefs that women are not successful in STEM fields. Because women have historically been employed in the public sector in the majority of GCC countries, there are also few female role models outside academic institutions. While there is a value in highlighting the successes of women who are from royal or prominent families, it is unclear to what extent the experiences of such women can serve as aspirational motivation for women. A major challenge in the GCC remains identifying and exposing young women to role models with whom they can more personally identify with.

Forbes Woman Middle East: Could conditioning, via early socialization and gender bias be to blame for the disparity?

Schwalje: Research on educational content in GCC nations has found that textbooks may contain implicit biases that portray women in administrative rather than technical positions. This research suggests that women throughout the Arab region are socialized to occupy different social and economic roles than males, and part of this socialization process occurs in educational institutions at young ages. Prior research has found that textbook content throughout the region continues to portray women as family members, while portraying males in their professions. The way that women are portrayed in textbooks to children, even at young ages, influences girls’ understandings of the appropriate future roles and paths available to them. When women are predominantly portrayed as mothers or in administrative positions, textbooks are re-enforcing socio-cultural norms that women should stay at home or should take predominantly desk-based work in the future. In learning and curricula materials across the GCC, there appears a widespread need to more positively and broadly portray women working in STEM fields.

Forbes Woman Middle East: Are there any signs to indicate positive change in the MENA region, or perhaps examples of Arab women successfully working in this field?

Schwalje: There have been several positive regulatory and policy changes that signify change. Many of the GCC countries have made positive changes to labor laws to guarantee women receive equal pay as men. Yet, females are still limited in terms of the fields in which they can be employed and hours they can work by some national labor laws. The majority of the GCC countries have made significant progress on creating national qualifications frameworks which are important to changing opinions about STEM fields as many people do not currently understand how particular technical or vocational qualifications relate to more academic university degree level qualifications. The UAE’s National Qualifications Authority is now leading regional efforts towards a GCC-wide qualifications framework to increase student mobility and qualification portability regionally.

Competitions are an emerging means via which GCC countries have begun to expose students to STEM fields. In many of these competitions at the regional and international level, the GCC’s young women are excelling. National, regional, and global skills competitions can help attract women to STEM fields. Yet, many of the competitions and experiential opportunities offered in the region tend to be supported by international organizations and multinationals rather than indigenous initiatives supported by the GCC business community.

Forbes Woman Middle East: What advice would you give to young women interested in entering the STEM arena?

Schwalje: For youth in the GCC, following parental advice to seek a role in the public sector was generally very sound in the past due to higher salaries, benefits, and favorable conditions of employment. Nowadays, emerging research done on the returns to education in the GCC suggests that STEM qualifications, and particularly those qualifications which can be earned through two-year technical and vocational programs, are increasingly valued in regional labor markets. For example, evidence from Qatar shows that the rate of return to technical education exceeds that of academic higher education. In Bahrain, the payoff to two-year, post-secondary technical education is also higher than the payoff to a university degree. However, information gaps about the future trajectory of industries and emergent skills needs, the returns to investing in particular skills sets, and projections on the future returns of education and training investments are often unavailable in Arab countries to help students calibrate their education and employment decisions. For this reason, young women interested in emerging STEM fields must seek out information and form mentor relationships with women in their industry of interest. Because career counseling tends to show a strong bias towards academic education in the region, young women will need to make these connections themselves and develop an individual development plan to examine their skills, interests, and values.

Walid Aradi outlines why local banks have been gaining market share from international competitors in the UAE

When it comes to business news and regional economic analysis, government and business leaders in the GCC turn to Gulf Business. Tahseen Consulting is honored to have its work highlighted in the publication’s October issue. We have posted the full article below.

Recently, Tahseen Consulting’s Chief Executive Officer, Walid Aradi, spoke with Ryan Harrison from Gulf Business regarding his thoughts on the competitive landscape evolving in the UAE retail and commercial banking sector. In a wide-ranging discussion, Aradi explained some of the reasons why local banks such as Abu Dhabi Commercial Bank, Emirates NBD, Mashreq, and First Gulf bank have been performing well while internationals have been downsizing their operations.

Gulf Business: What is driving this shift and how long will it continue?

Aradi: As a consequence of the economic crisis, some international outfits reassessed their presence in the region and redirected their resources back to their home markets, as they were seeking to limit their exposure, focus on rebuilding their competitive advantage in their home countries, and improve their balance sheets. This left the local banks, which came off a period of consolidation, ready to pick up the slack should the economic conditions improve.

With economic growth hovering around 4%, and an increased appetite to lend due to the introduction of loan caps and more defined lending criteria, banks in the UAE responded to the increased pace in government infrastructure projects by aggressively marketing their existing products, and offering new ones.

Gulf Business: How much business is for the taking?

Aradi: The UAE Monthly Banking Indicators, published by the Central Bank, show that despite experiencing modest year on year growth of 2.6% in 2012 in loans and advances, the increase in the first seven months of 2013 exceeded 4.3%. Championing this growth were local banks such as ADCB, Emirates NBD, Mashreq and First Gulf banks, which competed aggressively to fill the gap left behind by the downsizing of operations among some international banks.

While local banks managed to increase their share of the corporate and consumer lending markets, they will find it increasingly difficult to maintain past levels of profitability. This is because while the growth in the economy is expected to be solid over the next two years, it will not reach the spectacular levels posted in 2005 or 2007, thus limiting the ability of local banks to expand their revenues. Additionally, changes to capital and liquidity requirements have raised cost pressures on the banking sector.

Gulf Business: How can local banks improve their products and services to build their corporate lending business?

Aradi: To maintain their margins, local banks must bolster their revenues by expanding their product offerings, enhancing services to higher margin segments of the business, building upon their knowledge of the local market from operational and marketing perspectives, attracting global talent, and forming alliances with global banks to overcome their limited international footprint. On the other hand, local banks should aggressively pursue reforms to their business strategies by enhancing their systems and moving towards more efficient payment infrastructures.

Without fully capitalizing on the opportunity to solidify their place in the market, local banks will find themselves having to fend off pressures from global banks when their appetite to invest in emerging markets returns as a consequence of improved market conditions in their home countries.

When it comes to news on economic trends and policies in the UAE, government and business leaders turn to the Abu Dhabi Council for Economic Development’s Economic Review. Tahseen Consulting is honored to have its work on Islamic finance highlighted in the publication’s August issue. We have posted the full article below.

Recently, Tahseen Consulting’s Chief operating Officer, Wes Schwalje, spoke with representatives from the Abu Dhabi Council for Economic Development regarding his thoughts on the evolution of Islamic finance in the UAE. In a wide-ranging discussion, Schwalje laid out a broad vision of the future, the need to benchmark best practices for other financial hubs, and how human capital is essential to the UAE’s aspirations.

Abu Dhabi Council for Economic Development: What factors have contributed to the development of Islamic finance in the UAE and in Abu Dhabi in particular?

Schwalje: The global growth of Islamic finance, which has considerably outpaced conventional banking, is a primary factor behind the UAE’s desire to develop its Islamic banking sector. With the exception of Oman, which only recently ratified its regulatory framework for Islamic finance, the UAE has the lowest concentration of Islamic banking assets as a portion of total banking assets in the GCC. However, the UAE has the highest total banking assets in the GCC. This presents an opportunity for the UAE to unseat some of its competitors in the region, most notably Bahrain, as well as attract international assets to become both the primary financial and Islamic banking hub in the GCC. At the moment Dubai Islamic banks hold 50% of Sharia compliant assets in the UAE while Abu Dhabi banks hold 40%. Abu Dhabi entered the Islamic banking sector with the establishment of Abu Dhabi Islamic bank 22 years after the establishment the UAE’s first Islamic bank the Dubai Islamic Bank. Abu Dhabi is now trying to position itself, as well as the UAE as a whole, as both a financial and Islamic banking hub that has world class, robust institutions, markets, infrastructure, and regulation. Federal level intervention to establish and effective legal framework and infrastructure for Islamic finance will have a positive impact on both Dubai and Abu Dhabi which potentially will draw international banks with Islamic banking windows and other conventional institutions to offer Sharia compliant products.

Abu Dhabi Council for Economic Development: How have laws pertaining to Islamic financing developed in Abu Dhabi to help Islamic financial institutions and what laws are needed to help develop it into an Islamic finance hub?

Schwalje: All banks in the UAE operate under the provisions of Federal Law No. 6 of 1985 Regarding Islamic Banks, Financial Institutions and Investment Companies which vests the Central Bank with licensing, supervision, and inspection powers. This law was passed 28 years ago, while the Islamic banking industry has evolved significantly since then. I view four areas of reform as critical to the success of the UAE: Broadening International Financial Activities which requires reform of laws pertaining to cross-border foreign exchange flows, capital mobility, financial intermediation, clearing systems, and active exchanges. Increasing the diversity of market participants which will require reforms related to diversity of financial providers, strengthening institutions, and increasing public understanding of Sharia compliant product. Product Innovation is required in the UAE and the region in particular. This will include developing the capabilities at the federal or institutional level to expand the use and types of Sharia compliant products available as well as promote flexibility in structuring financial products.

Abu Dhabi Council for Economic Development: What other new products do Islamic institutions in the UAE need to develop to grow?

Schwalje: The UAE is a leader in Sharia compliant Islamic bonds. However, there are a whole host of other products which are available in other Islamic hubs which are less developed in the UAE. This included trade and lease financing products for businesses. Wealth management, retirement and healthcare financing, and debt financing for households are not as developed as elsewhere globally. Finally, many equity financing and capital market products which would facilitate economic diversification into high –value added industries, attract FDI, and funds from international capital markets are still underdeveloped.

Abu Dhabi Council for Economic Development: What are the main challenges facing Islamic financial institutions in the UAE and Abu Dhabi in particular? 

Schwalje: Talent attraction and development is single most worrisome challenge to the evolution of Islamic banking not only in the UAE but globally. Based on our projections, we estimate that a another $71 billion could potentially enter the Islamic banking system in the UAE by 2015 which would create approximately 7,800 new jobs at Islamic banks in the UAE assuming current asset concentration ratios remain similar. We also project another 500 jobs will be created by 2015 in other Islamic financial services segments. By 2015, the Islamic financial services sector will double in size from approximately 10,000 employees currently to 20,000.

To meet this growing demand for employees trained in Islamic finance, the UAE will need to significantly broaden its education and training options to ensure availability of human capital does not stall the growth of the sector. While it has a number of current executive training institutions and higher education institutions that target mid-level employees in the Islamic finance sector, the UAE does not have any programs that target new entrants interested in the field or senior level leaders. The UAE also does not have institutions which provide research and analysis that advances the field. The experiences of Bahrain and Malaysia show that research capabilities and institutions have been key structural feature of Islamic banking systems that lead to product innovation and effective regulation. Furthermore, many of the masters programs in Islamic banking and finance in the UAE remain general MBAs or masters degrees with very few specialized courses related to practical aspects of Islamic banking that are required by employers. The exceptions are Zayed University and Hamdan Bin Mohammed e-University which have in-depth course offerings in Islamic finance and economics.

Abu Dhabi Council for Economic Development: How can the setting up of a new financial center in Abu Dhabi help Islamic financial institutions and the industry as a whole?

Schwalje: The UAE’s largest Islamic banks do not presently operate in financial centers. However, the Abu Dhabi World Financial Market has the potential to attract regional banks from the GCC as well as international banks who want to enter the UAE market. The new financial center also has the potential to enhance the diversity of financial providers in the sector by attracting non-banking financial companies such as mutual funds, insurance companies, and other institutions. However, it is unclear to what extent such a center will be able to operate independently of federal laws which very clearly convey the powers of licensing, supervision, and inspection of Islamic financial institutions to the Central Bank.

Tahseen Consulting formed a partnership with the World Bank, United Nations, and International Labor Organization Youth Employment Network (YEN) to contribute its research and insights to a new online community to address the global youth employment challenge. The Youth Employment Network Marketplace (www.yenmarketplace.org) is a community where youth employment stakeholders can find or exchange ideas, resources, and partnership.

Tahseen Consulting will contribute to the process of exchange and dialogue through its award winning insights on the Arab World which have been recognized by UNESCO, the European Investment Bank, the Network for Policy Research, Review and Advice on Education and Training, the Gates Foundation, and other prominent think tanks globally and in the Arab World. The partnership will advance the World Bank, United Nations, and International Labor Organization mission to build a community that supports innovation by convening governments, workers, private sector, civil society, academics, and development professionals to reduce unemployment and underemployment among youth.