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General Council for Islamic Banks and Financial Institutions (CIBAFI)

Strategic Plan 2015 – 2018

November 2014

Excellence, Transparency, Accountability and Commitment to Results

CIBAFI Strategic Plan 2015 – 2018

ABOUT THE GENERAL COUNCIL FOR ISLAMIC BANKS AND FINANCIAL INSTITUTIONS (CIBAFI)

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The General Council for Islamic Banks and Financial Institutions (CIBAFI) is a not-for-profit organisation that represents the interests of Islamic financial institutions worldwide. Founded in May 2001 in the Kingdom of Bahrain by the Islamic Development Bank (IDB) and a number of leading Islamic Financial Institutions, CIBAFI is recognised as a key institution within the international architecture of Islamic finance. CIBAI is affiliated with the Organisation of Islamic Cooperation (OIC).

CIBAFI was established with the objectives of developing the Islamic Financial Services Industry (IFSI) and promoting the industry in various fields through information sharing and financial analysis, raising of awareness of the IFSI, and the development of human capital.

With nearly 120 members from over 30 jurisdictions, CIBAFI is recognized as a key piece in the international architecture of the Islamic finance industry. Its mission is to support the Islamic financial services industry in the form of a leading industry voice in advocating regulatory, financial and economic policies which are in the broad interest of our members and which foster the development of the Islamic financial services industry and sound industry practices. Our members vary from Islamic banks and financial institutions, multilateral banks, international standard setting organizations and other professional service firms.

5CIBAFI Strategic Plan 2015 – 2018

ChairmanH.E. Sheikh Saleh Abdullah Kamel*

Group ChairmanAl Baraka Banking Group

Vice Chairman

H.E. Abdulhameed M. Aboumoussa*Governor

Faisal Islamic Bank of Egypt

Dr. Abu Nasser Muhamed AbduZaherChairmanIslami Bank Bangladesh Ltd

Mr. Musa A.Aziz Shihadeh*Board of Director Vice Chairman & GeneralManagerJordan Islamic Bank

Mr. Yousif Abdulla TaqiChief Executive OfficerAl Salam Bank - Bahrain

Mr. Mazin Saad Al-Nahedh*Chief Executive OfficerKuwait Finance House

Mr. Adnan Abdulqader Moh'd AlmusallamBOD Chairman & Managing DirectorInvestment Dar Co.K.S.C

Mr. Abdulrazzak M. Elkhraijy*Head of Shariah Group The National Commercial Bank

Dr. Sami Al- Suwailem*Director, Islamic FinancialProduct Development CenterIslamic Development Bank

Eng. Hani Salem SonbolActing Chief Executive OfficerThe Islamic Corporation for the Insurance ofInvestment & Export Credit (ICIEC)

Dr. Abdul Hameed Mohammed JameelBoard of Director MemberSudanese Bank Association

Mr. Ahmed Mohammed SabaghBoard of Director ChairmanThe Federation of Takaful & Islamic InsuranceCompanies

Mr. Musaad Mohamed Ahmed Abdul KareemGeneral ManagerIndustrial Development Bank

Mr. Abdulla Zaid Al Shehhi*Head of International ExpansionAbu Dhabi Islamic Bank

Mr. Abdulgabbar Hayel SaeedBoard of Director ChairmanTadhamon International Islamic Bank

Board of Directors*Executive Committee Member

6 CIBAFI Strategic Plan 2015 – 2018

Table of Contents

Table of Contents ---------------------------------------------------------------------------------- 6

A. Executive Summary---------------------------------------------------------------------------- 7

B. Brief History ------------------------------------------------------------------------------------ 9

Governance structure ----------------------------------------------------------------------------- 9

Membership --------------------------------------------------------------------------------------- 10

Main Activities and Key Achievements ------------------------------------------------------ 10

C. CIBAFI’s role within the global financial architecture of Islamic finance ------------ 14

Understanding and promoting the value proposition of Islamic finance ------------------ 15

D. Strategic Focus -------------------------------------------------------------------------------- 16

CIBAFI Stakeholders ---------------------------------------------------------------------------- 17

Stakeholders’ needs and expectations:--------------------------------------------------------- 17

Mission -------------------------------------------------------------------------------------------- 18

Core Values --------------------------------------------------------------------------------------- 18

Strategic Objectives ------------------------------------------------------------------------------ 19

Outputs -------------------------------------------------------------------------------------------- 20

E. Action Plan / Execution ---------------------------------------------------------------------- 22


CIBAFI STRATEGIC PLAN 2015 – 2018

A. Executive SummaryCIBAFI has now been established for more than 13 years. During this period, Islamic finance has grown in size to cover all sectors of the financial system, including banking, capital markets, insurance (Takaful) and asset management. With Islamic financial institutions now operating in more than 75 countries, the industry’s global reach is undeniable.

In light of these developments, and as part of our efforts to ensure that our mission remains relevant to our stakeholders, CIBAFI began a wide consultation process with its stakeholders. Operating under the guidance of the Board of Directors, the consultation included meetings and direct discussions with the industry and a formal survey that was sent to our stakeholders, including both members and non-members. These meetings and discussions, and the key findings of the survey have helped to identify our priorities and have made a major contribution to the content of this draft Strategic Plan.

Through its consultation process and its assessment of members’ needs and expectations, the Secretariat has identified the following strategic goals that are within the mandate of CIBAFI:

Promoting and facilitating the growth of Islamic finance.Enhancing cooperation among members and other interested institutions, both regional and global, with a view to sharing best practices. Fostering economic growth and development through the value-added proposition of Islamic finance.

To implement the strategic goals mentioned above, which are broad in nature, the Secretariat has identified the following four specific key objectives for the organisation.

Strategic Objective 1 - Policy, Regulatory Advocacy

Strategic Objective 2 - Research and Publications

Strategic Objective 3 - Awareness and Information Sharing

Strategic Objective 4 - Professional Development

Delivering the strategy will entail a change in some of CIBAFI’s existing activities, a re-allocation of some staff within the organisation and a review of some of the activities that have been historically conducted.

The Strategic Plan requires a selective use of external consultants in order to efficiently enhance existing internal capacity, as well as the establishment of Members Experts Groups (MEGs) from our members to provide input on technical and policy issues.

The action plan for the Secretariat includes:

1. Internal Secretariat – aligning human and capital resources to the strategic goals, strategic objectives, outputs and outcomes;

2. Members Experts Groups (MEGs) – establishment of MEGs from our members to provide input on technical and policy issues;

Strategic Goal 1:Strategic Goal 2:

Strategic Goal 3:


3. Annual Work plan – formalising an annual work plan with the necessary financial resources needed, based on the initiatives and outcomes highlighted in the Strategic Plan;

4. Continuous Assessment – continuous assessment of the inputs and outputs will be performed by the Secretary General who will be guided by the BOD in order to ensure that the Secretariat is reaching its strategic objectives.

What Do We Need If We Are To Be Successful? • Continuous support from key stakeholders• Expansion of membership base• Remain relevant to the industry developments and changes• Be responsive to the needs of the stakeholders and the industry• Develop the skill set of the Secretariat.

The Survey showed that CIBAFI needs to turn itself into an effective organisation by meeting the needs and expectations of its members. The Survey also shows that the members will be ready to support CIBAFI as it changes, develops and improves over the next few years.

Strategic Goals 1. : Promoting and facilitating the growth of Islamic Finance

2. Enhancing Cooperation among members and other interested

institutions, both regional and global, with a view to sharing best practices

3. Foster economic growth and development through the value-added

proposition of Islamic finance

Strategic Objectives

1. Policy, Regulatory Advocacy

4. Professional Development

3. Awareness and Information Sharing

2. Research and Publications

2.b. Specific Reports 2.c. Market Related Research

3 Facilitate the discussion platform among the industry

Stakeholders

1.a.Expert Opinion on Regularity Developments

2.a. Periodical Newsletter

1.c. Coordination with relevant stakeholders1.b. Dialog with Financial Regulators and Supervisors

3 Corporate Communication

4.a. Executive Programme 4.b. Technical Workshops 4.c. Training & Certifications

3 Establish CIBAFI Award

OUTPUTS

CIBAFI - Strategic Plan 2015 – 2018


B. Brief HistoryThe General Council for Islamic Banks and Financial Institutions (CIBAFI) is a non-profit institution which is the umbrella for Islamic financial institutions worldwide. It was founded by the Islamic Development Bank (IDB) and a number of leading Islamic financial institutions. CIBAFI is affiliated with the Organisation of Islamic Cooperation (OIC). Being established on 16 May 2001, in the Kingdom of Bahrain, today CIBAFI is recognised as a key piece in the international architecture of Islamic finance.

CIBAFI was established with the objectives of developing the Islamic financial services industry (IFSI) and promoting the industry in various fields through information and financial analysis, communication, awareness, human resources and the rating of Islamic financial products.

The Objectives of CIBAFICIBAFI’s objectives, scope of activities and means of implementation are as follows:

1. Promoting Islamic financial institutions, dissemination of concepts, rules and relevant provisions of Islamic finance, development and promotion of the Islamic financial industry itself and enhancing its existence regionally and globally.

2. Consolidation of co-operation among CIBAFI members and with similar institutions in the areas which serve common objectives.

3. Providing information related to Islamic banks and financial institutions and other relevant Islamic organisations.

4. Promoting the interests of members; protecting the industry to ensure its future success; confronting common difficulties and challenges; and promoting co-operation among members on one hand, and between members and other parties, particularly regulatory authorities, on the other.

5. Participating in the development of the Islamic financial services industry by encouraging research and development, product registrationand tracking the development of laws and of the procedures of product registration.

6. Participating in the development of human resources to tackle international challenges and development opportunities.

In line with its objectives, CIBAFI has been taking a number of initiatives and activities that aim to develop the industry, from capacity building to awareness raising and publishing books and directories, meeting the needs of the stakeholders.

Governance structureThe governance structure of CIBAFI consists of the General Assembly (GA), the Board of Directors (BOD), the Executive Committee and the Secretariat.

The GA, the BOD and Executive Committee are headed by H.E. Sheikh Saleh Abdullah Kamal, Chairman of Al Baraka Banking Group, Bahrain. The members of the BOD and Executive Committee mainly consist of institutions offering Islamic financial services (IIFS) from the Middle East, Africa, Bangladesh, and the Islamic Development Bank (IDB) Group.


Article 19 of the Articles of Association states: “The Secretariat shall be comprised of the Secretary General and the technical and administrative units of the Council”.

The Secretariat has 14 full-time employees. However, it should be noted that the technical units are currently very limited – most of CIBAFI’s research and training work is outsourced to agents in different countries.

MembershipCIBAFI was founded by the Islamic Development Bank and 30 other members. Now, after 13 years of operations, CIBAFI has 105 members. Membership is spread across 26 jurisdictions in the Middle East, Africa, Europe as well as South and Central Asia and includes Islamic financial institutions, multilateral banks, international standard setting organisations and other professional services firms. CIBAFI is focused on expanding the membership base both geographically and by sector. The table below shows of the trend in the membership changes since CIBAFI’s establishment:

Figure 1 - CIBAFI membership

Main Activities and Key AchievementsCIBAFI’s main initiatives since its establishment in 2001 have been the following:

1. INTERNATIONAL ISLAMIC FINANCE TRAINING CENTERThis Training Center was established with the aim of upgrading the professional level of the employees working in the Islamic finance industry; standardising training; and providing accreditation for training institutions, trainers and training material. The Training Center also provides facilities for members who are working towards various professional certificates. Training sessions are usually facilitated by local agents rather than by CIBAFI staff.

The Center has three types of programme: Certificates, Professional Diplomas and a Masters in Islamic finance.

a. Certifications - CIBAFI issues various certificates of specialisation in different fields of Islamic finance. These professional certificates are the “Certified Islamic Banker” and ten other Certified Islamic Specialist certificates:


i. Certified Islamic Bankerii. Certified Islamic Specialist in Capital marketiii. Certified Islamic Specialist in Trade Financeiv. Certified Islamic Specialist in Takafulv. Certified Islamic Specialist in Accountingvi. Certified Islamic Specialist in Governance and Compliancevii. Certified Islamic Specialist in Risk Managementviii. Certified Islamic Specialist in Shariah Auditing

ix. Certified Islamic Specialist in Waqaf Management

x. Certified Islamic Specialist in Zakat Managementxi. Certified Islamic Branch Manager

B. Professional Diplomas – CIBAFI issues a number of Professional Diplomas in Islamic finance. Any candidate having achieved more than 60% in each of the component courses of the diplomas is granted a diploma degree according to the provisions and regulations of the International Islamic Finance Training Center. Below is a list of the available professional diplomas:

i. Professional Diploma in Accounting in Islamic Financial Institutions (IFIs)ii. Professional Diploma in Risk Management in IFIsiii. Professional Advanced Diploma in Islamic Financeiv. Professional Diploma in Banking Transactionsv. Professional Diploma in Shariah Auditing

C.The Professional Executive Master in Islamic Finance –This programme consists of 8 courses – (24 credit hours, 7 core courses and one elective course), a comprehensive exam (6 credit hours) and a research graduation paper (6 credit hours). The total number of credit hours is 36.

The trainings are mainly facilitated through agents around the regions. Currently CIBAFI is working with 32 agents in 19 countries in the Middle East, Africa and Europe

Since training began in 2009, the Training Center has conducted training sessions in 20 countries and has trained and certified more than 3,000 participants.

2. PUBLICATIONSSince its establishment, CIBAFI has published a number of publications and magazines in collaboration with various strategic partners, these include:

a) Global Islamic Economics Magazine (monthly since 2012): This is a monthly magazine issued in collaboration with Islamic Business Research Center. The first issue was published in June 2012. This magazine is published and distributed free of charge in order to spread awareness of Islamic finance to CIBAFI members and it is also available for download by non-members from CIBAFI’s website. The magazine features articles on emerging issues about Islamic Banking, Shariah, Risk Management, Takaful and other aspects of Islamic finance and banking. The contents of the magazine are written by international researchers and scholars.


b) Islamic Finance Country Report (series of reports 2013 - 2014): CIBAFI issues quarterly financial performance reports for member counties. These reports are issued in collaboration with Thomson Reuters (TR) and the Islamic Research & Training Institute (IRTI). They are designed to provide a spectrum of primary insights and information about countries developing Islamic finance and those who already have Islamic finance industries.

The reports that have been issued are:

• Tunisia, June 2013• Turkey, September 2013• Morocco, April 2014• Oman, November 2014

c) Finance Directory (2003 - 2012): The Finance Directory was an annual report issued from 2003 untill 2012. It was issued in two formats as “GCC Islamic Financial Directory” and “Global Islamic Finance Directory”. These reports highlighted administrative and financial information on all financial institutions in various countries. It also featured analysis of the jurisdiction in which the banks operate and the background of the banks. This Directory was available free of charge for all industry stakeholders in order to increase awareness and disseminate information.

d) Al Rasid International Financial Crisis (2008): Al Rasid is a specialised ad hoc report issued in 2008 to analyse the international financial crisis occurring at that time. This report highlighted the effect of the crisis on Islamic banks. Approximately 100 industry professionals, scholars and professors contributed their experience and practical knowledge to the report. The purpose of the report was to provide a collection of case studies showing the effects of the global financial crisis. This report was distributed to the members of CIBAFI.

e) Shariah Boards Report (2010): This report was conducted in collaboration with BDO Jordan. It covered important issues regarding Shariah boards’ members and scholars. It was available in three languages, English, Arabic and French. It featured statistics on the number of Shariah scholars working in the industry and the number of Boards on which Shariah scholars sit. The Report also presented an overview on the best practices for Shariah Boards.

f) Financial Indicators Reports (periodic reports 2003 - 2010): These reports were issued on an ad hoc basis to highlight important financial indicators.

3. AWARENESS PROGRAMMESSince its inauguration, CIBAFI has organised and supported a number of awareness programmes around the globe with the objective to establish appropriate development and discussion platforms to promote the Islamic financial services industry.

a) Islamic Finance Maghreb Forum -This forum started in 2011 in response to huge demand for, and development of, Islamic Finance in Maghreb countries. It is being organised in different Maghreb countries in order to create awareness of Islamic finance in this region as well as to create a so-called “Maghreb Platform” for discussion on the issues and challenges of new markets. Two forums have been held so far:


i. 1st Maghreb Forum for Islamic Finance in Tunisia (2011): It was held under the patronage of His Excellency Mr. Jalloul Ayad, Tunisian Minister of Finance.

ii. 2nd Maghreb Forum for Islamic Finance in Mauritania (2012): This forum was held in collaboration with the Islamic Corporation for the Development of the Private Sector (ICD).

b) Al Khartoum Forum for Islamic Financial Services Industry: In collaboration with Al Bayan Center for Islamic Finance Engineering, CIBAFI organised an annual forum in Sudan to tackle up-to-date industry and country issues. It cover a wide range of issues, starting from risk management in Islamic banks to the real development role that Islamic banks could play in today’s world. Events were conducted under the patronage of His Excellency Minister of Finance of Sudan. The events were held in 2011, 2012 and 2013.

c) International Forum for Islamic Banks and Financial Institutions: CIBAFI organises an international forum to tackle current industry issues and to respond to the evolving needs of Islamic banks and financial institutions. The Forum aims to bring together senior financial sector specialists, market players, and experts from international financial institutions to discuss issues and challenges that new markets may face in exploring the opportunities arising from the development of the Islamic financial services industry. The Forum focuses on discussing the importance and role of the infrastructure required for Islamic finance and, more importantly, sharing the experiences and practices of traditional markets. The first forum was held in Jordan in 2012 and the second forum was held in Luxembourg in 2014.

4. OTHER INITIATIVES CIBAFI has supported the objectives of the IDB Group by producing feasibility studies and other research under the IDB’s guidance. This led, for example, to the establishment of the International Islamic Center for Reconciliation and Arbitration (IICRA) in the United Arab Emirates in 2004.

IICRA, in its capacity as arbitrator, settles financial and commercial disputes that arise between financial and business institutions that choose to apply the provisions of Shariah principles, in resolving disputes between them and their clients (or between them and third parties) through reconciliation or arbitration. CIBAFI remains the key stakeholder of IICRA and supports its important role in the global development of the Islamic financial services industry.


C. CIBAFI’s role within the global financial architecture of IslamicfinanceCIBAFI has a unique role in the global architecture of Islamic finance – it is the only member-based organisation that exists to promote the interests of Islamic finance practitioners, whether they are banks, insurance companies, financial regulators, standard setters, customers and users of Islamic financial products, or others who encounter Islamic financial services in their professional or personal lives.

There are many other bodies that do excellent work for the Islamic finance industry. For example, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has developed accounting standards that take into consideration the particular features of Islamic financial instruments that are not recognised by International Accounting Standards Board (IASB). The Islamic Financial Services Board (IFSB) has developed prudential standards for Islamic financial institutions (IFIs) that accommodate the differences between the western financial institutions and IFIs. The International Islamic Financial Market (IIFM) is standardising Islamic financial products, documentation and related processes, mainly focusing on the Islamic capital market and money market. The Islamic Development Bank (IDB) uses its expertise, financial resources and towering reputation to support the Islamic financial industry as a whole and the institutions that work in it. There are many others who make great contributions to the industry.

CIBAFI is part of this web of institutions that supports and promotes the Islamic finance industry. CIBAFI’s role is to represent the practitioners of Islamic finance – banks, insurance companies, customers, regulators, etc – and also to act as an advocate for the Islamic finance industry as a whole. CIBAFI is the only institution that has this mission.

In some ways CIBAFI can be considered to be an industry body, similar in nature to, say, the Washington-based Institute of International Finance (IIF), the Association of British Insurers, or the Bahrain Association of Banks – all are membership-based organisations that promote their members’ interests and lobby for the industry as a whole. (Of the three mentioned, the IIF is a particularly good model, since it is not only seen as the spokesman for the international banking industry but also organises events for its members and has various specialised technical groups.)

Despite these similarities, CIBAFI’s mission is broader and deeper in three important respects.

1. CIBAFI’s mission extends to all sectors of the Islamic finance industry (it is not confined, for example, to “banks” or “asset managers”).

2. CIBAFI’s mission includes work to explain, demystify and promote the use of Islamic finance in what remains a predominantly conventional (or “western”) global financial system.

3. CIBAFI’s mission includes advocating the supporting the needs of customers of Islamic financial institutions and other users of Islamic financial products

CIBAFI acts as a point of reference for Islamic financial institutions, connecting different regions, different types of financial institution, and those with different strategic objectives, in order to enhance harmonisation cross the globe.


Other organisations work in some of the areas covered by CIBAFI’s mission. For example, the IFSB has regular dialogue with global financial standard setters as it develops its own standards which are tailored for use by those regulating Islamic financial institutions. Another example, is the IDB’s Islamic Research and Training Institute (IRTI) which propagates knowledge and understanding of Islamic finance.

CIBAFI’s approach to such organisations is inclusive: CIBAFI welcomes opportunities to co-operate with like-minded organisations that have objectives similar to those of CIBAFI. Together we will be stronger and we will bring more benefits to all our stakeholders.

Understanding and Promoting the Value Proposition of Islamic financeCIBAFI is passionately committed to Islamic finance. Underlying all of CIBAFI’s work is a belief in that Islamic finance can bring real benefits to the society as a whole. The benefits extend most obviously to Muslims, but CIBAFI also believes that the spread of Islamic finance and its greater acceptancein financial sectors worldwide brings benefits beyond the Muslim community.

The global financial crisis of 2007 - 2009 demonstrated one of the important distinctions between the conventional, profit-maximising and interest-based financial system and the Islamic finance industry. Western banks have no social mandate (although it is recognised that many do conduct socially-responsible operations). Their role in providing essential services (such as credit, deposit taking and payment systems) arises from the requirements of regulators rather than because it is an inherent part of their operations.

In contrast, the operations of IFIs are inseparably linked to the overall good of society as a whole. There is no objection to IFIs making profits (indeed, they must make profits if they are to continue in business) but IFIs have obligations to society as well as obligations to their shareholders.

Specifically, financial institutions that operate in line with the Shariah must, by their very nature, promote the following benefits for the society as a whole:

• Promote economic development: Financing provided by Islamic banks is based on real economic transactions through a risk-sharing principle. Islamic finance is inextricably linked to the real economy in everything it does – it grows and prospers as the real economy grows and prospers. IFI’s have no interest in being “parasitic” organisations, feeding off the real economy while offering no benefits.

• Promoting financial and social inclusion: IFIs share responsibilities with all members of society, not only those that will generate the greatest profits for the bank’s shareholders and its managers. As a result, IFI’s have a role to play in bringing under-served members of the community into the formal, regulated financial system. This not only brings them financial benefits, but is also a way of connecting poorer people into the broader structure of society. Financial inclusion leads to social inclusion.

• Treating customers fairly: The issue of “conduct” has become a huge issue in financial markets since the global financial crisis. In Western financial systems, there have been numerous examples of banks selling unsuitable products to their customers (for example, high-risk and illiquid investments to widows and the old) or not giving customers appropriate information about the products that they offer.


As a result of their abuses, western banks have a bad reputation and are often not trusted by ordinary people. This is a problem for society as a whole (not just the banks themselves) because banks perform essential functions. Islamic finance has a role to play in demonstrating that banks can operate efficiently and profitably, while also serving society and treating customers fairly.

• Enabling Muslims to fulfil their financial goals: The growth of Islamic banking gives Muslims the opportunity to fulfil their financial goals (for example, saving money, buying a car, making a money transfer) in a way that is in line with the religious beliefs that govern all other aspects of their lives. In some Muslim countries, Islamic finance is well developed and Muslims can conduct their financial transactions entirely within a Shariah-compliant system. But in many Muslim countries gaps still remain and significant difficulties continue to confront Muslims seeking to conduct a wide range of financial transactions in Western countries.

The essential features of Islamic finance are the value proposition of the underlying principles, where the Islamic financial transaction must be accompanied by underlying activities in the real sector that have economic values. Features and the value proposition inherent in the Islamic financial model can have the potential to contribute to global financial and economic stability through financial inclusion and access to finance for SMEs, promotion of real economic sector development, and risk-sharing principle which allows Islamic financial assets to grow in tandem with the growth of underlying economic activities. CIBAFI in line with its mandate is committed to being a strong voice of the industry and to continue its influence in changing the current practices of Islamic financial institutions as it continues to grapple with the fundamental form-versus-substance matter. In its mission CIBAFI is determine to bring back the value proposition of Islamic finance into the real sector, and this remains as the ultimate impact that CIBAFI seeks to have on the industry.

D. Strategic FocusThe Secretariat embarked on a proposal to develop a strategy paper that outlines strategic priorities that will respond to the identified needs of CIBAFI’s key stakeholders and match those priorities against an appropriate action plan.

Through this initiative, CIBAFI will shift from the traditional “activities-based” performance framework into a “Results-based Management” (RBM) framework. RBM is a management framework in which the assessment of an institution’s or programme’s performance is based on strategic goals, strategic objectives and impact as well as the benefits that the institution/programme is expected to produce.

The framework will help CIBAFI to be more efficient and effective in its mission and will ensure the activities undertaken by the Secretariat achieve the intended strategic goals and objectives.

The process can be described as a “life cycle”, where results/strategic objectives are central to planning, implementation, monitoring and evaluation, reporting and ongoing decision-making. By focusing first on results/strategic goals and objectives and translating them into activities, CIBAFI hopes to be able to fullfil its mission and better serve its mandate.


CIBAFI StakeholdersThe architects of CIBAFI saw the institution as having its members as the immediate stakeholders and believes that its services should evolve closely in line with its members’ needs and priorities. As a result, CIBAFI has, under the direction of its Board of Directors and its Chairman, developed an expanding set of products and initiatives that provide members with a wide range of benefits.

In line with its mission to represent the Islamic financial industry globally, CIBAFI also has a broader role, to protect society and industry and to raise the level of cooperation between members to achieve the intended goals and interaction with key public sector authorities and multilateral institutions.

Stakeholders’ needs and expectations:In recent years, Islamic finance has madeconsiderable progress in the global financial system. The key consideration as we move forward is the need to redefine how it can continue to meet the needs and expectations of various stakeholders, including CIBAFI. The financial crisis offered an opportunity for stakeholders to recalibrate the essential underpinning of Islamic finance as it aims to best serve the economy and broader society.

In meeting these needs and expectations, the Secretariat has developed a framework that aims to promote greater transparency and accountability within CIBAFI. The framework will help external and internal stakeholders to have a clearer sense of the status of CIBAFI’s projects and initiatives. Important elements of the framework are the Evaluation and Monitoring components, which will be performed through continuous assessment of stakeholders’ needs and expectations, the strategic goals and objectives and the output that will achieve the desired outcomes.

In Figure 2, the Secretariat has identified a process flow based on stakeholder’s needs and expectations. Based on this process, an outline of the strategic goals/impact is developed based on the expectations of CIBAFI. This, in turn, leads to identifying strategic objectives leading to defined outcomes which would eventually enhance the impact that CIBAFI aims to achieve.

Understanding the Stakeholders

General Assembly

BOD / Executive committe

Islamic Financial Services Industry

Customers / Consumer of Islamic finance

NEEDS AND EXPECTATIONS

Secretariat

Members ExpertsGroup ( MEG)

Strategic Goals / Impact

Continuous assessment process

StrategicObjectives

Input / Activities OUTPUTS

Impact

OUTCOMES


In order to achieve the defined outcomes, the Secretariat will work together with external consultants and Members Experts Groups that are proposed to be established to deliver the planned activities and strategic outputs.

This assessment process will be continuous in order to ensure that the relevant work programmes are in accordance with the plan, meet the intended objectives and contribute to the main impact which CIBAFI aims to achieve.

MissionTo support Islamic financial services industry by being the leading industry voice advocating regulatory, financial and economic policies that are in the broad interest of our members and that foster the development of the Islamic financial services industry and sound industry practices.

Core ValuesA set of core values drive the operations of the Secretariat. These core values are universal and apply to all aspects of the operations and to each and every member of the Secretariat:

Excellence:being excellent in what we do.

Transparency:being transparent to our stakeholders, our members and of course to our own self in our activities and initiatives.

Accountability:being accountable for the activities and actions we undertake at CIBAFI.

Commitment to results:being committed to deliver measurable results as per the mandate of CIBAFI

Strategic GoalsThrough its consultation process and assessment of members’ needs and expectations, the Secretariat has identified the following strategic goals that are within the mandate of CIBAFI:

Strategic Goal 1:Promoting and facilitating the growth of Islamic finance.

Strategic Goal 2:Enhancing cooperation among members and other interested institutions, both regional and global, with a view to sharing best practices.

Strategic Goal 3:Fostering economic growth and development through the value-added proposition of Islamic finance.

Strategic ObjectivesTo implement the strategic goals mentioned above, which are broad in nature, the Secretariat has identified the following four key strategic objectives for the organisation. These key strategic objectives have been identified through the “Satisfaction and Expectation Survey” that was conducted in May and June 2014. A summary of the results of that survey is included in this report as Appendix 1.


1. Strategic Objective 1 - Policy, Regulatory AdvocacyIn an increasingly-complex regulatory environment, new regulations are constantly being proposed for the financial sector. These regulations affect Islamic financial institutions as well as conventional institutions. International standard setting organisations as well as regulatory and supervisory authorities need to better understand how their proposals affect the IFSI and lead to operational and strategic challenges for the industry.

Members expect CIBAFI to voice the concerns of the industry with relevant bodies to ensure that their needs are taken into account when standards and regulations are developed. It is therefore very important for CIBAFI to engage with international setting organisations both conventional, such as the BCBS (Basel Committee on Banking Supervision), IOSCO (International Organisation of Securities Commissions), IAIS (International Association of Insurance Supervisors), IASB (International Accounting Standards Board); and Islamic, such as AAOIFI (Accounting and Auditing Organisation for Islamic Financial Institutions), IFSB (Islamic Financial Services Board), and IIFM (International Islamic Financial Markets), etc., in a constructive and proactive dialogue to highlight the challenges the industry is facing and implications of regulatory requirements in their business operations.

2. Strategic Objective 2 - Research and PublicationsMarket-related research has an important role to play in providing guidance and shaping the way forward through the complexities of the financial sector in a world that lacks innovation in products and services. Research is a crucial element of development, which is a necessity at the current stage of the IFSI development. Publications may promote best practices within the industry and may also highlight opportunities in emerging markets in the Islamic finance sector.

The “Satisfaction and Expectation Survey” that the Secretariat conducted found that members place a high value on receiving top quality research from CIBAFI on issues that are relevant to the Islamic finance industry.

Objective 1 Policy,

Regulatory Advocacy

Objective 2 Research and Publications

Objective 3 Awareness

and Information

Sharing

Objective 4 Professional

Development


3. Strategic Objective 3 - Aware-ness and information sharingIncreasing awareness is a key factor in the dissemination of the concepts and principles of Islamic financeand in addressing new challenges in the fields of regulation, risk management, product design, governance, etc. Creating a platform through which members may share their experience, discuss issues and challenges; and share success stories will play a pivotal role in promoting cooperation and information sharing among those involved in Islamic finance.

4. Strategic Objective 4 - Profes-sional DevelopmentHuman capital development is a key factor in the development of Islamic finance. With rapid growth of the Islamic financial services industry globally, there is a pressing need to ensure that staff engaged in Islamic finance are well trained, not only so that they will be able to serve customers well, but also so that they will be able to generate strong returns for investors.

OutputsIn consultation with its stakeholders, the Secretariat has identified the following outputs as key to achieving the strategic objectives of CIBAFI:

1. Strategic Objective 1 - Policy, regulatory advocacya. Expert Opinions on Regulatory Development: We will strive to create a balanced dialogue, on behalf of the industry, on key regulatory reforms. We will do this through the promotion of key policy positions to which our members can contribute their expert opinions. The Secretariat will aim to submit comments to the major standard setting organisations on issues that may have an impact on the IFSI.

b. Dialogue with Financial Regulators and Supervisors: The Secretariat will aim to establish a dialogue with relevant Regulatory and Supervisory Authorities (RSA’s) with a view to becoming the key voice of the Islamic finance industry, speaking on behalf of our members and acting as an advocate for our industry to promote their interests to the institutions that regulate and supervise them.

c. Coordination with Relevant Stakeholders: We will create strong working relationships with relevant stakeholders such as multilateral development institutions, private and public entities, so that we are seen as a valuable interlocutor, adding substance and bringing value to discussions about Islamic financial markets and the workings of financial systems as a whole.

2. Strategic Objective 2 –Research and Publications Produce More Up-to-Date Research and Publications which are high quality and relevant to the needs of members and the Islamic financial services industry

a. Periodical newsletter: The Secretariat will develop and publish a quality, informative periodical newsletter. The newsletter’s content will cover CIBAFI’s activities and other related industry news. It will serve as a platform for information sharing between CIBAFI and its members, as well as other stakeholders. It would be a timely news outlet to bridge the gap of communication between CIBAFI and its members that was identified in the recent “Satisfaction and Expectation Survey”.

b. Specific reports: The Secretariat will continue its existing initiative with IRTI and Thomson Reuters to issue country reports. It is planned to cover Malaysia in 2014, and Kazakhstan, among other countries, in 2015. Other countries will be


identified based on consultation with our members and partners.

c. Market related research: This will focus on the emerging topics which are of high relevance to the Islamic finance industry such as risk management, Shariah governance, impact of regulations on Islamic Banks, etc. As part of this work stream we would develop technical market-related research, to address the issues, and gaps of research and technical information in the industry.

3. Strategic Objective 3 - Awareness and information sharingFacilitate discussion platforms among the industry stakeholders

a. Periodic regional events: The Secretariat will continue raising the awareness on Islamic Finance in the emerging regions by participating in regional events and contributing to the development of those newly emerging markets.

b.Roundtables: The Secretariat is committed to enhance the cooperation among its members by creating a platform for face-to-face dialogue and closed door discussions, which will enable them to directly share their views with each other on the latest developments and issues. Topical roundtables can be organised covering subjects such: Investments, Strategic Planning for Islamic finance Asset-Liability Management, Risk Management and Governance, Strategic Shariah-compliant Investments, etc.

C. CIBAFI Award: The Secretariat will study the feasibility of establishing a CIBAFI Award to recognise and showcase individuals or institutions that are providing an outstanding example to the Islamic finance industry and promote the value propositions of Islamic finance. The award would be based on specific and detailed criteria and benchmarks. A feasibility

study will be performed to operationalise this initiative.

d. Corporate Communication: The Secretariat will develop a corporate communication plan in order to be able to achieve the goals of this Strategic Plan 2015 – 2018. The plan will focus on enhancing communication with the members and other stakeholders, enhancing the branding and visibility of the organisation and reaching stakeholders through active media coverage, via newspapers, television and radio.

4. Strategic Objective 4 - Professional Development for members and othersa.Executive Programme: High level Executive Programmes to focus on strategic training for the top level management. This would be implemented through forums that would focus on selected issues. For example, the Executive Programme for 2014 - 2015 could address risk management, investments and anti-money laundering matters. Participants of the Executive Programme would have a unique opportunity to discuss the emerging matters and share the experience and practices among the C-suite and top management circle. The programmes would be organised by region based after consultation with members and strategic partners;

b.Technical Workshops: The Secretariat plans to organise workshops for the members’ staff. These workshops will be designed based on the members’ needs and will have various levels (for example intermediate and advance levels) in order to achieve better results. These workshops will serve as the professional development initiative of CIBAFI. As one of the benefits to its members, the Secretariat will organise three workshops for members in 2014 and continue with the initiative in the years ahead. These workshops will address technical and operational issues.


C.Training & Certifications: The Secretariat will continue providing certifications in the field of Islamic finance. However, the training and certification initiative is expected to undergo a review process to ensure we continue to respond adequately to the industry’s needs and recommendations from our members through the survey’s findings. The Secretariat will continue working on building partnerships with banking institutes in various jurisdictions by appointing them as official agents for conducting and representing training and certification as well as to widen the reach of that training and certification.

E. Action Plan / ExecutionDelivering the strategy will entail a change in some of CIBAFI’s existing activities, a re-allocation of some staff within the organisation and a review of some of the activities that have been planned.

The Strategic Plan will require a selective use of external consultants in order to efficiently enhance existing internal capacity, as well as the establishment of Members Experts Group (MEG) from our members to provide input on technical and policy issues.

What Do We Need If We Are To Be Successful? • Continuous support from key stakeholders;• Expansion of membership base;• Remain relevant to the industry developments and changes;• Be responsive to the needs of the stakeholders and the industry;• Develop the skill set of the Secretariat.

The survey shows that there is a lot that CIBAFI needs to do to turn itself into an effective organisation that is meeting the needs and expectations of its members. On the other hand, the survey shows that the members will be ready to support CIBAFI as it changes, develops and improves over the next few years.

The Action Plan for the Secretariat include:

1. Internal Secretariat – alignment of human and capital resources with the strategic goals, strategic objectives, outputs and outcomes;

2. Members Experts Groups (MEGs) – establishment of the MEGs from our membership to provide input on technical and policy issues;

3. Annual Work Plan – formalisation of an annual work plan with the necessary financial resources needed, based on the initiatives and outcomes highlighted in the Strategic Plan;

4. Continuous Assessment – continuous assessment of the inputs and outputs will be performed by the Secretary General who will be guided by the BOD in order to ensure the Secretariat is reaching its strategic objectives.


Execution Timeline


Appendix 1 Survey Report

Industry Satisfaction and Expectation SurveyMay-June 2014

Background

In its meeting held on 24 April 2014, in Cairo Egypt, the Board of Directors (BOD) of the General Council for Islamic Banks and Financial Institutions (CIBAFI) approved the Secretariat’s proposal to conduct a survey of its members and also some non-members with the objective of getting a clear understanding of members’ satisfaction with CIBAFI and their expectations from membership, as well as the views of non-members on the effectiveness and relevance of CIBAFI.

CIBAFI then engaged in a broad consultation process with its stakeholders. The consultation included formal meetings and direct discussions with industry leaders by the Secretary General and this led into the development of a formal survey of our stakeholders, including both CIBAFI members and non-members from the Islamic Financial Services Industry (IFSI)

The survey was conducted in May and June 2014.

MethodologySurvey questionnaires were prepared in both Arabic and English languages and was available through soft copies, hard copies and online versions. The survey was sent to two groups of respondents: 1) CIBAFI Members and 2) selected Islamic financial institutions from countries with substantial Islamic finance potential such as Turkey, Indonesia, and Kazakhstan.

The Secretariat received completed survey questionnaires from 67 institutions in 27 countries comprising 42 member institutions and 25 non-members.

Five CIBAFI members apologised for not answering the survey questionnaires due to not having enough interaction with CIBAFI.

Summary of Results

General SatisfactionOnly 10% of respondents were dissatisfied with CIBAFI, but respondents did not express a high level of enthusiasm for the organisation. Twenty five per cent were neither satisfied nor dissatisfied, 48% were fairly satisfied and 18% very satisfied.

As for whether CIBAFI is becoming a better organisation or a worse organisation, the majority of respondents (52.5%) believed that that there had been no change over the last three years.

Members were asked which of CIBAFI’s activities they believed were most important. “Raising awareness of issues facing the Islamic finance industry” was ranked as the most important activity for CIBAFI with “initiatives to facilitate interaction among members and with other bodies” also deemed important. However, respondents were not satisfied with CIBAFI’s performance on either of these two issues (i.e. they ranked them high for “importance” and low for “satisfaction.”)


The written comments display a wide variety of views, although one clear theme is that there is insufficient contact between CIBAFI and its members and a lack of understanding of the benefits of being a member of CIBAFI.

Communication Between CIBAFI and its MembersMost members communicate with CIBAFI by email, but other channels, such as phone, fax and post are also heavily used. People seem happy with CIBAFI’s responsiveness, although there were some negative comments about CIBAFI for not keeping members’ contact details up to date.

Use of CIBAFI’s WebsiteForty per cent of members visit the website at least once a month and the remainder are split fairly evenly between those who visit the site more frequently than monthly or less frequently. Eight per cent never visit the website.

Fifty seven per cent use the site in English, and 43% in Arabic.

The most popular section on the site is “General Industry News”, followed by “Information & Research/ Other CIBAFI publications” and “CIBAFI Events”.

Seventy one per cent of respondents complained that information on the website was not up to date.

As for the site’s “Members’ Zone”, 63% of respondents were aware that it exists and 17% said that they use the Member’s Zone every time they visit the site. Half of the respondents said that they visit the Zone on most visits or during some of their visits.

Almost all members say that they have no technical problems when using the Zone.

General comments on the website focus on the quality of material on the site and updated information. Both require an improvement, according to respondents.

General EventsFifty three per cent of members have not attended any CIBAFI events within the last three years and another 22% have attended fewer than three in the last three years. In other words, three quarters of members are not attending even one event per year on average.

Fourteen per cent of members say they have attended at least five events in the last three years.

As for the reasons stated by members who did not attend these events, by far the most commonly mentioned reason is that they are not aware of the events. Other important reasons are: having too little advance notice and the difficulty of justifying spending time away from the office.

Language used during the events, the quality of venues and the fees charged for the events do not appear to be significant factors preventing people from attending.

However, it is clear that those who attended the events did find them satisfying.

There were several comments about the countries where CIBAFI holds its events, with several respondents suggesting that CIBAFI holds the events outside the Middle East. There was also a comment that the content of the events appears to be driven by whoever is sponsoring (ie paying for) the event.


General PublicationsSixty three per cent of respondents were not aware of CIBAFI publications. Some respondents suggested that CIBAFI should try to “add value” in its publications by focussing on areas of concern for the Islamic finance industry and using publications to promote Islamic finance.

Training and CertificationSixty three per cent of respondents were not aware of CIBAFI’s certification programmes and there were some comments about streamlining the certification programme and possibly partnering with other institutions that offer certification.

Benefits of MembershipThe most popular benefit of CIBAFI membership is “having two free seats on a CIBAFI course”, although it turns out that about half members do not use this benefit.

As for benefits that members would be interested to receive in future, it appears that receiving or having access to publications is important, and that there is a lot of interest in creating Member’s Expert Groups and participating in awareness programmes.

How interested were respondents in different types of benefits that CIBAFI membership could bring?

”Fairly interested“+

”very interested“

Very“”interested

89%43% Produce market research on products, markets,best practices

89%43% Exclusive and complementary materials (eg(finance directories, magazine, country reports

87%49% Create “expert groups” from members tocontribute to policy debates

84%46% Participating in awareness programmes (in theform of seminars/roundtables) on specific issues

83%50% Executive training programmes for senior management on issues such as risk management,.governance, AML

82%41% Regional roundtable meetings with members todiscuss topical issues

82%41% CIBAFI newsletter on events, industry issuesetc

81%49% Logistical support for events (eg help with visas,(corporate hotel rates

76%46% Hold dialogue on key issues with internationalorganisations

68%39% “CIBAFI annual “Award


One way of getting members to be more involved in CIBAFI would be to hold member meetings. This idea appears to have support from members, with nearly 44% suggesting that such meetings should be annual and 39% suggesting semi-annual meetings.

Membership feesSeventy eight per cent of members are satisfied with the level of membership fees. Most would like to be reminded two months in advance that membership fees are becoming due. There is little support for imposing penalties for late-payment of membership dues.

Comparing CIBAFI with other organisationsMost CIBAFI members are also members of other similar organisations, with AAOIFI, the Union of Arab Banks and the Islamic Financial Services Board being the most common. Some are members of the International Islamic Financial Markets (IIFM).

However, 56% of CIBAFI members rank CIBAFI either “a lot” less effective than other organisations or “a little” less effective. Twenty seven per cent rank CIBAFI “about the same.” That leaves only 17% of CIBAFI members thinking that CIBAFI is more effective than other organisations.

Concluding remarksCIBAFI appears to be disconnected from its members, many of whom do not know about key CIBAFI activities and do not take advantage of the benefits that they automatically receive from membership.

However, comments made by respondents indicate that members and non-members are supportive of CIBAFI and that they want the organisation to do more. Greater engagement with members (through “expert groups” and “awareness” events) would be welcomed, and members see CIBAFI as an organisation that can provide them with useful materials (such as briefings on industry issues).

Although most members do not object to the current level of fees, they do not consider CIBAFI to be an effective organisation when compared to other regional organisations such as the Union of Arab Banks, IFSB and AAOIFI.

As a final conclusion, one can say that while on the one hand, the survey shows that there is a lot that CIBAFI needs to do to turn itself into an effective organisation that is meeting the needs and expectations of its members, on the other hand, the survey shows that the members will be ready to support CIBAFI as it changes, develops and improves over the next few years.

General Council for Islamic Banksand Financial Institutions (CIBAFI)

Jeera III Tower, Office 51, Building No. 657, Road No.2811, Block No. 428Manama, Kingdom of Bahrain.

P.O. Box No. 24456

Email: [email protected] No.: +973 1735 7300

Fax No.: +973 1732 4902

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