Ramallah, 14/10/2012 – Initiated by the Palestine Monetary Authority and the Expanded and Sustained Access to Financial Services program (ESAF), funded by the United States Agency for International Development (USAID), a workshop has been held to discuss a study prepared by experts entitled: 'Increasing Prospects for Islamic Finance and Islamic Banking'.

Speakers exchanged points of view in order to enhance and develop Islamic financial services and to face challenges that impede expansion. The speakers’ list included PMA deputy governor Dr. Shehadeh Hussein, ESAF program representative Mr. Mohammad Tawil, Palestine Capital Market Authority general manager Mrs. Abeer Odeh, manager of USAID private enterprise program Mr. John Crihfield, PCMA director general Dr. Bashar Abu Za'aror, general manager at Islamic Arab Bank Mr. Sami Sa'idi, FATEN Association general manager Mr. Anwar Jayousi, director of PMA Supervision and Inspection Department Mr. Riad Abu Shihadeh and deputy director of PMA SID Mr. Mohammad Manasrah, in addition to staff from many banking and financial institutions.

Distinctive working papers were presented, which incorporated analysis of supply and demand in the Islamic finance market, as well as gaps, challenges and vulnerabilities that face growth opportunities, and means for raising awareness of Islamic finance system and Islamic money exchange.

The PMA deputy governor Dr. Shehadeh Hussein talked about the increasing attention to Islamic finance system: "Attention to this system comes as another alternative and option to the global financial system. However, there are many challenges that stand in the way of developing this sector, which include the need for a consolidated legal and oversight system for the Islamic countries in order to reduce the cost of introducing new products, and to build trust in transactions of the Islamic capital markets."

Dr. Hussein pointed out that assets of the global Islamic finance system have increased from 5 billion dollars in 1980s to about 1.2 trillion dollars by the end of 2011, and are expected to reach 1.6 trillion dollars at the end of 2012. The Islamic finance system has shown considerable flexibility during the global financial crisis and Islamic banking services and products expanded worldwide. The Sukuk instruments became an important international investment tool.

Dr. Hussein added that excessive attention to the Islamic finance system has led to many initiatives to work outside the boundaries of Islamic countries, and to provision of Islamic services by more than one hundred financial institutions. The ability of those financial tools to provide liquidity and manage risk has been praised. Dr. Hussein also mentioned a number of challenges that impede prevalence of Islamic financial services such as fewness of investment tools, limited size and depth of supporting market funds in the Islamic financial system, and paucity of qualified workforce.

The director of the PMA Consumer Relations and Market Conduct department, Mr. Ali Faroun, referred in his intervention to PMA's efforts to develop and enhance banking awareness and culture among all Palestinian society groups. These efforts included financial awareness campaigns in the form of a banking week for children and the youth, besides instructions intended to enhance Islamic banking and commercial services and products. The last of the latter were instructions for use of ATMs and for opening bank accounts for all citizens to encourage people to deal with banks and to promote financial inclusion principles, which would help improve living and economic conditions in general.

The deputy director of the PMA's SID, Mr. Mohammad Manasrah, stated that the aim of the current workshop is to review and analyze the outcomes of a survey conducted to help set a mechanism necessary to increase access opportunities to Islamic banking products and services. 'The most important ratios of the survey concluded that %56 of individuals surveyed have not dealt with banks before, %80 of individuals who undertake banking transactions deal with only one bank, %25 prefer borrowing in a way that complies with Islamic Sharia, and only %8 prefer not to deal with banks at all for religious reasons', Mr. Manasrah added.

On the other hand, the aforementioned study has revealed that the supply of financial products that comply with Islamic Sharia has reached roughly %10 of the people surveyed, while the volume of demand was %25.

The above-mentioned survey that was conducted by the PMA and ESAF and funded by the USAID covered a random sample which included 1300 individuals and institutions.