Musa Abdul-Aziz Mohammed Shihadeh, Chief Executive Officer, / General Manager of Jordan Islamic Bank talks to BUSINESS LIFE reporter how he became a pioneer in Islamic banking and the importance of Islamic banking.
His distinguished efforts in settling Islamic banking rules in Jordan proved his capabilities in possessing a dynamic leadership and management characteristics.
Musa Abdelaziz Mohammed Shihadeh serves as a General Manager at Jordan Islamic Bank, a Chairman of Islamic Insurance Company, Al Amin Investment Company , Arabian Steel Pipes Company and Petra University Company. He joined the banking venture in 1961. Shihadeh served as the Head of Accounting Committee at Accounting and Auditing Standards for Islamic Institution and Head of the investment committee for Sharia Faculty at University of Jordan, Jordan. He served as a Vice Chairman at Jordan Islamic Bank. He serves as a Member of Trustees Council and Board of Directors of The Petra University of Jordan. He served as a Board Member of the Egyptian Saudi Finance Bank - Cairo. He serves as a Director of AlBaraka Islamic Bank B.S.C. - Bahrain. He served as a Member of the Arab Management Society, Member of the Board of Directors of the Association of Jordanian Businessmen, Board Member of the National Support Funds - Jordan and Member of IFSB Corporate Governance Committee. He also serves as a Board Member of Sharia Faculty - Jordan University - Jordan. He serves as Chairman of Banks’ Association in Jordan. Shihadeh received Bachelor of Commerce from Beirut Arab University in 1969 and MBA from the University of San Francisco, USA in 1979.
He succeeded in transforming JIB from being a small and unimportant Islamic bank established in 1978 to a leading Islamic bank. Under the loyal and unbroken stewardship of the seasoned leader, Jordan Islamic Bank (JIB) has, over the last three decades transformed itself into the largest Islamic lender and the third largest domestic (Islamic& conventional) bank in Jordan. This is by all standards impressive given that JIB’s main competitor in the market is the mighty Arab Bank Group, one of the largest banks in the Middle East and which has its own dedicated Arab International Islamic Bank.
JIB is a subsidiary of the Al-Baraka Banking Group (ABG), which is incorporated in Bahrain and is the restructured holding company of the financial services division of Jeddah-based Dallah Al-Baraka Group (DAG) headed by Saleh Kamel.
The market for Islamic banking products continues to surge. “We have maintained our policy of cautious asset growth aimed at leveraging our timely objectives,” Shihadeh notes.
Ultimately, in 2016 JIB aims to expand its market shareand cement its business in the Jordanian market.
BL: You have been appointed since March 2015 as Chairman of The Association of Banks in Jordan, what developments did you introduce?
Musa Shihadeh: Of course, I have just received my job since a year. We are working with the board to put strategies for the Jordanian banks and establish a solid cooperation among the Jordanian banks to further their business in the Jordanian market; to reduce the bank’s losses in order to help them play their role efficiently in the Jordanian economy through encouraging investments and trade. Proper regulations will help the Jordanian banks to avoid financial distress.
The activation of Arab convergence and working to build real partnerships that embody the Arab economic integration is considered one of the most important pillars to raise our Arab economies.
BL: Musa Shihadeh, possesses the longest experience among all the Jordanian bankers, what banking regulations would you suggest?
Musa Shihadeh: It gives me pleasure and honor to work with the Jordanian banks. I do not have only the longest banking experience in Jordan but I have the longest banking experience among the Arab bankers as a whole, because I started almost fifty years ago in Jordan’s banks. I hope by working in harmony with the board, we can suggest the necessary requirements that the Jordanian banks should do in order to strengthen their banking business in Jordan through encouraging corporate governance, prompt control and transparency so that they can be accepted internationally though the Jordanian banks are well-developed and work in accordance with the International standards. That is what we look forward to see in our society.However, rules and regulations are governed and controlled by The Central Bank of Jordan. We have to abide by these regulations and make sure that these regulations are implemented by Jordan’s banks.
Arab economy has been confronted for more than five years, and even today with many challenges and risks that have affected the rates of development and affected various sectors of the economy, which came as aggregate radical transformations witnessed by many of the Arab states of the political, economic and social aspects.
BL: What is the difference between Jordan’s banks and the international banks?
Musa Shihadeh: The Jordanian banks are almost at the same level with the international banks. I feel that they should continue to develop in order to become more advanced than the international banks. Consequently, I evaluate the level of compliance of the Jordanian banking sector with the rules and regulations of the Central Bank of Jordan. At the banking level, Jordan’s banking sector deposits grew by a healthy 9.7% in 2014.
The economic importance of the Jordanian banking sector is illustrated by its compelling contribution to GDP.
The sector currently consists of 25 banks, 15 of which are listed on the Amman Stock Exchange (ASE).
BL: Are the Jordanian banks fairly advanced? How do local banks contribute to Jordan’s economic development?
Musa Shihadeh: The Jordanian banks are well-advanced and well-equipped. The staff of the Jordanian banks is highly equipped, well educated, and knowledgeable. Nevertheless, most banks do their very best to provide their staff with training that helps in the development of the country. The Jordanian banks are also considered as one of the biggest employers within the private sector as well as having the largest market capitalization in Amman Stock Exchange. The banks extend loans to SMEs and in turn help in job creation. Hence, the Jordanian banking sector is one of the key pillars supporting the economy.
The Arab banking system, it is considered a clear Arab success story in the world, and this leads us to cherish it and impart it to the rest of other economic sectors. Where we in the Arab countries possess a strong and stable banking sector proved a clear immunity in the face of the surrounding challenges and proved its presence in the global arena. Banks , one of the most important types of financial institutions in the Arab countries, it can be said that the Arab economy as a whole based on the banks, and this carries a burden and a great responsibility in the process of economic development and financing investments. The importance of the banking sector appears through a number of indicators.
BL: In what ways did your long banking experience add value to the sector’s journey?
Musa Shihadeh: I am still learning and whenever I learn something, I pass it to the institutions that I work or I do business with.
BL: What are the latest news and developments at Jordan Islamic Bank?
Musa Shihadeh: The right technology is key to keeping up with the new digital-savvy. Banking moves fast, but technology moves faster, we are keeping up with the latest technology because we are keen to put our customers at the heart of everything to keep them loyal to our institution. And, that is part of our services, JIB has the highest return for shareholders equity among the Jordanian banks since three years. Our return on our shareholders’ equity was last year almost, 16.4 whereas the average return on shareholders’ equity in the Jordanian banks is almost 11. Thus, we are keeping up with the good business by having a good market share, educating our team and keeping the trust that banks rely on whether they are Islamic or non-Islamic banks. Trust is part of the business of any bank. Being an Islamic bank is an additional burden because we have to meet our customers’ needs and expectations.
BL: Are Islamic banking services limited to Moslems?
Musa Shihadeh: No, It is open to all religions.We have Christian depositors and lenders; we have Christian shareholders. Islamic banking is open for all human beings and we do not differentiate between religions. Islamic banking is currently in a period of rapid growth, and is expected to grow further.
BL: Why Jordan Islamic bank is contributing the highest return among Al Baraka Banking Group?
Musa Shihadeh: Being the oldest bank in the group, we started our business almost thirty-six years ago and we have our strong stand. We rely on our staff: the educated staff makes us promote our business to a wide range of customers. For example, we have almost 800,000 deposit accounts. We have almost 150,000 customers, we render them facilities and we concentrate on retail products that service the whole community and we reach our clients through our 93 branches and offices in Jordan. We run our business and guide our team, which is almost 2150 staff members who well-trained and well-equipped. We have a training academy in the bank since 1985 that makes our people feel trustworthy, confident and do their business professionally. We make it a priority to listen to our employees to understand their views. We always try to have the electronic mechanism which service every customer to the level that he feels he is dealing with an Arab bank or any other international bank. That is how we put the strategies of the bank.
BL: Does Jordan Islamic Bank finance the mega projects of Jordan?
Musa Shihadeh: We financed a mega project in Aqaba and we provided the government with financial facilities over the past three- four years by almost, 1.2 billion Jordan Dinars for buying Petroleum and Energy. Why we do that? Because, we have high liquidity and we provided the government with financing facilities over the past five years. We feel that we are part of the government because the Jordanian government is working very well on the energy issue. For example, we provide electricity in 18 branches through solar energy stations and we are building now two additional solar stations to generate electricity which will provide most our branches with electricity. This project helps the economy and Jordan Islamic Bank by reducing our expenses and saving the environment at the same time.
Last year, we received the ISO Certificate for our social responsibility. This is the third year that we receive the ISO Certificate for our social responsibility.
BL: Musa Shihadeh, What do you think of Lebanon’s banks, the banking industry and the corporate governance?
Musa Shihadeh: The corporate governance in Lebanon is controlled by the Central Bank of Lebanon which is working well on improving the banking industry. We appreciate what has been achieved in Lebanon’s banking sector. The banking sector has been always the preferred choice and the trusted partner for all corporate and institutional activities.
BL: What is the impact of falling oil prices on the economy?
Musa Shihadeh: The year 2015 witnessed a rise in the relative importance of two variables that had a huge impact on the economies of Arab countries and these variables are : fall of oil prices and the intensification of conflicts. Due to the fall in oil prices, many oil-producing countries have been forced to resort to exceptional policies.
Oil is considered to be the main artery that feeds the Arab economy, where oil accounts for more than 85% of exports of Arab countries, and accounts for more than 60% of government revenues, and contributes to more than one-third of Arab GDP. Thus, the prospects of Arab economies remain dependent on developments and trends in world oil prices, which are encircled with more mystery, especially after the lifting of the siege imposed on Iran by the European Union and the United States of America.
in the light of the increasing challenges and uncertainties and political risks that surround the Arab countries, it becomes necessary to adopt a set of policies, programs and measures and actions aimed to promote Arab economic structure. Some of these measures and actions are as follows :
- Work with all peaceful means available to use all the Arab, regional and international political forums to restore the confidence of Arab political environment and enhance political stability and security in the Arab countries.
- Adopt work programs to achieve inclusive and sustainable economic development with the concentration on increasing the transparency ,enhancing social responsibility and following good governance.
- Expanding Arab economic cooperation, bringing bilateral trade from the stage to the production and joint investment levels, and start-up companies and major projects within the Arab borders.
- Focus on the promising sectors which have a great impact on the Arab economic development especially value-added sectors that generate jobs and enable us to compete locally and globally including the industrial sector, where the industrial imports of machinery and transport equipment , basic manufactures and chemicals constitute about one-third of Arab imports.
- Take advantage of the success stories available in many Arab countries in different economic sectors and circulate them to other Arab countries.
- There should be a clear and practical strategies to support small and medium-sized companies in the Arab countries, because of their visible contributions in the production, employment and economic diversification.
- The oil-producing countries should move forward to achieve economic diversification and restructure of their economies, rather than over-reliance on oil and gas sector.
- Non-oil Arab countries should work on controlling public finance through the reconsideration of the structure of public revenues and expenditures in an effort to narrow the budget deficit and make structural reforms aiming to improve the investment environment.
