The Islamic Development Bank (IDB) (Arabic: ????? ???????? ??????? ) is a multilateral development financing institution located in Jeddah, Saudi Arabia. It was founded in 1973 by the Finance Ministers at the first Organisation of the Islamic Conference (now called the Organisation of Islamic Cooperation) with the support of the king of Saudi Arabia at the time (Faisal), and began its activities on 20 October 1975. There are 56 shareholding member states. Mohammed bin Faisal is the former president of the IsDB.
On the 22 May 2013, IDB tripled its authorized capital to $150 billion to better serve Muslims in member and non-member countries. The Bank continues to receive the highest credit ratings of AAA by major rating agencies. Saudi Arabia holds about one quarter of the bank's paid up capital The IsDB is an observer at the United Nations General Assembly.
Membership
The present membership of the Bank consists of 56 countries. The basic condition for membership is that the prospective member country should be a member of the Organisation of Islamic Cooperation (OIC), pay its contribution to the capital of the Bank and be willing to accept such terms and conditions as may be decided upon by the IsDB Board of Governors.
Ranked on the basis of paid-up capital (as of August 2012), major shareholders include:
- Saudi Arabia (26.5%)
- Libya (10.7%)
- Iran (9.32%)
- Egypt (9.22%)
- Turkey (8.41%)
- United Arab Emirates (7.54%)
- Kuwait (7.11%)
- Pakistan (3.31%)
- Algeria (3.31%)
- Indonesia (2.93%)
IDB Group
IsDB has evolved into a group of five Entities, consisting of Islamic Development Bank (IDB), Islamic Research & Training Institute (IRTI), Islamic Corporation for Development of the Private Sector (ICD), Islamic Corporation for Insurance of Investment and Export Credit (ICIEC) and International Islamic Trade Finance Corporation (ITFC). IsDB also hosts the Islamic Solidarity Fund for Development (ISFD), the waqf (endowment) fund for fighting poverty in its 56 member countries.
Islamic Research & Training Institute (IRTI)
IRTI was established in 1401H (1981) as the research and training arm of IDB. It plays an important role in the transformation of IDB Group into a world-class knowledge-based organization by leading and sustaining the development of a dynamic and comprehensive Islamic financial services industry to support the socio-economic development of member countries. As a centre of excellence, IRTI conducts training, undertakes research, provides advisory services and enhances capacity building in basic and applied Islamic economics and finance.
Objectives:
o Undertake research, training and knowledge-creation activities on Islamic economics, banking and finance;
o Organize seminars and conferences on various subjects in collaboration with national, regional and international institutions;
o Undertake information management activities such as developing information systems for use in Islamic economics, banking and finance; and
o Maintaining databases on experts as well as trade information and promotion.
In 1433H (2013G), IRTI organized 22 Conferences, Seminars and Workshops, and participated in 15 others. During the same year, IRTI organized a total of 38 training courses in addition to online Master's degree Program in Islamic Banking and Finance in collaboration with Insaniah University (Malaysia). It also published six research papers on various topics in Islamic Finance. Since its inception, IRTI has conducted numerous research studies and organized seminars and conferences in various member countries.
IRTI also undertakes a variety of events designed to enhance the Islamic financial sector, namely: knowledge building for financial stability; IDB Prize for Islamic Economics, Banking and Finance; IRTI Scholarship and Research Grant Program; collection and publication of data on Islamic Financial Institutions; and knowledge building for inclusive financial services.
It prepares seminar proceedings, lectures and articles, which are published in the IRTI Journal entitled "Islamic Economic Studies" (a six-monthly journal published in Arabic, English and French).
Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC)
ICIEC was established in 1415H (1994G). Its membership comprises 40 IDB member countries from three continents: Africa, Asia and Europe.
Objectives:
To increase the scope of trade transactions from the member countries of the Organization of Islamic Cooperation (OIC), and to facilitate foreign direct investments into member countries and to provide reinsurance facilities to Export Credit Agencies (ECAs) in member countries. ICIEC fulfills these objectives by providing appropriate Shari'ah-compatible solutions:
o Export credit insurance and reinsurance to cover non-payment of export receivables resulting from commercial (buyer) and non-commercial (country) risks; and
o Investment insurance and reinsurance against country risks stemming mainly from currency inconvertibility and transfer restrictions, expropriation, war and civil disturbance, breach of contract and noncompliance with sovereign financial obligations.
ICIEC also manages IDB Group Investment Promotion Technical Assistance Program (ITAP), which was set up in 1426H (2005). The objective of ITAP is to unlock the development potential of member countries through a comprehensive and integrated program of foreign investment promotion and technical assistance. It provides advice to member countries on how to improve their investment climate, build the capacity of investment promotion agencies, and identify investment opportunities by organizing events designed to attract foreign direct investments.
At the end of 1433H, the total insurance commitments of ICIEC stood at US$16.9 billion, out of which US$14.3 billion was insured. In 1433H, insurance commitments for US$2.5 billion were made.
Islamic Corporation for the Development of the Private Sector (ICD)
ICD was established in 1420H (1999). At present, its membership comprises 52 IDB member countries from four continents: Africa, Latin America, Asia and Europe.
Objectives:
o Support the economic development of its member countries through financing private sector development in accordance with the principles of Shari'ah; and
o Advise governments and private organizations to encourage the establishment, expansion and modernization of private enterprises.
During 1433H (2012G), ICD approved 18 new investment projects and 6 capital increases amounting to US$419 million and disbursed US$124 million during the same year. The largest share of ICD's financing during 1433H (2013G) went to CIT countries (38.6%), followed by Asia and Pacific (15.2), MENA (13%) and Sub-Saharan Africa (13%) while regional projects accounted for 20% of the total approvals.
In terms of sectoral distribution, the finance sector received the largest share, 41.5% of the net cumulative approvals of the ICD since its inception, followed by Industry and Mining 22.2%, and Real Estate 14.1%. Between 1420H (1999G) and 1433H (2012G), the ICD's net cumulative approvals stood at US$2.6 billion in 36 countries. The net approvals have risen from US$35.3 million in 1421H (2000G) to US$317.7 million in 1433H (2012G).
Other activities of the ICD during 1433H included successful fund raising for Tunisian and Saudi Arabia Small and Medium Enterprises (SMEs) Funds and Central Asia Renewable Energy Fund. ICD also has mandates for capacity building and creation of Islamic windows within conventional banks (e.g. in Tunisia and Cameroon).
In a bid to bring the activities of the private sector under a single entity, the ICD was assigned the management of the Unit Investment Fund (UIF) in 1429H (2010G). The UIF mobilizes resources through the securitization of its leases and installment sales to assets. It also complements IDB's project financing and trade financing operations. By the end of 1433H (2012G), the UIF had funded 277 financing operations worth US$2.6 billion in a wide range of industries.
International Islamic Trade Finance Corporation (ITFC)
ITFC was established in 1428H (2007). It commenced operations in 1429H (2008). Its membership comprises 37 IDB member countries from three continents: Africa, Africa and Europe.
o Foster member countries' trade and trade integration;
o Be responsive to customers' needs with innovative Shari'ah-compliant solutions;
o Be the preferred financier of choice for trade solutions;
o Deliver fair returns for shareholders.
In 1433H (2012G), trade financing approvals reached US$4,466 million, a remarkable increase of 47% compared to the US$3,033 million recorded in 1432H (2011G). In addition, utilization reached new highs, with disbursements increasing by 42%, from US$2,826 million in 1432H to US$3,999 million in 1433H (2012G).
ITFC is an autonomous entity established with the objective of enhancing trade thereby improving the economic conditions and livelihoods of people throughout the Muslim world. Its primary objective is to promote trade among OIC member countries. Besides, it acts as a facilitator in mobilizing private and public resources to achieve its objective of fostering economic development through trade.
ITFC's two main arms are (i) Trade Finance and (ii) Trade Cooperation & Promotion Program (TCPP). Its primary focus is to encourage intra-trade among OIC member countries. As a member of the IDB Group, ITFC has unique access to governments in its member countries and it works as a facilitator to mobilize private and public resources towards achieving its objectives of fostering economic development through trade. The Corporation helps businesses in member countries gain better access to trade finance and provides them with the necessary trade-related capacity building tools in order to help them compete successfully in the global market.
Islamic Solidarity Fund for Development (ISFD)
The Islamic Solidarity Fund for Development (ISFD), a Waqf (Endowment) fund, is the poverty reduction arm of the Islamic Development Bank. It was established in 1426H (2005G) and started its operations in 2008.
The Islamic Solidarity Fund for Development (ISFD) is dedicated to reducing poverty in the IsDB member countries by promoting pro-poor growth, emphasizing human development, especially improvements in health care and education, and providing financial support to enhance the productive capacity and sustainable means of income for the poor, including financing employment opportunities, providing market outlets especially for the rural poor and improving basic rural and pre-urban infrastructure.
Therefore, projects and programmes undertaken by the ISFD are low-cost, high-impact, innovative, result-oriented, and mainly community driven. ISFD interventions focus on the poorest of the poor, enabling them in the area of employment and income generating activities, breaking the circle of poverty in which they are trapped, and on sustaining the interventions in order to achieve long-term results.
Strategic Priorities of ISFD include basic infrastructure development, agriculture and rural development, and human development. Cross-cutting themes of ISFD strategy include capacity building, and women empowerment.
The following flagship programmes are ISFD's main vehicles for poverty eradication:
1.Sustainable Villages Programme (SVP)
2.Vocational Literacy Programme (VOLIP)
3.Microfinance Support Programme (MFSP)
4. Renewable Energy for Poverty Reduction (REPoR)
5. Save the Mothers (STM)
Till-date (April 2015), ISFD has provided funding for 74 projects with overall cost of US$ 2.3 Billion in more than 30 countries. Around 80% of this amount is distributed to the Least Developed IDB Member Countries, mostly in Sub Saharan Africa. Most of the ISFD financing (68% of the total) has been concentrated in Africa; Sub Saharan Africa received 64%. The remaining interventions are in Central Asia (13%), Middle East (6%) and Asia (13%).
In line with the IDB Policy on Poverty Reduction, interventions have been focusing on the sectors that have direct impact on poverty alleviation in rural areas: Agriculture and Rural Development (41%), Education including Vocational Education (26%), Micro Finance (12%), Health (7%), Rural Transport (6%), and Renewable Energy (8%).
ISFD Waqf Lands Initiative
As part of its efforts to broaden the resource base of the Fund, the ISFD Board of Governors adopted resolution No ISFD/BG/3-1433 calling on member countries to allocate to the Fund suitable waqfs (such as plots of land, buildings or other assets) that can be developed to generate revenue to the fund. So far, 10 countries have responded to BOG Resolution: Azerbaijan, Cameroon, Jordan, Senegal, Yemen, Benin, Oman, Sudan and Guinea, and Burkina Faso. To-date two countries (Benin and Burkina Faso) have allocated plots to the ISFD.
Special Assistance Program
This program was launched in 1400H.
Objectives o Assist Muslim communities in non-member countries;
o Help to develop and strengthen the institutions offering social services (education and health) with a view to improving the wellbeing of the masses and preserving their Islamic and cultural identity; and
o Alleviate the plight of communities affected by natural disasters or conflicts in both member and non-member countries.
Until the end of 1433H (2012G), US$725.8 million had been approved by the Program for 1,440 operations including 69 regional operations: US$378.4 million for 438 operations in member countries, and US$284.5 million for 933 operations in Muslim communities and organizations in non-member countries.
Scholarship Program
The IDB has three scholarship programs and a community development program as a support program to the scholarship programs:
o IDB Scholarship Program for Muslim Communities in non-member countries (SPMC) - launched in 1404H (1983G);
o Merit Scholarship Program for High Technology (MSP) - launched in 1413H (1992);
o M.Sc. Program for Science and Technology (MPST) - launched in 1419H (1998); and
o Community Development Program - launched in 1408 (1987).
Objectives:
o Build science-based human capital in countries as well as Muslim communities in non-member countries;
o Strengthen the capacity of research institutions in member countries; and
o Develop leadership competencies to enable beneficiaries contribute to IDB development objectives in their countries.
Cumulatively, the number of graduates from the three scholarship programs has exceeded 8,000 students from both member and non-member countries by the end of 1433H (2012G). Until the end of 1433H (2012G), an amount of US$133.7 million has been spent on the Programs for a total number of 13,726 students/scholars.
Head Office and Regional Offices
The Bank's principal office is in Jeddah in the Kingdom of Saudi Arabia. Four regional offices were opened in Rabat, Morocco (1994), Kuala Lumpur, Malaysia (1994). Almaty, Kazakhstan (1997), and Dakar, Senegal (2008). It also has two country gateway offices in Ankara, Turkey and Jakarta (Indonesia) and field representatives in 14 member countries (Afghanistan, Azerbaijan, Bangladesh, Burkina Faso, Guinea, Iran, Mali, Pakistan, Sudan, Turkmenistan, Uzbekistan, Yemen, Mauritania and Libya).
Projects and programs
Completed
- The Gao Bridge in Mali: Until a few years ago, crossing the Niger River at Gao was done by a ferry that might or might not be operating. This hindered progress and discouraged trade. The Gao Bridge financed by the IsDB connected the once isolated Gao Region in eastern Mali to the heartland.
- Khanarc Canal in northeast Azerbaijan: Built around 70 years ago, the Samur-Absheron Canal carries water from the Samur River to irrigate farms in northeastern Azerbaijan and supply the national capital, Baku, with drinking water. Years of neglect meant that the canal was inefficient - it lost much of the water it carried - and did not have the capacity to meet existing demand for irrigation or, still less, to allow for expansion. A loan from the IsDB helped the Government of the Republic of Azerbaijan rebuild the canal.
Ongoing
- Modernising road planning and designing in Yemen: The deserts and mountains of Yemen make building and maintaining roads a challenge. The network of paved roads is limited and many remote communities are still isolated. A good road network is essential to bring rural areas into the mainstream and to boost development.
- Scholarship Programs: The Bank's fund and implement its scholarship programmes as part of its overall effort in the development of human resources of its member countries and those of the Muslim communities in non-member countries. There are three scholarship programmes offered by IDB:
- Scholarship Programme for Muslim Communities in Non-Member Countries
- M.Sc Scholarship Programme in Science and Technology for IDB Least Developed Member Countries
- Merit Scholarship Programme for High Technology
See also
- Economy of the Organisation of Islamic Cooperation
- Islamic banking
References
- Taylor & Francis Group; Dean, Lucy (2003), The Middle East and North Africa 2004: 2004 (Illustrated ed.), Routledge, ISBN 1-85743-184-7
External links
- Official website
- IDB Review by DinarStandard
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