ICD has plans to set up SME funds with local partners for equity and quasi equity investments, and debt financing in small and medium enterprises (SMEs), according to
"Poverty reduction is one of the key objectives of ICD and our strategic intent is to focus on job creation through the support and development of SMEs in the member countries," he said, adding that given its firm roots in ethical and social values, Islamic finance has proven itself to be the tool of choice for promoting financial inclusion whereby a greater multitude of citizens will have access to financial services.
"This will automatically generate more economic activity and wealth creation whereby we should see a clear reduction in poverty," he added.
Following is the text of the interview:
What were ICD's achievements in 2013?
ICD recorded another year of positive results for 2013 not only in financial terms but, most importantly, in terms of promoting development of the private sector and promotion of the Islamic financial sector in its member countries, despite the many challenges arising from the broader economic and social environment in which it is operating. ICD currently has 52 member countries representing 1.5 billion people spanning across
In which countries and sectors was ICD most active in 2013 and 2014?
ICD approved 31 new projects and participated in 8 capital increases in its investee companies totaling an amount of
Where do you see the next market for Islamic finance?
I think that growth opportunities for Islamic finance are vast. Since the global financial crisis in 2009 we have seen Islamic finance clearly getting more and more acceptance across not only the Muslim world but also in the West for its resilience to withstand external shocks, its ability to impact the real economy and, most importantly, for its ethical and social dimensions. It is also recognized that Islamic finance is a comprehensive alternative financial system that can promote and support inclusive and equitable growth whereby the living standards of the poorer segment of the population can be uplifted to ensure that poor people live with greater dignity. The global Islamic finance industry has recorded double digits growth rates over the last few years and is expected to remain on this growth trajectory with total assets expected to surpass the
What challenges ICD faces in various countries in funding projects?
We have seen very encouraging signs in many jurisdictions where government policy makers and regulators are providing a greater support to create an enabling legal and regulatory environment, which would be conducive for promoting Islamic finance and also ensuring the financial stability of the Islamic financial sector through specific Islamic finance legislation. Of course, challenges vary by country and by intensity, but in general, most jurisdictions are facing problems due to a number of fairly similar factors. For example, the lack of the required skilled Islamic finance human capital, lack of well-developed capital markets, lack of financial integration both regionally and internationally, poor capitalization of Islamic financial institutions, lack of liquidity and cash management tools and poor public awareness of Islamic finance products are all factors impeding the growth of the Islamic financial sector.
Name the sectors in which projects mostly need financing?
Again, the needs of member countries differ from country to country depending mainly on the general state of development of their economy. However, infrastructure projects in transportation and energy sectors are clearly seen as key to attracting foreign direct investments which in turn would generate further economic activity and growth across the economy whereby standard of living can be enhanced. In addition, health care, education, food production and transportation have seen historically severe under investments in most of ICD's member countries. Concerted efforts have to come from both governments, players in the private sector financing arena and all other stakeholders to remedy the dire situation currently prevailing in many member countries.
What role does ICD play in promoting the private sector?
ICD was established by the board of governors of the IDB in 1999 as an autonomous entity with the purpose of promoting private sector development in its member countries. Today, ICD is the leading multilateral financial institution offering a multitude of Islamic finance investment and financing products and continues to play an important role for the development of the private sector in its member countries. ICD has also been successful in mobilizing resources to bring highly needed investments in certain member countries through the comfort it provides to other foreign investors by its own participation in these projects. ICD also offers advice to governments and private sector organizations to encourage the establishment, expansion and modernization of private enterprises, the development of capital markets and the adoption of best management practices.
Which are the countries where ICD is involved in major projects?
ICD is currently implementing several key projects in
How will ICD-funded projects help in reducing poverty?
Poverty reduction is one of the key objectives of ICD and our strategic intent is to focus on job creation through the support and development of SMEs in the member countries. It is well recognized that the SMEs sector has a crucial role to play in a country's growth and development as witnessed in the developed world. Given its firm roots in ethical and social values, Islamic finance has proven itself to be the tool of choice for promoting financial inclusion whereby a greater multitude of citizens will have access to financial services. This will automatically generate more economic activity and wealth creation whereby we should see a clear reduction in poverty.
How is ICD supporting SMEs in
ICD has a three-pronged approach to improving SMEs' access to financing and investments in its member countries. Firstly, ICD provides lines of credit to selected local banks in its member countries for onward financing of bankable SMEs projects. Secondly, ICD has established leasing companies in several member countries and has plans for many more to support SMEs mainly in machinery and equipment financing. Thirdly as mentioned earlier ICD is establishing SME funds with local partners for equity and quasi equity investments and debt financing in SMEs. Specifically for
What is ICD's strategy toward African states?
ICD's commitment to the development of the private sector in
Is ICD promoting food security-related projects?
Food security is also high on ICD's agenda and ICD is providing assistance to reduce the risk of food insecurity by promoting projects, which will ensure that member countries produce enough food to feed their own populations. ICD aims to achieve this through the establishment of a
What is the progress of ICD's home finance company?
In 2013, ICD sponsored a mortgage home finance company and successfully raised SR900 million in capital. The internal architecture for the company's operations has been developed and in
What is the result of the collaboration between ICD and
In order to address the growing global demand for transparent and accurate industry information across global Islamic finance market, last year ICD and
How does ICD help in mortgage financing?
ICD has a strategy to support financial institutions in its member countries and mortgage finance companies are among the strategic targets. ICD is in a position to provide equity or debt financing to mortgage finance companies to help strengthen this vital sub sector. ICD can also provide technical support and advisory services to mortgage finance companies and regulators through its technical subsidiaries.
What future do you see for Islamic banks and Shariah-compliant financing?
I strongly believe that as the Islamic financial services industry continues to grow further into a dynamic and competitive global financial system, we must not lose focus on the ethical and social dimensions, which are at its roots. As Islamic finance moves into new markets, we need to ensure that it is inclusive and accessible to all, particularly the lower income groups and small businesses. It is only by bringing the financially underserved population into the economic mainstream that we can truly contribute toward more sustainable and equitable economic growth, which is at the heart of Islamic finance.
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