UAE | General
Islamic Development Bank shifts focus to private sector
As part of its diversification strategy, the Islamic Development Bank (IDB), through its affiliates, will raise financing for the private sector in Islamic countries, an IDB official said yesterday.
- By Stanley Carvalho
- Published: 00:00 May 28, 2001
As part of its diversification strategy, the Islamic Development Bank (IDB), through its affiliates, will raise financing for the private sector in Islamic countries, an IDB official said yesterday. Also, Abu Dhabi Islamic Bank (ADIB) has been named local agent for IDB to handle export financing in Abu Dhabi.
"IDB is reinventing itself, creating independent corporations and funds to increasingly finance the private sector in Islamic countries. Most of the funding so far has been to governments," said Dr. Abdel Rahman Taha, manager of the Islamic Corp for the Insurance of Investment and Export Credit (ICIEC), an affiliate of Jeddah-based IDB.
Taha was addressing delegates at a seminar on IDB and ICIEC organised by the Ministry of Finance and Industry in association with Abu Dhabi Islamic Bank, IDB and the Abu Dhabi Chamber of Commerce and Industry.
Total annual lending by IDB stands at $2.5 billion. "We are continuously increasing lending and this year we see it going up by 10-15 per cent to at least $3 billion. But our aim is to lend more to the private sector," Taha said. The sector accounts for 50 per cent of the bank's financing.
However, this financing is not enough, especially in view of the WTO and economic changes taking place worldwide and the greater role assumed by the private sector, he said. The IDB and its affiliates have as at end-2000 financed some $25 billion since inception in 1975.
In the past, they have lent mainly to public sector infrastructure projects. "IDB is diversifying its means of financing so that the private sector becomes a greater beneficiary in the Organisation of Islamic Conference (OIC) members."
Dr. Mohammed Khalfan bin Kharbash, Minister of State for Financial and Industrial Affairs, emphasised the need for Islamic countries to restructure their economies in light of global economic developments.
He urged Islamic organisations to enhance their financing to help members of the OIC cope with challenges, and called for regional and joint cooperation among Islamic countries in developing the private sector.
While the IDB has an authorised capital of $5 billion, the ICIEC, set up in 1994, has an authorised capital of $150 million. The IDB holds a 50 per cent equity while the rest is held by OIC countries. The ICIEC's primary aim is to promote trade and the investment among OIC countries by providing investment and export credit insurance.
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