FAMBB

SPONSORED FEATUREDelivering positive resultsEconomic development is crucial to poverty alleviation; and the private sector has a key role toplay in creating jobs and increasing exports to ensure more people benefit from growing economiesThe Islamic Corporation for the Development of the Private Sector(ICD) is part of the Islamic Development Bank and aims to supporteconomic growth in its 52 member countries through the provisionof finance to private sector projects, in accordance with Shariah, orIslamic, law.Harnessing the power of the private sector in order to fund projectsis critical to the development of sustainable economies: which in turnincreases incomes, creates jobs and provides goods and services thatbenefit peoples’ lives. This can only happen if finance can trickle down tothe bottom of the pyramid, which is why ICD is committed to providingsmall and medium-sized enterprises (SMEs) with access to Shariahcompliant financial products and encouraging the development of Islamicfinancing in member countries.By the end of 2013, ICD had funded 267 projects with US$3 billionof finance, with the finance, agriculture, industry and mining sectorsbenefiting most from the ICD’s work. All projects that request financingare vetted to ensure they comply with ICD’s investment guidelines andstrategy, ensuring maximum developmental impact.Most recently, ICD agreed to a joint venture with the Republic ofChad to create a local leasing company and a local Islamic bank. Theorganisation has also extended a US$6 million line of finance to Tajikstan’sOrienbank and is helping to fund a specialist bank in Bangladesh.As many of ICD’s projects and investments are in the early stages, thesuccess of various projects is ongoing; but its recent establishment of aMonitoring & Evaluation (M&E) department means the agency can nowprovide timely, credible and reliable information to assess operationalperformance and track the progress of projects.The M&E department has started to prepare a set of policyinstruments and guidelines based on globally-recognised Good PracticeStandards that will include a ‘development effectiveness policy’ and‘development effectiveness framework’ within which projects will operate.Crucially, a ‘Development Indicator Monitoring System’ will monitorthe development outcomes of all ICD operations.ICD’s strategic vision is to set up 20 Islamic leasing companiesover a period of five years and to ensure that all these companies followthe highest standards of corporate governance and best internationalpractice. The leasing sector is an attractive offering for ICD for thefollowing reasons:1. Medium- to long-term finance to increase production and outputA medium/long-term financial instrument for SMEs to help themprocure productive machinery, equipment, vehicles and/or properties.2. Shariah compliant natureAn asset-based leasing with the asset leased (in most situations) beingthe security for the leasing.3. Good fit for ICD member countriesLack of collateral requirement offers an important advantage incountries without strong business environments, particularly thosewith weak creditors’ rights and collateral laws.4. Profitable opportunity for ICDThe current state of market and low level of competition in ICDMember Countries provide a wealth of business opportunitiesICD arranged the term financing for theMukalla Iron and Steel Co steel plant in YemenCurrent reviews of ICD projects show they delivered positivedevelopment results and were performing satisfactorily against theirobjectives, with several exceeding expectations. Some of the benefitshave included increased competition in banking services leading toincreased funding for SMEs, successful growth strategies, increases inemployment and increased transfer of technology and skills.More broadly, ICD has recently worked with Thomson Reuters todevelop and launch the ICD Islamic Finance Development Indicator, anumerical measure representing the overall health and growth of theIslamic finance industry worldwide.The indicator allows all relevant information about the differentarms of Islamic finance to be quantified and used as an independent andreliable barometer of the health of the Islamic finance industry.It is vitally important for the work of ICD and for the industry to whichit contributes to be monitored to ensure resources are channelled intothe right areas and that the outcomes of the ICD’s projects are makinga difference. ICD will continue working with the private sector: not onlyto develop projects that help grow economies and aid communities, butalso ensure that these projects continue to help the intended beneficiariesthrough an ongoing commitment to careful monitoring and support.Islamic Corporation for theDevelopment of the Private SectorContacts: Tel: (966-12) 6361400; Tel: (966-12) 6441644; Fax: (966-12) 644 4427Email: icd-bdpd@isdb.org Website: www.icd-idb.org