Islamic finance key to helping SMEs grow

In his opening remarks at the International SMEs Conference, held within the framework of the G20 meetings taking place in Istanbul under the Turkish Presidency, the President of the Republic of Turkey HE Recep Tayyip Erdogan praised the Islamic Development Bank (IDB) Group for supporting the Islamic banking industry in Turkey, noting that the Group contributed US$570 million this year to finance the construction of the country’s Vakifbank, and to provide a credit line to the Export Credit Bank of Turkey to promote SMEs in Turkey and support their competitiveness in global markets.

Said IDB Group President, Dr Ahmad Mohamed Ali: "SMEs create jobs and foster growth, contribute to political stability and make a significant dent
on poverty in every country. Statistics show that SMEs contribute to an estimated 43.5% of the total job opportunities created at international level, a figure that can increase to 57.8% worldwide.”

The IDB Group President also commended the Islamic Research and Training Institute (IRTI) and the World Bank’s Global Islamic Finance Development Center for their joint work that contributed to a flagship report, Leveraging Islamic Finance for SMEs. "I also envisage that this report will bring significant benefits to G20 constituencies, as well as other developing countries, who are interested in leveraging the Islamic financial services industry for stimulating SMEs,” Dr Ahmad said.

“The major challenge faced by SMEs is access to financing. The need to deal with this challenge better highlights the significance of recognising the potentials of Islamic finance which can greatly contribute to development of SMEs as it helps in promotion of collective cooperation for the sake of production and investment.”

In his conclusion, Dr Ahmad called for the establishment of a working group to exchange expertise and develop innovative Islamic financial instruments.

The event was organised by the World Bank, the IDB Group, the Turkish Prime Ministry’s Under-secretariat for Treasury, as well as the country’s industrialists and businessmen's association (TUMSIAD).