ICD explores line of credit with EXIM Bank, India for importing Indian goods into member countries

Source: ICD. The MoU was signed by Khaled Al Aboodi, the Chief Executive
Officer and General Manager of ICD (left), and Tarun Sharma, Regional
Head of EXIM Bank. 

A memorandum of understanding (MoU) has been signed between the Islamic Corporation for the Development of the Private Sector (ICD), the private sector arm of Islamic Development Bank (IDB) Group and Export-Import Bank of India (EXIM Bank). EXIM Bank is a specialised financial institution, established under an Act of the Indian Parliament, wholly owned by the Government of India with a mandate to finance, facilitate and promote India’s foreign trade.

The MoU envisages cooperation to explore the feasibility of extending a commercial line of credit of US$100 million to ICD with the aim of facilitating the export of goods and services from India to ICD’s member countries. Typically, the recipients of EXIM Bank’s commercial lines of credit act as intermediaries and on lend to overseas buyers for the import of Indian goods and services. Under the agreement, cooperation will also be achieved through the exchange of information on trade-related matters and the identification of business opportunities for Indian companies to pursue in ICD’s member countries.

Khaled Al-Aboodi, CEO and GM, ICD commented: “We acknowledge that India, being the seventh largest economy in the world, has a lot to offer and its high-quality exports of goods and services can drive the next wave of growth. I believe ICD’s member countries can offer vibrant business prospects for India’s exporters.”

Tarun Sharma, Regional Head, EXIM Bank said, “Since its inception, EXIM Bank has been both a catalyst and a key player in the promotion of cross-border trade and investment. We remain committed to support Indian exporters to enter new markets in their bid to expand and we are convinced that our co-operation with ICD will serve that very purpose and will be mutually beneficial for both parties.”

ICD and Saturna partner on sustainable Islamic investing

The Islamic Corporation for the Development of the Private Sector (ICD) and Saturna in Malaysia, a wholly-owned subsidiary of US-based Saturna Capital Corporation, have signed an agreement to cooperate on offering sustainable Islamic investment vehicles to investors.

In choosing Saturna as its partner, ICD will be tapping the firm’s 25 years of expertise in global values-based investing and its experience in managing the US-based Amana Funds, the world’s largest Islamic equity funds open to the public, as well as Saturna Sustainable Funds. Saturna Capital is adviser to the Amana Mutual Funds (Amana Growth Fund, Amana Income Fund, and Amana Developing World Fund) that follow principles of Islamic finance. Saturna Capital is also adviser to the Saturna Investment Trust, consisting of Sextant International, Sextant Growth, Sextant Core, Sextant Bond Income, Sextant Short-Term Bond, Sextant Global High Income, and the Idaho Tax-Exempt Fund. Both sets of funds have been recognised by rating agencies for having portfolios with highest scores on sustainability. 

"ICD recognises the growing demand for responsible investment vehicles and believes that such strategies will greatly benefit economies as well as investors and societies,” said Khaled Al Aboodi, the CEO of ICD. 

“Islamic investing has long been an integral part of socially-responsible investing,” said Monem Salam, President of Saturna in Malaysia. "Saturna is very proud to be ICD’s partner in expanding Islamic investment choices that put even more emphasis on responsible finance. We believe that investing in sustainable and well-run companies could offer both growth and lower risk.” 

ICD's mandate is to support economic development and promote the development of the private sector in its member countries through providing financing facilities and/or investments which are in accordance with shari'ah principles.

Interested?

Read the Suroor Asia blog post about Saturna's expertise

ICD invests in AIB, Bangladesh

Source: ICD. Stakeholders pose at the strategic investment signing ceremony between Al-Aradah Islami Bank Limited and the Islamic Corporation for the Development of the Private Sector.

The Islamic Corporation for the Development of the Private Sector (ICD), the private sector arm of the Islamic Development Bank Group, has announced its strategic investment partnership with Al-Arafah Islami Bank (AIB), an Islamic bank in Bangladesh. ICD is expected to infuse growth capital of around US$20 million through a 10% equity subscription in the capital of AIB.

The collaboration with AIB exhibits ICD’s long-term vision to bring not only good corporate governance, international best management practice, innovative Islamic products but also to reap stability and confidence in the financial sector in Bangladesh. Khaled Al Aboodi, the CEO of ICD stated that this strategic initiative reflects ICD’s continuous effort to play a catalyst role in the promotion of Islamic finance and private sector development in Bangladesh.

Badiur Rahman, the Chairman of the bank highlighted that with ICD as Islamic multilateral institution, AIB would materialise its vision having the finest Islamic infrastructure by bringing financial solutions in the liquidity management, capital market products (sukuk), infrastructure, real estate, retail and SME sectors with best risk management framework. He further stressed that having ICD as strategic shareholder is the result of the confidence and trust kept on the board and management by all the stakeholders over the last 20 years. This new avenue would strengthen rating of the bank and pave the way for extending network with other international Islamic players in the world.

ICD has already committed US$110 million for the manufacturing, textiles and apparels, construction, and power sector along with US$70 million in lines of financing for the SME sector in Bangladesh. 

QDB, ICD to collaborate on boosting SME sector

Source: ICD. The MoU was signed by (from left) Khaled Mohammed Al-Aboodi, the Chief Executive Officer and General Manager of the ICD, and Abdulaziz Nasser Al Khalifa, the Chief Executive Officer of QDB.

Qatar Development Bank (QDB) has signed a memorandum of understanding (MoU) with The Islamic Corporation for the Development of the Private Sector (ICD), the private sector arm of Islamic Development Bank (IDB) Group. The new agreement is a joint strategic collaboration in examining innovative means and opportunities to support small- and medium-sized enterprises (SMEs) in Qatar.

The MoU commits the two institutions to share knowledge and expertise relating to the SME sector in Qatar. A workgroup composed of key stakeholders and experts from each party will be formed in order to work on the feasibility of co-developing an investment and financing vehicle that will focus on supporting and developing SMEs and local businesses. The preliminary work to be undertaken by the joint parties will cover, although be not limited to, the following: concept design, market analysis, structure and governance, as well as potential positioning and product development. The MoU will enhance the ability of the organisations to achieve their respective objectives and mandates.

Abdulaziz Bin Nasser Al-Khalifa, CEO of QDB said: "Qatar Development Bank aims to empower local SMEs and entrepreneurs to help achieve Qatar’s National Vision 2030. Through this memorandum QDB will conduct a compatibility study for ICD programmes, and find the best applicable ways to utilise the findings in supporting the local SMEs, especially in providing funds to this important and vital sector, in order to develop the skills of the Qatari entrepreneurs and empower them to grow and compete successfully in the regional markets, in accordance with international standards."

Khaled Al-Aboodi, the CEO of ICD, said: “ICD and QDB share a mission of supporting the private sector, in particular SMEs. We look forward to enhancing our cooperation through this new and innovative initiative as there are great opportunities for local businesses to benefit."

ICD and OJSC Agroinvestbank sign MoU for SME financing

Source: ICD. ICD signs MoU with OJSC Agroinvestbank for financing facility.

The Islamic Corporation for the Development of the Private Sector (ICD) and OJSC Agroinvestbank of the Republic of Tajikistan have signed a memorandum of understanding for cooperation to consider the extension of a financing facility to the bank as part of the allocation of US$25 million for Tajikistan.

The line of financing will be extended by OJSC Agroinvestbank to the SME sector for industrial, communication, technology, health, construction and agricultural projects. 

Khaled Al Aboodi, the CEO and General Manager of ICD, commented: “The small and medium sized enterprises (SMEs) have a crucial role to play in a country’s growth and development, and ICD has big plans for them. This is an important sector in all the member countries, including the higher income ones. ICD is now focusing on this sector by extending lines of finance to local banks in addition to the establishment of ASR Leasing Company in Tajikistan - a company specialised to provide shari'ah compliant leasing products to the SME sector.”

ICD previously extended a total of US$11.5 million in financing for the development of SMEs in Tajikistan which demonstrates ICD’s commitment to develop the private sector in its member countries.

The Chairman of OJSC Agroinvestbank said, "The close and mutual fruitful cooperation between Agroinvestbank and ICD positively affects the development of the economy of the Republic of Tajikistan through financing SMEs in key sectors such as agricultural, industry, construction and etc. The Islamic banking products have a huge potential to meet the increasing demand for long term financing of SME in Tajikistan. In this regard, the signing of present MoU is a step towards strengthening and deepening our further collaboration in context of development of the economy of the Republic of Tajikistan and enabling SMEs access to finance.”

IFSB Annual Summit to discuss prudential and supervisory infrastructure for Islamic finance

The 12th Annual Summit of the Islamic Financial Services Board (IFSB) will be held on 20 and 21 May 2015, in the commercial capital of Kazakhstan, Almaty. The Summit is aimed at harnessing the latest developments and innovation in regulation, prudential standards, current market practices and future challenges to keep stakeholders informed about the global Islamic financial services market; to provide a platform for dialogue with peers; and to give delegates a voice in contributing to the future direction of the industry.

According to the organisers, the Islamic finance landscape is populated by sovereign sukuk issuances by non-traditional markets such as the UK and Hong Kong; reforms underway in both Asia and the Middle East to integrate Islamic finance into governmental budgets; and increased interest from international institutions such as the International Monetary Fund and the World Bank. 

Developments such as new IFSB standards on stress testing, liquidity management, capital adequacy are occurring alongside strong private sector activity, the organisers note, especially on the sukuk front: 

• The Islamic Corporation for the Development of the Private Sector (ICD), the private sector funding arm of the Islamic Development Bank (IDB) Group has won mandates from Jordan, the Ivory Coast and Senegal to assist them in issuing sukuk. 
• Dubai’s Noor Bank recently debuted a US$500 million sukuk wakālah. 
• Kuveyt Turk Participation Bank inaugurated a RM300 million sukuk murābahah in the Malaysian market. 
• The syndicated sukuk murābahah market helped AlBaraka Turk Participation Bank raise US$268 million.
• The first sharī`ah-compliant insurance product was launched through Lloyd’s of London by XL Group and Cobalt Underwriting.
• The Central Bank of Bahrain launched a new wakālah liquidity management instrument.

The transformational impact of the Islamic finance industry can only be truly enhanced if the requisite prudential and supervisory infrastructure is in place. As such, issues relating to Core Principles for Islamic Finance: Integrating with the Global Regulatory Framework, the Summit theme, require discussion. Discussions at the 12th IFSB Summit in Almaty with focus on the new regulatory developments, policy and market trends in the global Islamic financial services industry, concluding with a panel on The New Silk Road: The Importance of Regulatory Cooperation for Cross-Border Integration.

Need background? Read the Suroor Asia blog posts:

IFSB introduces core principles for Islamic finance
IFSB launches indicators for soundness and growth of Islamic finance banking systems 
ADB and IFSB launch book on Islamic finance for Asia

ICD starts Corporate MBA programme with IE Business School

Source: ICD.

IE Business School in Spain and the Islamic Corporation for the Development of the Private Sector (ICD) have signed an agreement to create a Corporate MBA programme specifically developed for the employees of ICD, Islamic Development Bank (IDB) Group and private sector entities from their member countries.

Harnessing and developing talent, building a high performance culture by creating an conducive environment- transparent, merit driven and supportive are main objectives of ICD. In line with its private sector developmental mandate, ICD is keen to build a pool of highly talented young executives who are capable of supporting the channels and investees current and future business requirements.

The 15-month Corporate MBA programme will include 10 residential periods, each a week in length. The opening and closing sessions, including the graduation ceremony, will take place on the IE Business School campus in Madrid, Spain, and six residential periods will be held at the ICD headquarters in Jeddah, Saudi Arabia. The remaining two modules will be taught by faculty at collaborating US-based schools, including Harvard Kennedy School in Cambridge, Massachusetts.

Between these face-to-face classroom sessions, ICD students will use IE’s online learning platform to access multimedia material and cases, group work, and class updates.

The 40 executives participating in the initial Corporate MBA program have been chosen by ICD as experienced employees with an average of 10 years of work experience. The graduates will receive an MBA degree from IE Business School.

The core ICD MBA curriculum will include marketing, accounting, strategy, economics, finance – including valuation and behavioral finance – operations, and entrepreneurship. Courses will also develop the leadership, teamwork, and negotiation skills of participants. Instruction at Harvard Kennedy School will include a policy perspective on the MBA curriculum.

Dr Abdelziz Mustafa, representing the Chief Executive Officer of ICD Khaled Al Aboodi said: "The mandate of ICD is basically development. We are certain that a critical part of the development is education. In this regard, ICD management is keen to build the capacity of its staff in order to be able to develop and apply the best practices in our markets in the member countries. Furthermore, ICD is not only financing and investing institution but also advising and catalysing positive change”.

Islamic finance industry needs to move from awareness to action

For the second consecutive year, the Islamic Corporation for the Development of the Private Sector (ICD), the private sector development arm of the Islamic Development Bank (IDB), in collaboration with Thomson Reuters, has released findings from the Islamic Finance Development Indicator* (IFDI 2014) at the Global Islamic Finance Forum in Kuala Lumpur, Malaysia.

Khaled Al Aboodi, CEO of ICD said: “The ICD-Thomson Reuters Islamic Finance Development Indicator (IFDI) is the only numerical measure representing the overall health and development of the Islamic finance industry worldwide. It is an unbiased, multi-dimensional barometer that considers the progress of the Islamic finance industry beyond measurement of profits and assets growth. 

"In 2013 we saw awareness of Islamic finance spread worldwide. The next step is to translate that awareness into action. The ICD will continue to facilitate the use of Islamic financial products and services in order to empower the private sectors in Organisation of Islamic Cooperation (OIC) countries.”

Key findings from the ICD Thomson Reuters Islamic Finance Development Indicator 2014 report are:

• 2013 global Islamic finance assets = US$1.658 trillion; Malaysia overall leader 
• 2013 global Islamic banking assets = US$1.214 trillion; Sudan best performing
• 2013 global takaful assets = US$27.8 billion; Qatar best performing 
• Gap between the awareness indicator (most developed) and quantitative development (weakest) 
• Twenty-eight countries have Islamic finance regulations. Only Bahrain, Malaysia, Nigeria and Pakistan have regulations covering all sectors.
• For global financial centres, Singapore is the most developed. 

• Singapore is in the sukuk top 10
• Singapore and the UK are in the corporate governance top 10
• Singapore is in the conferences top 10
• UK is in the knowledge and seminars top 10

The IFDI measures five key components that combine to depict the bigger picture of the state of Islamic finance: quantitative development, governance, corporate social responsibility (CSR), knowledge and awareness. 

The IFDI global average development value is 10. Malaysia is the most developed Islamic finance nation out of 92 countries, scoring 93. Bahrain (76) and Oman (64) are second and third, respectively. The other four GCC countries are also ranked in the top 10, along with Jordan, Pakistan and Brunei.

The awareness indicator has a high global average value of 29 development points for the news sub-indicator, which assessed 92 countries. The other two sub-indicators for awareness are: seminars (global average value seven) and conferences (global average value nine). There were 231 Islamic finance seminars and conferences and 14,490 exclusive news announcements in 2013. 

There is a gap between awareness development and quantitative development, which scored the lowest global average of six. Significantly, the awareness indicator saw the lowest percentage of countries – 21% – scoring higher than the global average. This indicates that while awareness about Islamic finance is widespread, it is not deeply-rooted enough to be translated into action. 

Islamic finance activities are still largely concentrated in the GCC and Malaysia, with Jordan, Pakistan and Brunei also in the top 10. Action is needed to move all other countries from awareness to quantitative development.

Moving from awareness to knowledge is one challenge for the Islamic finance industry worldwide. Globally, 66 countries contributed to this indicator. There were 477 institutions providing Islamic finance courses and degrees and1,363 research papers were published between 2011 and 2013. 

There is greater interest on Islamic finance in Sub-Saharan Africa, which closely trails leaders Europe and other MENA in the courses category and is home to more institutions offering degrees than Southeast Asia. In Southeast Asia and the GCC, more institutions offer degree programmes than courses, which reflects a focus on longer-term human capital development.

The global average score for the quantitative development stands at a very low six development points. There is a highly uneven development of Islamic finance worldwide, even among the top 10 most developed nations. Fifty-three points separate Malaysia in first place and fifth-placed Qatar, and there are 64 points between Malaysia and tenth-placed Brunei. 

The global aggregate value of Islamic finance assets reached US$1.658 trillion at the end of 2013 mainly from Islamic banking assets which accounted

for 73% of the total, followed by sukuk that contributed US$279.8 billion. Other Islamic finance institutions (OIFIs) contributed US$85.5 billion while Islamic funds and takaful assets stood at US$50.7 billion and US$27.8 billion, respectively. Islamic finance assets are expected to reach up USto $2 trillion within a couple of years.

Governance considers regulations, shari'ah governance and corporate governance. The global average value for governance is 12 development points. Only 28 out of 92 countries have Islamic finance regulations. Unsurprisingly, the overwhelming majority of jurisdictions (86%, 24 countries) with regulations are Muslim-majority countries. Of the remaining four, Nigeria has a significant Muslim population and three Muslim-minority countries round off the top 10: Mauritius, Singapore and the Philippines.

Only four countries have full coverage of regulations: Bahrain, Malaysia, Nigeria and Pakistan. Bahrain pips Malaysia to the top spot with its superior shari'ah governance score.

The CSR Indicator considers CSR Funds Disbursed and CSR Disclosure. Overall, average disclosure for financial reporting is high but there is a low level of CSR disclosure; on average only 30% of items are disclosed. There is particularly a lack of disclosure of training and employee welfare activities. Oman was the best performer for CSR disclosure but distributed a far lower amount of CSR funds than Jordan and Bahrain.To download the report, click here.

*The ICD Thomson Reuters Islamic Finance Development Indicator is a composite weighted index that measures the overall development of the Islamic Finance industry by providing an aggregate assessment of the performance of all its parts, in line with the objectives of Islamic principles. 

It is a global level composite indicator with country and unit specific level indicators. The composite indicator is released annually, featuring a full report detailing each country and unit specific level indicator and their raw numbers.
Each indicator within the composite indicator's constituents will be equally weighted and aggregated, i.e. all variables are given the same weight. In addition, normalisation is required prior to any data aggregation as the variable indicators in a data set have different measurement units. 

For the country composite indicator level, country indicators are normalised to allow for meaningful comparisons over time for a given country and between countries. Various economic indicators (e.g. population size) will be considered while measuring the health of the Islamic finance industry in each country.