Development partnership for KSA's Ministry of Culture and Royal Commission for AlUla

The KSA Ministry of Culture (MoC) and the Royal Commission for AlUla (RCU) have signed a Memorandum of Understanding in Riyadh during the Cultural Investment Conference to strengthen cooperation in culture, heritage and development. 

Source: PRNewsfoto/Cultural Investment Conference. The agreement was signed by KSA Vice Minister of Culture Hamed Fayez (right) and RCU CEO Abeer AlAkel (left), marking a key step towards positioning AlUla as a global cultural destination.

HE Vice Minister of Culture Hamed Fayez affirmed that this agreement drives forward the partnership between the Ministry of Culture and RCU, paving the way to significantly enhance the presence of Saudi cultural identity in AlUla. He noted that AlUla seamlessly blends diverse natural landscapes with authentic heritage and thousands of years of history. It stands as an open-air museum and a powerful reflection of the human civilisations that have flourished across KSA land.

Abeer AlAkel, CEO of RCU, stated that the agreement significantly strengthens RCU's partnership with MoC and builds upon previous successes in areas of shared cultural interest. She added that this agreement represents a fundamental step for cultural development in AlUla, aligning with the cultural ambitions of Saudi Vision 2030, and will contribute to the integration of expertise and innovations at both national and global levels, empowering the cultural and knowledge-based economy. 

The agreement outlines broad areas of cooperation, underscoring the joint development of cultural infrastructure in AlUla. This includes long-term planning, addressing development needs, and implementing initiatives to ensure the continuity and sustainability of cultural activities across the arts and heritage sectors.

It also supports the coordination of cultural events, festivals and initiatives across a wide spectrum of disciplines, including heritage, cinema, music, museums, culinary arts, visual arts, architecture, design and libraries. The agreement encourages closer cooperation between cultural institutions and RCU to facilitate the exchange of expertise and enhance the quality and diversity of cultural content in AlUla.

In addition, the MoC and RCU will support the development of community-focused, educational and professional programmes aimed at nurturing talent and enabling broader participation in the cultural sector at local, national and international levels. The agreement also seeks to stimulate the cultural economy, attract investment into creative industries, and support cultural entrepreneurs in establishing ventures in AlUla, driving inclusive economic growth and generating high-value employment anchored in creativity and knowledge.

The MoC and RCU have a strong history of collaboration. Successful initiatives include the Wadi AlFann Dialogue, the AlUla Future Culture Summit and the 2023 AlUla World Archaeology Summit. The two entities have also jointly supported the Prince Mohammed bin Salman Project for the Development of Historical Mosques and have worked together to expand cultural programming across AlUla. The scope of the agreements extend to initiatives supporting the growth of public and private cultural schools in AlUla.

The Cultural Investment Conference highlights culture as both a pillar of national identity and a promising investment opportunity. The annual two-day event positions culture as a sustainable economic engine by supporting innovation, fostering entrepreneurship, while serving as a meeting point to exchange expertise, explore innovative financing tools, and build international partnerships that advance sustainable cultural investment and the growth of creative industries.

Fitch, Moody's give the Islamic Development Bank AAA ratings

Fitch Ratings has affirmed the Islamic Development Bank (IsDB)'s long-term issuer default rating (IDR) at AAA with a stable outlook. The short-term IDR has been affirmed at F1+. The trust certificates issued by IDB Trust Services and guaranteed by IsDB have also been affirmed at AAA.

Meanwhile, Moody's Investors Service has affirmed the Islamic Development Bank's AAA rating with a stable outlook. The AAA-rating is based on the bank's strong capital base, Moody's said in a statement.

"The Islamic Development Bank benefits from a strong liquidity position, and is considered a benchmark issuer within the global sukuk market," Moody's said. "It is a benchmark issuer within the Islamic finance world, being one of the few AAA-rated issuers. Given the scarcity of high-quality, shari'ah-compliant securities, the bank's sukuks have always found strong demand."

The AAA rating of IsDB reflects its intrinsic credit strengths with its solvency and liquidity assessment both at 'aaa'.

The 'aaa' solvency assessment reflects IsDB's excellent capitalisation and low risk. Its equity- to-asset ratio was 43% in 2017, one of the strongest among multilateral development banks (MDBs). The ratio has declined in recent years (49% in 2015), reflecting rapid growth in IsDB's banking portfolio. However, Fitch expects lending growth to decelerate in line with IsDB's strategy and the equity-to-asset ratio to remain above 40% through to 2020. 

Fitch assesses IsDB's overall risks as low. Credit risk is moderate. The bank's operations in low-rated countries translate into an average rating of loans at B+. Impaired loans have remained moderate at 3.2% of total exposure in 2017 (based on Fitch's own calculation, which differs from IsDB's calculation) and primarily reflect the bank's sovereign exposure to Syria and Yemen. Concentration risk is low as the bank's five largest exposures account for 33% of the total. Equity risk is assessed as low, reflecting the bank's limited exposure to equity (10% of total banking operations in 2017).

The bank's risk management is conservative overall and risk management policies are deemed strong. Prudential rules include strict limits on country, sector and single borrower exposures. However, the provisioning of impaired assets is less conservative than at other AAA-rated peers. The leverage ratio maximum limit was loosened to 175% in 2017 from 125% previously. At 127% in 2017, it remains below that of AAA-rated peers.

IsDB's 'aaa' liquidity assessment balances the bank's liquidity buffers, with liquid assets-to-short-term debt expected to remain well above the 1.5x threshold by 2020 (4.9x in 2017), against the bank's moderate asset quality. The share of AA to AAA rated assets in the bank's treasury portfolio is expected to remain at around 15% in 2020 from 14.1% in 2017, well below AAA-rated peers. This is mitigated by an overall high share of investment-grade assets in total treasury assets (87% in 2017). IsDB's access to capital markets is deemed excellent as evidenced by regular sukuk issuance.

IsDB's business environment is assessed as medium-risk, which translates into no adjustment to Fitch's solvency assessment. Fitch views both the business profile and operating environment as medium-risk. This primarily reflects the bank's focus on lending to non-investment grade countries (only two of the top 10 exposures are investment-grade) and the generally low credit quality and high political risk in countries of operations. 

The medium-risk assessment also accounts for the moderate share of non-sovereign operations (16% of total) and the medium size of IsDB's banking portfolio (US$21 billion). This is mitigated by the bank's quality of governance, including experienced staff and a prudential risk framework. Fitch's assessment also reflects the importance of IsDB's public mandate for the bank's member countries and the operational support that member states can provide to the bank, including KSA where IsDB is located.

Shareholders' support is not a rating driver. The support rating is assessed at aa-, reflecting the coverage of net debt by callable capital rated AA- or higher. The average rating of key shareholders consisting of KSA (A+/Stable), the UAE, Libya, Iran and Nigeria (B+/Negative) is BB+. 

Islamic Development Bank and OECD commit to rebuilding efforts in post-conflict Yemen

The Islamic Development Bank (IsDB) and the Organisation for Economic Cooperation and Development (OECD) have signed an aide-mémoire marking the commencement of a new project to help rebuild institutional capacitates in post-conflict Yemen.

The project, Building Institutional Capacities to Prepare for Recovery and Reconstruction in Yemen, is funded by the G7 Deauville Partnership MENA Transition Fund. It builds on the government of Yemen’s National Dialogue Conference Outcomes, first adopted in 2014, which represents a roadmap to building a new Yemen whereby citizenship, justice and the rule of law are achieved in accordance with principles of good governance.

The project is being implemented by the IsDB and the OECD in close coordination with the Ministry of Planning and International Cooperation, Yemen. It aims to translate the outcomes into actionable programmes for when peace arrives in Yemen to aid the country’s recovery by focusing on building institutional capacities at the central and local level.

HE Dr Mohamed Saed Al-Sadi, Minister of Planning and International Cooperation, Yemen and Yemen Governor of IsDB, said: “Yemen is experiencing multidimensional crises – economic, social and humanitarian. Negative economic growth and high unemployment, the degradation of basic services and rising food insecurity has displaced millions of Yemenis in a devastating war.

“Together with the OECD, MENA Transition Fund, government of Yemen and our partners in the international community, we are launching this project to help establish a safe and prosperous Yemen by preparing for its reconstruction and recovery as soon as peace emerges. I also want to commend the efforts of our regional and international partners for their support with the ongoing humanitarian and economic situation in Yemen.”

A signing for the extension to the Framework Agreement for the Business Resilience Assistance for Value-Adding Enterprises (BRAVE) Project also took place at the event after the approval of additional financing of US$3 million by the MENA Transitional Fund of the Deauville Partnership.

Winners of Kazakhstan Transformers Roadshow announced

The winners of the first-ever Transformers Roadshow at the Astana Islamic Economy Forum in Kazakhstan have been announced. The Transformers platform acknowledges the crucial need to give people the tools to build a sustainable future and is supported by Transform, a US$500 million fund for innovation and technology.

The Transformers Roadshow serves as a platform to accelerate science, technology and innovation-led initiatives across the IsDB’s member countries and Muslim communities. Organised by the Islamic Development Bank (IsDB) and hosted by the Astana International Finance Center (AIFC), the science, technology and innovation competition invites innovators to pitch concepts supporting one or more of the UN’s Sustainable Development Goals. Winners receive US$3,000 to further develop their ideas.

Speaking at the launch of the Roadshow, President of the IsDB, Dr Bandar Hajjar said: “With Kazkahstan emerging as a growing Islamic finance market, we are delighted to be launching the first leg of our roadshow here with the AIFC’s support. An extension of the IsDB’s Transform Fund, it helps us to identify innovators who are seeking funding, business partners and advice for their unique ideas.”

Over 150 entrepreneurs across the Central Asia region entered the competition, and finalists were invited to participate in a series of masterclasses, seminars and workshops ahead of pitching. The sessions focused on: the benefits of creating a global ecosystem; generating interest in ideas and enterprises among impact investors; and how science, technology and innovation can solve social and health challenges across the developing world.

The winners of the Transformers Roadshow are:

- Z. Kerimkulov and N. Shodorova's  Egistic project, which focuses on the creation of a geo information and analytical system to support farmers and decision-makers in the development of the agricultural sector in Kazakhstan.

- R. Rakymbay, A. Taukenov and S. Satayev's project on smart farming, which aims to create a sustainable and technologically-driven solution to address farming challenges and ensure that a wide variety of plants are grown using accurate, live and digitally-driven data.

- K. Tuleishin pitched a venture on smart halal finance, which will aim to make its impact on reaching the UN sustainable development goals particularly in the area of quality education.

The initiative follows the IsDB’s recently launched Engage platform - an online ecosystem for innovators seeking market opportunities.

Islamic Development Bank announces economic empowerment initiatives for July 2018

The Islamic Development Bank’s (IsDB) has established the Economic Empowerment Fund for the Palestinian People with a founding capital of US$500 million. US$100 million of the fund comes from the IsDB with other contributions from waqf (Islamic endowment) contributions and other investment and financing instruments.

The Board also approved US$57.1 million for financing development projects in member countries and approved in principle the establishment of the Waqf International Centre of Excellence in Madinah, KSA.

The promotion of science, technology and innovation as a catalyst for economic growth is an important priority for the IsDB as was evident by the launch of the Transform fund in March 2018. As part of this initiative the Board has approved a technical assistance grant amounting to US$1.5 million for a Regional Community Development Programme for Rural Women Engineers. This will be implemented in remote villages in nine member countries including Afghanistan, Syria, Jordan, and Indonesia, by employing a proven model for self-sustaining community development.

The technical assistance will:

- Support 44 illiterate and semi-literate Women Barefoot Solar Engineers as entrepreneurs in their own right, and enable them to train and develop the skills of other women

- Bring solar electricity to 2,250 households via the trained women

- Install clean sustainable light to 14,625 people across the nine countries

- Develop viable business models and go-to-market approaches for a number of decided livelihood activities customised to tap relevant local and/or international market opportunities.

Special Assistance grants to Muslim communities in non-member countries amounted to US$1.6 million were also approved by the Board, including:

- Construction of the OZEF Special Education Center, Nicosia, Turkish Republic of Northern Cyprus (US$200,000).

- Construction of New School Building for Suffah Ideal Academy in Birgung Village, Nepal (US$200,000).

Islamic Development Bank funds power plant project in Bangladesh

The Islamic Development Bank (IsDB), the Asian Infrastructure Investment Bank (AIIB) and Infrastructure Development Company (IDCOL) have signed a long-term financing facility with Nutan Bidyut Bangladesh (NBB). This is a first co-financing by IsDB in cooperation with AIIB and IDCOL for a Ppblic-private partnership project.

The agreement will see the organisations build, own and operate (BOO) a dual fuel combined cycle power plant in Bhola Island, Bangladesh, for a period of 22 years from the date of start of operations. With net generation capacity of 220 MW under gas and 212 MW under high speed diesel (HSD) operations, the completed plant will generate an estimated energy output of 1,322,000 MWh per annum at an 80% plant load factor.

The purchaser is Bangladesh Power Development Board, the government-owned entity which is the largest electricity generation and distribution entity in the country. IDB is providing a US$60 million ijarah facility with a 18-year door-to-door tenor to support this project. The sponsor, Shapoorji Pallonji Infrastructure Capital Company, is a part of the Shapoorji Pallonji group, a global institution with a leading presence in several industries, including engineering and construction, infrastructure, real estate, water, energy and financial services.

The project is in line with the IsDB’s commitment to support the UN Sustainable Development Goals. Energy is the major pillar of the seventh Five-Year Plan - 2016-2021 of the government of Bangladesh (GoB) as one-third of the nation does not have access to electricity.

The project will provide quality, reliable, sustainable and resilient infrastructure that will contribute to the government's initiative to increase power generation capacity by 17,984 MW by the year 2021. It will provide Bangladesh with cheaper energy as compared to the conventional hydrodeoxygenation (HDO)/HSD-fired capacity.

This announcement follows a memorandum of understanding (MoU) signed by the AIIB and IsDB on 25 June 2018 to establish a framework for strategic cooperation, including actively seeking to co- finance projects in common areas of operations. The overarching theme of the MoU is Mobilising Financing for Infrastructure: Innovation & Collaboration.

The MoU enables the two banks to jointly foster collaboration, share information and facilitate knowledge exchanges on development finance, Islamic finance and integrity mechanisms. The MoU is expected to have a strong focus on sustainable infrastructure including the development of energy and power, transportation and telecommunications, rural infrastructure, water supply and sanitation, environmental protection, urban development and logistics.

“An agreement between our banks is a natural fit because we are both dedicated to development and helping our members promote growth and economic opportunity,” said AIIB President Jin Liqun. “We have complementary skill sets and expertise. We believe working together on joint investments and initiatives will strengthen our capacity to deliver on our respective missions and benefit our members.”

Said IsDB Group President HE Dr Bandar M.H. Hajjar: “We have a number of common member countries in Asia and also in Africa and a significant overlap in sectors and financing activities. IsDB Group looks forward to jointly strengthening the effectiveness and sustainability of our banks’ operations and to looking for new ways to stimulate the region’s economic growth together. We strongly believe in the power of innovation, science and technology to stimulate growth and will ensure this is a key area of collaboration for the banks going forward.”

Among other activities, the banks intend to share knowledge and exchange experiences among employees through joint temporary assignments, secondments and training.

Islamic Development Bank presents new branding

The Islamic Development Bank (IsDB) has unveiled a new brand identity that reflects its modern values, strategic direction and relationship with its 57-member countries, its first change in its 40+ year history. The new brand identity maintains the core elements of the IsDB’s heritage while signalling modernity, independence and transparency, future proofing the bank’s identity and evolving it for an international audience.

Source: Islamic Development Bank.
The new logo.

The change reflects the reforms that the KSA-based Islamic Development Bank, one of the world’s largest multilateral development banks, has been undergoing in the last year. The bank’s new President, HE Dr Bandar Hajjar, formerly KSA Minister of Hajj, is reimagining the traditional role of a development bank, making the organisation more globally-facing, placing partnerships, technology and innovation, and global engagement at the heart of his modernising programme.

"The Islamic Development Bank has been a symbol of trust, credibility, strength and stability for over 44 years, with a proud heritage of providing resources, fighting poverty and restoring dignity in our member countries. As we build on the successes of the past, we must also look to the future. I believe that this new brand identity is one of a world class institution – tackling the challenges of today’s modern world,” he said.

The globe at the heart of the logo demonstrates the network of 57-member nations, across four continents that the IsDB represent. It reflects the IsDB’s global outlook and status as a world leading international organisation.

The dots within the globe represent the IsDB’s new operating model, becoming a bank of development and developers, whose role is to connect organisations together, acting as a catalyst and facilitator. The dots also represent infrastructure and science, technology and innovation, which are at the heart the IsDB’s strategic direction, as they are crucial for the economic evolution of member nations. 

 
The semi-circle, inspired by the dome of a qubba (قُبَّة, an Arabic tomb), is a reference to the Islamic identity of our member nations. It also represents the sun rising, and a new dawn for the Bank.

The unfinished nature of symbol represents dynamism and progression, as it builds upon the achievements of the last 44 years, and looks to the future, with new partners, new members, new ideas, as it adds pieces of the puzzle.

The rich green to blue colour represents sustainability, progression, growth and our planet, as well as the bank’s Islamic heritage.

The IsDB abbreviation can be used alone, or alongside the full name of the Bank, adaptable for use in all three languages – Arabic, English and French.

The IsDB’s mission, as it enters its next stage of growth, includes equipping people to drive their own economic and social progress at scale; putting the necessary infrastructure in place to enable them to fulfil their potential; building collaborative partnerships between public and private sectors; and championing the latest science, technology and innovation led solutions to the UN Sustainable Development Goals.

Dr Hayat Sindi, Scientific Advisor to the President and General Supervisor of Communications and External Relations for the Islamic Development Bank, said: “This is a significant moment in our organisation’s history. It is a new identity for the next generation of the IsDB, putting our vision at the heart of our brand, harnessing the achievements of our past, as we build towards the future.”

The Islamic Development Bank has also launched a new website to coincide with their new brand identify and future vision.

Malaysia, Indonesia universities win IsDB Prizes for Science and Technology

The 15th IsDB Prizes for Science and Technology have been announced, and two of the winners are from Southeast Asia: 

• Universitas Indonesia has been awarded a prize for its overall outstanding contribution to social and economic development

• Faculty of Chemical and Energy Engineering, Universiti, Teknologi, Malaysia, which has won for most outstanding contribution in a given scientific field


Established in 1849, it is among the oldest tertiary institutions in Indonesia and among the top universities of the world. Over the years, its scholarly work has had significant scientific technological, socioeconomic, and environmental impact in Indonesia. In the last five years the university has contributed to the development of human resources in Indonesia as well as the region by awarding a large number of graduates and post graduates degrees. It has also published in the same period huge number of impactful books and scientific articles. The university has registered a large number of patents and inventions, of which many have been either commercialised or industrialised. The university helped increase the value of local resources through its research by developing techniques for manufacturing of palm oil derivatives and fuel additives which has benefited Indonesian companies.

The Faculty of Chemical and Energy Engineering of Universiti Teknologi Malaysia (FCEE) is a recognised center for research and development and education in the areas of biotechnology and natural products, membrane technology, process systems, hydrogen economy and energy in general. The staff of FCEE produce over 400 scientific articles in one year alone. Pioneering work at the FCEE has led to the development of advanced membranes that can be used for gas separation in the oil and gas industry, water and waste water treatments as well as sea water desalination. FCEE has 78 patents, with 32 products commercialised. In the last five years, FCEE has awarded 132 PhD degrees and 808 MSc degrees.

“I would like to congratulate the winners of this year’s competition,” said Dr Bandar Hajjar, President of the Islamic Development Bank (IsDB). “IsDB is proud of their inspiring feats in the field of scientific and technological research. I hope other universities and scientific centres in member countries benefit from these admirable examples.”

The prize was established in 2002 to promote science and technology excellence and capacity building in IsDB member countries. Each year, three institutions are selected by an independent panel of eminent scientists external to the IsDB to receive the prize in one of three categories. Each prize consists of a cash award of US$100,000 and a trophy.

This year’s prizes will be awarded during the 42nd Annual Meeting of IsDB’s Board of Governors, which will take place in Jeddah, Kingdom of Saudi Arabia on 17 to 18 May 2017.

Palestinian organisation wins IDB Prize for Women's Contribution to Development

The 12th Islamic Development Bank Prize for Women's Contribution to Development in the Organisation category has been awarded to women-led Dunya Center of Palestine for its outstanding work in providing screening, early detection, rehabilitation, survivorship services and information and for extending its services to families of the affected women.

The announcement was made by Dr Bandar Hajjar, President of the Islamic Development Bank Group, who explained that the selection process was carried out by an independent committee of expert women external to IDB and representing different parts of the Islamic world.
 
The Islamic Development Bank Prize for Women's Contribution to Development was established in 2006, with a view to highlighting the important role played by Muslim women in developing local communities. Since 2006, the prizes have been awarded to 40 laureates under the Individual and Organisation categories from 27 countries. This year's edition of the prize is presented to women and women organisations who have played a prominent role in the prevention and control of cancer.
 
The award ceremony is to be held in conjunction with the 42nd Annual Meeting of IDB’s Board of Governors, which will take place in Jeddah, KSA on 17 and 18 May 2017.

Lives and Livelihoods Fund approves US$243 million for anti-poverty projects

Source: Islamic Development Bank. Second Lives and Livelihoods Fund meeting in Riyadh, KSA.

Representatives from KSA, Qatar, the UAE, the Bill & Melinda Gates Foundation, the Islamic Solidarity Fund for Development, and the Islamic Development Bank (IsDB) have approved several development projects for 2017 under the US$2.5 billion Lives and Livelihoods Fund (LLF). The fund is the largest multilateral development initiative in the Middle East and North Africa for poverty alleviation in member countries of the Organization for Islamic Cooperation (OIC).

Major donors to the LLF include the KSA-based King Salman Relief and Humanitarian Aid Center (KS Relief), the Qatar Fund for Development (QFFD), Abu Dhabi Fund for Development (ADFD), the Bill & Melinda Gates Foundation, and the Islamic Solidarity Fund for Development (ISFD).

US$242.6 million was approved in financing for health, agriculture, and rural infrastructure development projects in eight member countries of the IsDB. The projects are scheduled to be implemented in Tajikistan among other countries.

Maher Al Hadhrawi, Assistant Supervisor General for Operations and Programs at KS Relief, and Chair of the LLF for its first year of operations, commented: “The second meeting of the Lives and Livelihoods Fund Impact Committee marks an important milestone in the fund’s progress.


“Over the next five years, the Lives and Livelihoods Fund will make US$2.5 billion available for anti-poverty projects in health, agriculture and rural infrastructure in Islamic Development Bank member countries. US$363 million has been approved for the Fund’s first operational year, and all the donors are working closely together to ensure that it is allocated most effectively.”

HE Dr Bandar Hajjar, President of the IsDB, commented: “The Lives and Livelihoods Fund is now making progress in its mission to help the poorest people in the Muslim world live healthier, more productive lives through investments in health, agriculture, and rural infrastructure. By innovatively combining grants from donors with loans from the Islamic Development Bank, we are able to leverage more funding than grants can alone to fight disease and poverty across the Muslim world.”

Dr Waleed Alwohaib, Director General, ISFD, said: “Through the grant contributions of the LLF, our aim is to protect communities from the risk of preventable diseases, improving reproductive, maternal and child health, increasing access to sanitation and primary healthcare, and supporting rural
development, we are empowering some of the poorest people in the world, and giving them the chance to live healthy and productive lives.”

Khalifa bin Jassim Al-Kuwari, Director General of QFFD, added, “The Lives and Livelihoods Fund is the first multilateral partnership of its kind in this region, and demonstrates the benefit of partnering with other donor organisations and regional governments. By pooling our resources together, and combining grants with finance from the IsDB, we are able to increase our impact and ultimately save more lives. At Qatar Fund for Development, we are proud to contribute to an initiative that is going to have such a massive impact on the lives of millions of people across the Islamic world.”

HE Mohammed Saif Al Suwaidi, Director General of ADFD, said: “Our contribution to the Fund articulates the development agenda pursued by the UAE government that aims to promote inclusive social and economic development through working with our partners from other development agencies to ensure the effectiveness of our aid programs. We are proud to be a founding member of the largest multilateral development initiative in the Middle East and look forward to devoting all our resources and expertise to ensuring improved livelihoods for the people of developing countries. This approach aligns well with Abu Dhabi Fund for Development’s aim to use innovative finance to support developing countries achieve their own development goals.”

Hassan Al-Damluji, Head of Middle East Relations for the Bill & Melinda Gates Foundation, noted: “Of the more than 1 billion people in the world facing extreme poverty, 400 million are living in the Islamic Development Bank’s member countries. These countries urgently need access to finance for development projects that eradicate disease, provide basic healthcare, and invest in agriculture and critical infrastructure. The Lives and Livelihoods Fund was only established in late 2016, but already it is filling this gap by supporting projects that will enable people to lift themselves out of
poverty.”

The Lives and Livelihoods Fund will make US$2.5 billion available over the next five years on projects that help the poorest people in 30 of the poorest Muslim countries lead healthy and productive lives. Administered by the IsDB, the fund combines US$2 billion of IsDB financing with US$500 million in grants from donors. So far, US$400 million in grants have been committed by the Bill & Melinda Gates Foundation (20% of the total up to US$100 million), the Islamic Solidarity Fund for Development (US$100 million), the Qatar Fund for Development (US$50 million), the King Salman Relief and Humanitarian Aid Center (US$100 million), and the Abu Dhabi Fund for Development (US$50 million).

In September 2016, the Lives and Livelihoods Fund’s Impact Committee approved projects worth US$363 million for the first of the five years that the fund will be operational.

Islamic Development Bank approves US$715 million in funding

Source: Islamic Development Bank Board Members at the 318th meeting convened in Madinah Al Munawarah, KSA.

Members of the Board of Executive Directors of the Islamic Development Bank, have approved the allocation of US$714.7 million in financing for new development projects in member countries.

Approved financing included:
US$328.5 million for the reconstruction of the Atyrau – Border of Russian Federation (Astrakhan) project in Kazakhstan; 
US$300 million for phase two of the Construction of Rural Housing project in Uzbekistan; and 
US$86 million for the Expansion and Development of the Port of Tripoli project in Lebanon. 

The Board Members were also informed of a US$270,000 technical assistance grant approved by the IsDB Group President, Dr Bandar Hajjar, for Oman aimed at increasing the export value of luban (Editor's note: frankincense) and dates.

Public-private partnerships are the way to go in socioeconomic development

Source: Islamic Development Bank. Participants at the event.

The Islamic Development Bank’s first Public-Private Partnership Forum has called for more public-private partnerships (PPP) to handle the challenges of socioeconomic development in the bank’s member countries.

Dr Bandar Hajjar, President of the Islamic Development Bank Group, said that the group is putting every resource available at the disposal of its 57 member countries so they can gain experience in building successful partnerships between the public and private sectors in every field, especially with the gap between the two in the funding they provide for these partnerships.

“We all know that laws and regulations alone are no guarantee for a successful partnership,” said Dr Hajjar. “Both parties must work hard to create successful, ties that actually work. Each one of the two sectors have multifaceted administrative, economic, judicial, legal, and social aspects that need to intertwine and hook up at just the right points, and all stakeholders must share a common understanding of the principles of transparency, disclosure, accountability, and equal rights, as well
as a clear determination of responsibilities for the efficient use of resources, boosting competitiveness, finding new sources of funding, expanding projects, creating new job opportunities, and solidifying economic stability in our member countries.”

At the forum, water desalination and housing came up as the two sectors set to see the strongest interest from PPPs, particularly in KSA's Kingdom Vision 2030. Challenges for PPPs that were identified included inadequate funding. Participants also stressed that these partnerships need support at the highest levels of government to succeed, as well as teams of specialists in place that are dedicated only to this model. Also, universally recognised procedures and contracts need to be adopted, so as to encourage funding and attract the global talent which will ultimately build capabilities and expertise in the private sectors of respective member states.

More than 300 government figures and private-sector business leaders from the member countries participated in the forum, set to be the first of many that are scheduled to be held successively in member states.

The IsDB launched the forums after the major changes witnessed in the economies of many of the bank’s member states, mostly due to weak oil prices, at a time of immense pressure for infrastructure projects to continue in member countries especially now that the traditional model of the government-funded infrastructure projects has proven to be inadequate, with the huge disparities between national budgets and the funds actually needed to keep projects on track.

Islamic Development Bank finalises funding for new development projects in Middle East

The Board of Executive Directors of the Jeddah-based Islamic Development Bank (IsDB), in its 316th meeting, has approved funding of US$863 million for new financing development projects in a number of member countries, including the UAE, Bahrain, and Jordan. 

Financing approvals for the Middle East included: 

- US$170 million for the “non-sovereign project financing participation in the Dewa 800 MW Photo-voltaic Solar Power Plant – Phase III” in Dubai, UAE

- US$105 million for the “aluminum Bahrain BSC (Alba) 1,350 MW Power Plant (PS5) under Line 6 expansion project” in Bahrain 

- US$5 million for the “solar power plant – King Hussein Cancer Center expansion project” in Jordan 

The meeting also approved to a number of programmes, including a proposed three-year action plan (from 2017 to 2019) totalling US$16 billion. It further approved a US$5.2 billion budget for the new fiscal year 2017 and reviewed the major components of the IsDB President’s programme for the next five years. 

Islamic Development Bank lists sukuk in London, Dubai and Malaysia

The Islamic Development Bank (IsDB) has successfully priced a US$1.25 billion, five-year trust certificates (sukuk) under its US$25 billion Trust Certificate Issuance Programme. The certificates will be listed on the London Stock Exchange, NASDAQ Dubai and Bursa Malaysia (under the exempt regime).

Overall, the deal saw strong participation from money managers and official institutions, which showed confidence in IsDB’s credit strength. The sukuk were priced at par at 2.263%, to be payable on a semi-annual basis. This issuance marks the bank’s second benchmark issuance in 2016. In terms of the final allocation, the distribution was well diversified with 72% allocated to the Middle East and North Africa (MENA) region, 25% to Asia and 3% to Europe, respectively. Central banks and official agencies were allocated 90% followed by 10% to banks.


IsDB’s ability to issue a sizeable benchmark in a volatile environment is a clear testament to its strong credit and financial position, as affirmed by its AAA ratings. IsDB maintains ratings of Aaa, AAA and AAA by Moody’s, S&P and Fitch respectively.

“We are very pleased with the outcome of the deal, which met our objectives for the transaction to continue building on the success of our prior deals,” said Dr Ahmet Tiktik, IsDB’s Acting VP of Finance and Chief Financial Officer. “I would like to thank IsDB’s member countries and other investors for their continuous support and commend the lead managers for delivering a deal that fully met our objectives. We hope that this further IsDB funding will continue to contribute towards
extending bigger financing to our member countries to support their developmental needs.”

The joint lead managers and joint bookrunners were Boubyan Bank, Credit Agricole CIB, GIB Capital, JP Morgan, Mizuho Securities, National Bank of Abu Dhabi, NATIXIS, RHB Investment Bank and Standard Chartered Bank.

Islamic Development Bank shares update at COMCEC

The Islamic Development Bank (IsDB) Group has participated in the 32nd Ministerial Session of the Standing Committee for Economic and Commercial Cooperation of the Organization of the Islamic Cooperation (COMCEC), which took place 21 to 24 November in Istanbul, Turkey. 

On 23 November, IsDB and Borsa Istanbul, the sole exchange entity of Turkey, signed a memorandum of understanding (MoU) to cooperate in fostering Islamic finance in Turkey and other IsDB member countries. The MoU provides a basis for both institutions to work together to expand the size of sukuk issuance and shari'ah-compliant IPOs at Bursa Istanbul.

Recently-appointed IsDB President Dr Bandar Hajjar highlighted the pioneering role IsDB has taken in supporting Islamic finance for economic development in member countries. Over the past 40 years, IsDB has supported the development of the Islamic financial industry through equity investments, supporting the necessary enabling environment, and developing financial products and funds. 

IsDB helped establish 35 financial institutions that supported the sukuk issuance as a market maker. Dr Hajjar also emphasised the bank’s contribution in building the Islamic finance ecosystem by supporting the creation of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), International Islamic Liquidity Management Corporation (IILM), Islamic Financial Services Board (IFSB), and the Islamic International Rating Agency (IIRA). The bank’s current portfolio stands at around US$120 billion, including US$64 billion of trade financing and US$32 billion for infrastructure financing.

The IsDB delegation also reiterated its commitment to implement the OIC 10-Year Program (2016-2025) under the cooperation pillar of its 10-Year Strategy (2016 to 2025) and its continuing work to enhance intra-Organisation of the Islamic Conference (OIC) trade as well as implementation of the Trade Preferential System among the Member States of the Organisation of the Islamic Conference (TPS-OIC). The delegation also highlighted the current focus of the bank’s World Trade Organization (WTO) Technical Assistance Program on three themes: accession to the WTO, regional integration and national activities. 

They also highlighted the International Islamic Trade Financial Corporation's (ITFC’s) contribution through initiatives such as Aid for Trade Initiative for Arab States, Arab Africa Trade Bridge Program, Trade Knowledge Bridge Program, Youth Training and Employment for International Trade, ITFC Indonesian Coffee Export Development Program and the Trade Development Forum. ITFC trade financing approvals surpassed a record high of US$6 billion in 2015. 

The Islamic Corporation for the Development of the Private Sector (ICD) has continued to support the private sector through its wide range of financing, investment and advisory services for approximately 2,000 small and medium enterprises, and the introduction of around 4,000 new businesses that created more than 55,000 private-sector jobs in member countries.

IsDB further updated on a new initiative for the development of transport geographic information system (GIS) software. The first phase of the project covers 11 member countries in the Euro-Asia sub-region and has been developed in cooperation with the United Nations Economic Commission for Europe.

MARC confirms rating of AAAIS on Islamic Development Bank's sukuk wakalah

MARC has assigned a final rating of AAA_IS to Islamic Development Bank’s (IsDB) proposed sukuk wakalah (sukuk) issuance of up to RM400 million by Tadamun Services (Tadamun), a trust established by IsDB for the purpose of issuing the sukuk. The outlook on the rating is stable.

Upon review of the final documentation of the issuance, MARC is satisfied that the terms and conditions of the sukuk have not changed in any material way from the draft documentation on which the earlier preliminary rating of AAAIS was based.

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Read the Suroor Asia blog post about MARC's ratings for the IsDB

MARC discusses Islamic Development Bank ratings

MARC has assigned long-term and short-term financial institution (FI) ratings of AAA and MARC-1 respectively to the Islamic Development Bank (IsDB). The ratings are on the Malaysian national scale. Concurrently, the rating agency has assigned a preliminary rating of AAA_IS to the proposed sukuk wakalah (sukuk) issuance of up to RM400 million by Tadamun Services (Tadamun), a trust established by IsDB for the purpose of issuing the sukuk. IsDB will provide an undertaking to acquire the sukuk upon maturity, early redemption or in the event of a default by Tadamun as well as to cover any shortfall in profit payments on the sukuk. The outlook on the ratings is stable.

Established by the Organisation of Islamic Cooperation (OIC) in 1975 and headquartered in Jeddah, Saudi Arabia, IsDB is a multilateral development bank (MDB) with a membership of 57 countries, most of which are from the Middle East and North Africa (MENA) and Sub-Sahara Africa (SSA) regions. IsDB undertakes financing and investment activities to support the economic development of member countries and Muslim communities across the world.

MARC’s ratings on IsDB primarily reflect the bank’s solid capital position and strong liquidity levels, which are underpinned by high shareholder support. The ratings also incorporate IsDB’s prudent financing policy that includes limits on geographical and sectoral exposures and the bank’s preferred creditor status. These strengths significantly mitigate the credit risk in the bank’s financing and investment portfolio.

IsDB’s capital adequacy levels provide significant coverage over any unexpected losses stemming from its financing and investment activities. For the Islamic year ended 1436 (FY1436H), which corresponds to October 13, 2015, the bank’s total members’ equity of ID7.8 billion (Islamic dinar*), comprising paid-in capital of ID4.9 billion and reserves of ID2.9 billion, accounted for 48.8% of total assets. As a proportion of total financing and investments, members’ equity amounted to 60.7%. The coverage ratios are comparatively higher than its peer MDBs such as the African Development Bank and the Asian Development Bank. MARC notes IsDB’s capital position is further enhanced by the bank’s callable capital of ID40.5 billion as at end-FY1436H; the bank’s callable capital constitutes contractual support that can be called upon on member countries to cover the bank’s obligations.

MARC views positively the strong financial commitment of IsDB’s key shareholders, in particular Saudi Arabia, Kuwait, Qatar and UAE (with a combined stake of 45%), to support the bank. The rating agency draws comfort from the fact that among the member countries, 47% or ID19.1 billion of total callable capital is committed by member countries rated in the A and above category on a global rating scale.

In line with its financing policy, IsDB maintains a single country exposure limit of 15% on its financing and investments to address concentration risk; its three largest country exposures Turkey (8.78%), Morocco (8.74%) and Pakistan (8.43%) are well within the limit. In terms of sectoral distribution, the bank’s inclination is towards infrastructure-related activities, namely public utilities (40.0%) and transport & telecoms (26.8%).

The bank continues to have significant exposure to sovereigns with weak credit ratings, although this has declined from 80% in 1432H to about 70% of the bank’s financing and investments. The bank makes full provisions against installment payments overdue by six months. As at FY1436H, installments overdue stood at 0.97% of total financing and investments. IsDB mitigates the credit risk by requiring explicit guarantees on all sovereign entities; financing for non-sovereigns is limited to strategic entities and projects in which the governments of member countries are major stakeholders and are guarantors of suppliers/offtakers. Given that IsDB has been granted preferred creditor status by its shareholders, the bank has priority claim over other creditors in the event of default.

MARC observes that IsDB has historically maintained a conservative leverage position, relying mainly on equity capital to fund its operations. However, in recent years the bank shifted to capital markets for funding through several sukuk issuances. This led to an increase in the bank’s gearing ratio from 79.1% in 1432H to 93.2% in 1436H; nonetheless, the bank’s gearing remains conservative, both by its own internal measures of 1.25 times members’ equity (paid-in capital plus reserves), as well as compared to its peer MDBs. IsDB is also one of the most liquid institutions among its peer MDBs, with liquid assets constituting 23.5% of total assets.

The stable rating outlook reflects MARC’s expectations that IsDB will maintain its strong capitalisation and liquidity profile, and that the bank’s member countries will continue to extend strong support.

Interested?

View the definitions of MARC's ratings

Read the Suroor Asia blog post about IsDB's work in Bangladesh

*The Islamic dinar is a unit of account used by the IsDB, that is currently equivalent to one Special Drawing Right (SDR) of the International Monetary Fund (IMF). The composition of currencies in SDR basket for the Islamic Dinar are 41.9% for US dollars, 37.4% for the Euro, 11.3% in British pounds and 9.4% in Japanese yen. The IMF declares changes in the composition of currencies in the SDR basket every five years. The last change was declared by IMF on January 1, 2011.

Bangladesh receives schools designed as cyclone shelters from IDB

Islamic Development Bank representative Dr Mohammad Hassan Salem has formally handed over 34 schools which also double as cyclone shelters as part of the third phase of the Fael Khair Program in Bangladesh. The programme is funded by a grant from the late King Abdullah Bin Abdul Aziz of KSA.

A total of 95 out of 174 planned school-cum-cyclone shelters have been handed over so far. Each building will serve as a modern educational institution for 240 students and can also provide shelter to 2,000 people and 500 cattle during the country’s frequent cyclones.

The late King Abdullah’s grant of US$130 million for relief and assistance to the victims of cyclone Sidr, which hit in 2007, has been utilised as follows:

• US$110 million to construct 174 School-cum-Cyclone Shelters in the coastal belt of Bangladesh
• US$20 million waqf (Editor's note: a endowment made by a Muslim for a cause) as partial support to maintain the buildings and to provide urgent relief and rehabilitation through agricultural and other inputs to the affected population

The buildings are designed to withstand top wind speeds of up to 260 km/h. The green facilities are equipped with solar power and durable school furniture. They also have potable water systems, including rain water harvesting, to supply safe drinking water.

OIC, IsDB launch Islamic microfinance initiative in Indonesia

The Organisation of Islamic Cooperation (OIC) and IsDB Group have launched the Islamic Microfinance for Poverty Alleviation and Capacity Transfer (IMPACT) Program in Bogor, Indonesia, in mid-May 2016.

The programme provides a platform for experts to share and deepen their understanding of the Islamic microfinance models and to create tools and infrastructure to disseminate best practices.
The programme was launched during the Seminar on Islamic Microfinance for Poverty Alleviation in OIC Member Countries hosted by Bogor Agricultural University.

Islamic microfinance institutions (IMIs) differ from conventional microfinance institutions as they do not charge interest and work on a profit- and risk-sharing basis. Their relationship with the client is thus not based on a traditional creditor-debtor relationship. The central premise of IMIs is that social networks among partners have value. The social capital resources inherent in social relations help facilitate collective action for a common purpose.

IMIs engage and treat their clients as business partners. As a business partner, they add value in the relationship and provide ‘smart finance’. This allows IMIs to create sustainable jobs even in difficult and fragile situations. “Islamic microfinance is about economic empowerment of the poor,” said Anas El Hasnaoui, CEO of IBF International Consulting, a Brussels-based organisation that works on development aid projects financed by international organisations. Hasnaoui explained how the Bank of Khartoum in Sudan invested US$4 million in venture capital in the Abu Halima Greenhouses Project. The initiative provided low-income graduates and their families, 600 people in all, with smart finance products to enable them to work in the modern agricultural sector.

“IMIs treat their clients as business partners, not as debtors,” said Nasser Faqih, Team Leader of the Deprived Families Economic Empowerment Program (DEEP) in Palestine. He compared how two women with similar small sewing businesses were treated after they were hospitalised. One had borrowed under the Islamic microfinance window while the other borrowed from the conventional window of the same monetary financial institution (MFI).

When the woman who borrowed from the Islamic microfinance window was hospitalised, the MFI hired a replacement and ensured her business continued to run while she recuperated. Her payment schedule to the bank was frozen until she returned to work. The woman who borrowed from the conventional window was required to continue making her payments, and interest compounded as the payments were delayed. After some time, when it was clear that she would not be able to make her payments, the MFI took her to court.

The innovations in Islamic microfinance and its ability to generate employment and alleviate poverty through trading and investing with their clients makes it possible for microfinance institution to do business with poor people. However, such good practices are not well known and expertise and experience gained from innovative pilots are scattered in various countries.

The IMPACT Program was created in response to a call from the President of IsDB for experts in Islamic finance to take advantage of existing technologies and business approaches and develop smart Islamic microfinance. The programme will promote Islamic microfinance in a way that puts poor clients' needs at the centre, providing an enabling environment and tools for microfinance institutions to do business with and help them thrive. Financing provided will therefore help poor clients find their way out of poverty, instead of perpetuating the cycle of poverty through debt.

The five pillars of the IMPACT Program are:

Technology: To develop a one-stop portal on Islamic microfinance that provides all the necessary knowledge and tools needed for a microfinance institution to understand and implement Islamic microfinance. Knowledge generated from various pillars will be disseminated through the portal. The information portal will also include key applications that will be useful for IMIs.

Operations: To develop an operational toolkit that includes standard operating procedures, policies, contractual document templates, feasibility study templates and other operational documents. The toolkit will be developed for MFIs that are already operating but are interested in implementing Islamic microfinance, highlighting what they need to do to be shari'ah-compliant as well as lay out an incremental approach that will develop their capacity to engage in the value chain through practical
methods.
Monitoring and evaluation: To develop a monitoring and evaluation framework, including a rating system combining areas of financial sustainability, governance, social performance. In addition, the framework will highlight approaches on how to determine the impact of the MFI on its beneficiaries through measuring its value-add to its client through its engagement in the value-chain. The framework will be summarised in a logical framework with key indicators for each project stakeholder.

Policies and standards: To identify and promote key policies and standards (including accounting and governance standards) that facilitate the growth of Islamic microfinance. This will include a framework for Islamic microfinance law highlighting key policy requirements needed to facilitate the industry, simplified accounting standards for MFIs as well as governance structures for various organisation structures such as cooperatives, companies, funds and NGOs.

Advocacy: To develop and promote Islamic microfinance in IsDB member countries and beyond by building awareness, exchanging experiences and reverse linkages through collaboration among different stakeholders, including governments, regulators, private sector, practitioners, networks, developmental organisations and financial institutions.

Implementation arrangements: The programme will be implemented by stakeholder teams identified under each pillar. OIC General Secretariat and IsDB Group will identify key experts to participate in each team. Additional experts may be engaged when required. Experts/stakeholders may be engaged through partnership or consultancy agreements. All five pillar teams will constitute the Program Management Team (PMT) that will be led by Senior Specialists from IsDB Group and OIC General Secretariat who will report to the Leadership Committee on the progress of the IMPACT Program.

Winners of the 14th IDB Prizes for Science and Technology are from Kuwait, Turkey and Bangladesh

Three scientific institutions have won this year’s 14th IDB Prizes for Science and Technology.

The 2016 winners, chosen by an independent committee are:

• Kuwait Institute for Scientific Research (KSIR): Overall Outstanding Contribution to Social and Economic Development
KSIR was selected for its scientific and technological contributions and accomplishments, which have had a positive impact on the socioeconomic development of Kuwait and other IDB member countries. Its research and scientific achievements are centred on enhanced oil exploration, innovative desalination, waste water treatment and zero liquid discharge. KISR’s technologies in these fields are being used in the region and around the world. KISR has a longstanding tradition of fostering young talent and promoting innovative scientific research.

• NanoManyetik Bilimsel Cihazlar Sanayi ve Ticaret, Turkey: Most Outstanding Contribution in a Given Scientific Field

NanoManyetik Bilimsel Cihazlar Sanayi ve Ticaret was selected for its high quality of research and its commercial application in applied nanomagnetics. The company specialises in the development of sensing, measurements, characterisation and manipulation of nanosystems.

• Bangladesh Institute of Nuclear Agriculture: Most Noted Scientific Institution from a Least Developed Member Country The Bangladesh Institute of Nuclear Agriculture was selected for its outstanding contribution to the field of nuclear technologies in agriculture. The institute was established in 1961 to develop friendly nuclear technologies to enhance the performance of the agriculture sector, one of the major economic drivers in Bangladesh. It has a team of 170 scientists and researchers who focus on biotechnology and crop management. The team has published nearly 300 scientific research papers. The institute has successfully commercialised some of its technologies, with nearly 40 products on the market, and has close collaborations with many scientific institutions globally. 

"IDB is proud of their inspiring feats in the field of scientific and technological research. I hope other universities and scientific centres in member countries benefit from these admirable examples,” said
Dr Ahmad Mohamed Ali, President of the Islamic Development Bank (IDB) Group.

The prize was established in 2002 (1422) to promote science and technology excellence and capacity building in IDB member countries. Each year, three institutions are selected by an independent panel of eminent scientists outside the bank to receive the prizes, which consist of US$100,000 and a trophy.

The award ceremony will be held at the 41st Annual Meeting of IDB’s Board of Governors, which will take place in Jakarta, Indonesia from 15 to 19 May.