The Islamic Institution for the Development of the Private Sector, the financing and investment arm of the Islamic Development Bank (IsDB), is planning to set up Islamic banks and financial leasing companies in the Middle East, Khaled Al Abboudy, chief executive officer of the institution, told Zawya.
According to Al Abboudy, the development bank is exploring the possibility of entering more markets in MENA and East Asia, although he did not specify which countries IsDB is currently eyeing.
He did mention, however, that IsDB will contribute a majority share in the funding of Egypt-based Guardian Financial Leasing Company. The initiative will be done in collaboration with the Housing and Development Bank and the National Investment Bank, in a bid to address the guarantee scheme facing the local banking sector.
"The Guardian Financial Leasing Company will undertake the funding of small and medium projects by purchasing these projects' financial liabilities. The company will then lease these business entities and return ownership to them once the financing deal has expired," said Al Aboudy.
He likewise noted that IsDB's private sector funding unit had previously created funds in Tunisia, Saudi Arabia and some countries in East Asia, with the objective of investing in small and medium projects.
"The institution has pumped some USD 3.9 billion to the private sector since its inception in 1976 until November 2011 in the form of Islamic loans and financial investments. As of 2012, the group has allocated an additional USD 3 billion to be provisioned over the next three years," Al Abboudy explained.
IsDB's Islamic Institution for the Development of the Private Sector has a board of capital shareholders comprising 54 member-states. It invests in 32 nations and focuses primarily on the financial and industrial sectors.
"The Islamic institution seeks to create investment funds for small and medium projects, while extending financing channels throughout the Middle East region. It also intends to increase the volume of operations in Egypt, where it is currently in the process of setting up a USD 250 million sugar factory, in addition to the first shariah-compliant financial funding company," added Al Abboudy.
© Zawya 2013
