LONDON, 30 January 2006 -- The Islamic Development Bank (IDB) took an important step in London toward globalizing its unique system of faith-based development financing and reaching out to the wider global financial community. At a conference, chaired by Professor Dr. Rifaat Abdel Karim, secretary-general of the Kuala Lumpur-based Islamic Financial Services Board (IFSB), there were a number of important people, including the Prince of Wales; President Amadou Toumani Toure of Mali; Hilary Benn, UK secretary of state for international development; and Tan Sri Nor Mohamed Yakcop, finance minister II of Malaysia.

In his keynote address The Prince of Wales praised the positive difference the IDB has made throughout the Muslim world and elsewhere. "I was amazed to learn that the Islamic home financing in the UK will reach 1.4 billion sterling pounds by 2009," he said. "I also know that the City of London will live up to its reputation in leadership and innovation and grab this opportunity to cooperate with the Islamic financial institutions."

The Prince of Wales outlined the work of his 16 or so charities, which he said were "helping people fulfill their potential and develop their self-esteem." Indeed, one of the charities, The Prince's Trust, which works with young people, often disadvantaged, gives loans to young people who wish to start-up their own ventures. Since the Trust deals with many young Muslims, the loans it gives to Muslims are structured on a Shariah-compliant basis. The Trust's total financing for 2005 was just under 50 million pounds.

The IDB, in fact, signed a historic memorandum of understanding (MoU) with The Prince's Trust to cooperate on a number of initiatives including youth engagement, youth leadership, business leadership, sustainable development, and the teaching and training in Islamic arts.

IDB President Dr. Ahmed Muhammed Ali in his welcome speech said that during the last thirty years, the IDB has enjoyed collaboration and active support of its stakeholders and development partners, and it has indeed come a long way from its initial challenging years. "When the IDB commenced its operations in 1975, one of the major constraints it faced was the limited number of available Islamic financing instruments that can be readily applied. As such, the bank had to evolve new modes of finance to satisfy the different types of financing requirements of its member countries. Various modes of financing which share a common feature were therefore developed by the bank to overcome this constraint. This feature is absence of interest in the sense that transactions are asset-based and returns are shared on a pre-determined formula. Some of these instruments are increasingly being used by banks in Europe and other parts of the world."

Along with the development of these instruments, a number of financing windows and schemes were put in place to achieve the bank's objectives, including projects finance, trade finance, insurance of investment and export credit and technical assistance to member countries. As a result, the IDB financing reached to cumulative approvals of about $45 billion by the end of 2005. He stressed that the bank was in the process of establishing a specialized international Islamic trade financing corporation (ITFC), with an initial authorized capital of $3 billion and a paid-up capital of $500 million

Yakcop said that Muslims "can take pride at the vital role that the IDB has played in bringing development and economic well-being to the Muslim ummah, particularly in the pioneering the mobilization of funds for this development."

He also warned that Muslim countries could have done more for their prosperity and dignity "if our economies had grown and developed on a consistent and sustainable basis. We must continue to pursue relentlessly efforts at enhancing economic strength, alleviating poverty, creating employment and building human resource capacity. We must aim to be industrially competent and technologically advanced. Collectively, the Muslim world has sufficient assets and abundant resources to develop and prosper. It remains for us to ensure their optimal utilization."

By Mushtak Parker

© Arab News 2006