What are IDB’s initiatives for this year?
AL MADANI: At the opening of the World Islamic Economic Forum (WIEF), I emphasized the importance of innovation in our member countries. This is why IDB announced that this coming year will be the year of innovation. In fact, our annual meeting with the board of governors has as a theme “innovation”, which is very important for the progress of the least developed countries. Our goal is to encourage activities related to innovation in our member countries. Some member countries already have their own programs in place, so we want other member countries to benefit from their experience. This is IDB’s goal for the Islamic year 1434, the year of innovation.
What are the IDB’s most notable achievements to date?
AL MADANI: One of the major policies of IDB is to be open. We are open to cooperate with every entity that is interested in supporting development in our member countries. That is why we have a very close collaboration with the World Bank, the Asian Development Bank, the African Development Bank, the Inter-American Development Bank, and the Arab Group. We are also cooperating with the United Nations agencies and private funds, such as the Bill and Melinda Gates Foundation. As you know, we have a very close cooperation with the latter. In fact, we have just signed an agreement with them to eradicate polio. As polio is only in 3 countries, that are Pakistan, Afghanistan, and Nigeria, and all of them are members of IDB, we signed an agreement with the Gates Foundation to help these countries to eradicate polio from their territories. Succeeding in these countries means succeeding globally, as this represents a great contribution to humanity and to all people living in our global village.
Where does the IDB stand with regards to the Reform Agenda?
AL MADANI: With regards to the Reform Agenda, IDB has obtained support from a number of personalities and member countries, which helped the bank in formulating its 2020 vision. One of the major recommendations was to reform the bank itself, so that is where we started. We went through all the divisions of the bank, from the personnel, to the procedures, to IT and all the other aspects of the institution. As a result of this, last year, the IDB group’s total operations, including its entities which are ICD (Islamic Corporation for the Development of the Private Sector), ICIEC (Islamic Corporation for the Insurance of Investment and Export Credit), and ITFC (International Islamic Trade Finance Corporation), went up to almost $9.7bn. So now we are a very large group. More importantly, IDB maintained its AAA rating with all 3 rating agencies, despite the global financial crisis.
Geographically speaking, which countries or regions are IDB’s targets for budgetary allocations and lending?
AL MADANI: Our lending is of 2 types, the concessional financing and the ordinary financing. So far, the targets for the concessional financing are the least developed member countries. The philosophy of IDB is founded on solidarity. Therefore, our mission is to pay more attention to the sub-Saharan countries. With regards to the ordinary type of financing, we cooperate with other member countries spread in many different regions and memberships. These are South East Asian countries, Arab countries, and countries in the Far East. We have very active programs in the Far East, in the west part of Asia, but also in the North part of Africa, where the member countries are going through some special circumstances, like Tunisia, Egypt, and Libya. I have been in these countries several times and we are starting a number of programs there, especially with a view to create jobs for the youth. During my visit to Tunisia, to Libya, and to Egypt, there was great emphasis and demand for Islamic banking, so we are having a special program including Islamic micro financing. We think that this program will help increasing employ-ability for the youth.
As a development bank, how do you balance the need to deliver positive financial returns with the more philanthropic goals?
AL MADANI: The underlying philosophy of IDB is solidarity among the member countries and this is clearly stated in the Articles of Agreement of IDB, which have been ratified by the authorities of all member countries. Of course, we always give priority to the needy and less developed member countries, but at the same time we have to preserve the viability of our institutions, and that is why, in the last 10 years, the bank has enjoyed the highest rate from the 3 rating agencies. We just recently received the AAA rating from the agencies. Even the sukuks issued by IDB have been rated AAA by the rating agencies. Indeed, we are backed by a very strong level of support from all member countries. In the last Islamic summit held in August, the focus was on political issues. Nevertheless it was emphasized that the IDB has the full support of its member countries, and in its last meeting, our board of directors prepared a resolution to be submitted to our board of governors to increase IDB’s capital. This indicates that IDB is balancing its work successfully, as we help the least developed countries, while ensuring the viability of our institutions. In this way we are able to continuously provide our services to all member countries and still take care of the least developing ones.
Last year, the IDB group’s total operations, including its entities which are ICD (Islamic Corporation for the Development of the Private Sector), ICIEC (Islamic Corporation for the Insurance of Investment and Export Credit), and ITFC (International Islamic Trade Finance Corporation), went up to almost $9.7bn. So now we are a very large group. More importantly, IDB maintained its AAA rating with all 3 rating agencies, despite the global financial crisis.
What effects do the different interpretations of Islamic finance have on IDB’s operations?
AL MADANI: As an international financial body of the OIC (Organization of Islamic Cooperation), the global differences that we encounter within all schools of jurisprudence are noticeable. We do not have a problem, but we are doing our best to help unifying the Sharia opinions coming from the different schools. We are working with the vision that the Sharia Committee, which we have in the IDB group, will help bring the different views together and minimize this fragmentation. We acknowledge that there is a problem, but this really reflects the livelihood of the jurisprudence. We do not wish to close the jurisprudence, or what you call, the fiqh, and its different interpretations. But we want to establish a reference point that is going to be respected by all Islamic banks. This is what the IDB group is trying to achieve and we think that this is a very important service for the industry. Hopefully, we will succeed in minimizing the differences among the various Sharia committees.