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The Islamic Development Bank The Islamic Development Bank GroupGroup

Together We Build a Better FutureTogether We Build a Better Future

Islamic Finance Seminar, Sao Paulo, Brazil, October 4, 2010

Vision 1440H (2020) Structure Products and Services Portfolio and Activity Highlights Cooperation with other Institutions

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“ “ By the Year 1440H (2020) IDB By the Year 1440H (2020) IDB shall have become a world-class shall have become a world-class development bank, inspired by development bank, inspired by Islamic principles, that has helped Islamic principles, that has helped significantly transform the significantly transform the landscape of comprehensive landscape of comprehensive human development in the Muslim human development in the Muslim world and helped restore its world and helped restore its dignity.”dignity.”

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Source: AHDR

““We are committed to We are committed to

alleviating poverty, alleviating poverty,

promoting human promoting human

development, science & development, science &

technology, and Islamic technology, and Islamic

banking & finance, and banking & finance, and

enhancing cooperation among enhancing cooperation among

member countries, member countries, in in

collaboration with collaboration with

development partners”development partners”

Source: AHDR

Achieving healthy human development

Securing strong and sustainable economic growth

Promoting good governance

Strengthening peace and stability

Fostering a powerful sense of common identity, consciousness, and empathy

Restoring the Image of Islam and the Muslim world

The Strategic Challenges Confronting The Strategic Challenges Confronting the Muslim Worldthe Muslim World: :

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Human DevelopmentHuman Development

Agriculture Development and Food SecurityAgriculture Development and Food Security

Infrastructure DevelopmentInfrastructure Development

Intra-trade Among Member CountriesIntra-trade Among Member Countries

Private Sector DevelopmentPrivate Sector Development

Research and Development in Islamic Research and Development in Islamic Economics, Banking and FinanceEconomics, Banking and Finance

IDB: Six Priority AreasIDB: Six Priority Areas

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Improving the Image of the Muslim World Integration of IDB MCs Economies

Universalizing Education Empowering Women

Alleviating Poverty Promoting Health

Expanding Islamic Financial Industry Prospering the People

Key Strategic Thrusts

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Vision 1440H (2020) Structure Products and Services Portfolio and Activity Highlights Cooperation with other Institutions

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Principles of Islamic Shari’ah Governing Islamic Finance: Prohibition of Interest (Riba) in all financial

transactions Prohibition of deception, incomplete disclosure of

information and sale of prohibited items and gambling, etc

Speculation and excessive leveraging is forbidden All transactions are based on real assets Entitlement to return is due to liability of loss and

vice versa Unlawful earnings , expenditures or fraud is

prohibited Dealings are based on trust, honesty and integrityIslamic Dinar (ID): The Unit of Account of IDB, which is equivalent to One

Special Drawing Rights (SDR) of the International Monetary Fund (IMF)

Definition of Key Terminology

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• Established in 1975 to foster socio-economic development in member countries and Muslim communities in compliance with Shari’ah.• Authorized capital of US$ 45 billion

• Subscribed capital of US$ 22 billion

• Paid-up capital of US$ 5.3 billion• AAA rating by Moody’s Investors Service, Fitch

Ratings, Standard & Poors.• Zero-Risk Rating by the European Parliament

Islamic Development BankIslamic Development Bank (IDB)(IDB)

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• Established in 1981 to undertake Established in 1981 to undertake applied & basic research in Islamic applied & basic research in Islamic Economics and Finance. Activities Economics and Finance. Activities include:include:• Research Seminars & Conferences• Training Courses• Publications• IDB Prize in Islamic Economics,

Banking & Finance• IRTI Scholarship for PhD in Islamic

Banking

Islamic Research & Training Islamic Research & Training Institute (IRTI)Institute (IRTI)

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• Established in 1994 to provide Shari’ah-compatible export credit insurance, political risk insurance, technical assistance.

o Capital Structure (66.7% IDB, 33.3% MCs) : Total authorized capital US$ 231 million, subscribed capital US$ 228 million

o Business Insured in 2009 : over US$ 1 over US$ 1 billionbillion

o Cumulatively, as of December 2009 : - Business Insured US$ 6.35 billionUS$ 6.35 billion- in more than 37 member countries37 member countries

• Insurance Financial Strength Rating of Aa3 by Moody’s Investors Service

Islamic Corporation for Islamic Corporation for Insurance of Investment & Insurance of Investment &

Export Credit (ICIEC)Export Credit (ICIEC)

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o Established in 1999 & commenced its operation in July 2000

o Mandated to promote private sector development and to offer advisory services to the private sector entities in member countries.

o An authorized capital of US$ 2 billion, paid up capital of US$ 470 million.

o 47 Islamic Countries are members of which 21 are in Africa.

o Capital Structure (50% IDB, 30% MCs, 20% Financial Institutions).

o As of December 2009, cumulative business : - Approvals : 185 Projects 185 Projects amounting to US$ US$ 1.59 billion1.59 billion- in more than 32 member countries32 member countries

Islamic Corporation for the Islamic Corporation for the Development Development

of the Private Sector (ICD)of the Private Sector (ICD)

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• Commenced business activities in January 2008. It promotes and enhances intra-trade and trade cooperation among 57 member countries of the Organization of Islamic Conference (OIC) through trade financing and promotion programs;• Authorized Capital : US$ 3.0 billion

• Subscribed Capital : US$ 750 million

• Managing Funds for other institutions : US$ 1.0 billion

• Year 2009 Trade Finance Approvals : US$ 2.1 billion

• Cumulatively Trade Financing, end 2009 : US$ 4.6 billion

International Islamic Trade International Islamic Trade Financing Corporation (ITFC)Financing Corporation (ITFC)

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IDBPreside

nt

BOARD OF GOVERNORS

BOARD OF EXECUTIVE DIRECTORS

IDB Organizational Structure

IDB Organizational Structure

VP(Fin.)

Chief

Econ.

VP(Opr.)

VP(CorpServ.

)

Group Internal Audit

Group Strategic Planning

Group Risk Management

World Waqf Foundation

Group Integrity Officer

General Council

Group Ombudsman

Group Operations Evaluation

Group Shari’ah Board

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IDB Regional OfficesIDB Regional OfficesIDB Regional OfficesIDB Regional Offices

In addition, there are currently 12 In addition, there are currently 12 Field Representatives in some Field Representatives in some

countriescountries

Regional

Offices

Almaty Kazakhst

an

Kuala Lumpur, Malaysia

Dakar, Senegal

Rabat, Morocco

18• 22 countries in 1975 → 56 countries in 2009• 22 countries in 1975 → 56 countries in 2009

• A Unique Model of South-South Cooperation

Africa: 27

Asia: 26Europe: 2

Latin America: 1

• 56 members spreading over 4 continents

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Vision 1440H (2020) Structure Products and Services Portfolio and Activity Highlights IDB Group Reform Cooperation with other Institutions &

the African Development Bank

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Financing of Projects (Public and Private) Promoting the Islamic Financial Industry Trade Finance and Promotion Capacity Building and Technical

Cooperation Risk Insurance Research and Training Fund/ Assets Management

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NGOs and Women-In-Development (WID) Scholarship Programs Science & Technology Program Investment Promotion Technical

Assistance Program (ITAP) Trade Cooperation & Promotion Program

(TCPP) Special Assistance

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Technical Cooperation Program (TCP) Capacity Development (exchange of experts, training,

etc.) Supporting civil societies through NGOs Supporting women-in-development initiatives

Investment Promotion Technical Assistance Program (ITAP) Promote Intra-Investment among OIC MCs Capacity Building of Investment Promotion Agencies Dissemination of Investment opportunities Investment Information Network Intra-Investment Statistics on MCs

Trade Cooperation & Promotion Program (TCPP) Exhibitions, Trade Fairs and Buyers-sellers Meetings Capacity Building of Export Promotion Agencies Consultative Meeting on Aid-for-Trade Promote regional Cooperation

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- Special Assistance and Scholarships•Provide Relief & Alleviation of suffering in case of natural disasters•Support development of Muslim minorities in non-MCs•Scholarships for Muslim communities in non-MCs.•M.Sc. Program for the Least Developed Member Countries•Merit Scholarship Programs for High Technology

- Science and Technology Program•Capacity development in areas of Science and Technology•Inter-Islamic S&T Network•IDB Prize for Science & Technology to Promote Excellence in Research & Development•Self Reliance in Vaccine Production

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Interest-Free Loan Leasing Installment Sale Construction Finance (Istisna’a) Equity Line of Financing Technical Assistance (Loan & Grant) Murabaha (Trade Financing)

The Islamic Development Bank Group: The Islamic Development Bank Group: Current Areas of InterventionCurrent Areas of Intervention

Financing Financing of Projects of Projects (Public and (Public and

Private)Private)

Developing Developing the Islamic the Islamic Financial Financial IndustryIndustry

Trade Trade Financing Financing

and and Promotion Promotion

of of CooperationCooperation

Capacity Capacity BuildingBuilding

AgriculturAgricultureeInfrastructInfrastructureureIndustryIndustryEducationEducationHealthHealthSMEs, SMEs, microfinancmicrofinancingingOther Other sectorssectors

Equity Equity participation participation in Islamic in Islamic financial financial institutionsinstitutionsDeveloping Developing Regulatory Regulatory frameworkframeworkResearch Research and trainingand training

Financing Financing importsimportsFinancing Financing exportsexportsPromoting Promoting trade trade cooperationcooperation

Disseminating Disseminating of skills of skills (exchange of (exchange of experts, training, experts, training, etc.)etc.)Supporting civil Supporting civil societies through societies through NGOsNGOsSupporting Supporting women-in-women-in-development development initiativesinitiatives

IDB/ICD IDB/ICD ITFC IDB/IRTI26

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The Islamic Development Bank Group:The Islamic Development Bank Group:

Current Areas of InterventionCurrent Areas of Intervention (Cont’d)(Cont’d)

Risk Risk

InsuranceInsuranceResearch Research

and and TrainingTraining

Asset Asset ManagemManagem

ent ent

Special Special AssistanceAssistance

and and ScholarshipsScholarships

Country Country riskrisk Short- and Short- and medium-medium-term term commercial commercial risksrisks Coverage Coverage of banks for of banks for Islamic Islamic financing financing productsproducts

Islamic Islamic banking and banking and financefinanceIslamic Islamic economicseconomicsTraining in Training in related related fieldsfields

Awqaf Awqaf assetsassetsInvestment Investment portfoliosportfoliosEquity Equity fundsfundsVenture Venture capital capital fundsfunds

Support to Support to Muslim Muslim minorities in non-minorities in non-MCsMCsAlleviation of Alleviation of natural disastersnatural disastersScholarships for Scholarships for Muslim Muslim communities in communities in non-MCs.non-MCs.Merit Merit Scholarship Scholarship ProgramsPrograms

ICIEC IRTI IDB/ICD IDB27

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Vision 1440H (2020) Structure Products and Services Portfolio and Activity Highlights Cooperation with other Institutions

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Type of OperationUS$ billion

1 -Development Projects28.14

2 -Technical Assistance0.29

3 -Trade Operations34.78

4 -Special Assistance0.68

TOTAL 63.90

Net Cum. End 2009 = US$ 63.90 billionNet Cum. End 2009 = US$ 63.90 billion

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Cumulativebillion 63.9 $

Cumulative $ 63.9 billion

Total Operations Plan : US$ 3.72 billion- US$ 39 million Grants Financing- US$ 381 million Concessional Loans- US$ 3.30 billion Ordinary Financing

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Rural electrification, power generation & distribution

Transport (highways and roads) and telecom Microfinance capacity building and lines of finance Dams, irrigation, water supply Agricultural and rural development projects Industry, petroleum & gas Primary and secondary education Higher education (engineering and medical) Health centers, rural hospitals, specialized

facilities

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Investments in Islamic Banks & Financial Institutions

Capacity Building for Islamic Banks Introduction and Dissemination of Islamic

Modes of Financing, and Developing Knowledge

Developing the architectural foundation of the Islamic financial Industry, by establishing and supporting crucial institutions

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Accounting & Auditing Org. for Islamic Financial Institutions (AAOIFI)-1991

General Council for Islamic Banks and Financial Institutions (CIBAFI)-2001

International Islamic Financial Market (IIFM)-2002

Islamic Financial Services Board (IFSB)-2002 Liquidity Management Centre (LMC)-2002 International Islamic Rating Agency (IIRA)-2002 International Islamic Centre for Reconciliation

& Arbitration (IICRA)-2005

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A dedicated facility to fight poverty

Launched - IDB BOG Annual Meeting (Dakar 2007)

Target Endowment of US$ 10 billion

Current IDB and MCs contribution of US$ 2.6 billion

Two Pilot Programs already approved: Vocational Literacy (VOLIP) Microfinance Support (MFSP)

Vision 1440H (2020) Structure Products and Services Portfolio and Activity Highlights Cooperation with other Institutions

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Vision 1440H (2020) Structure Products and Services Portfolio and Activity Highlights Cooperation with other

International Institutions

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Multilateral Financing Institutions(WB; AfDB; ADB; EIB; EBRD; etc.)

Regional & International Organizations (IMF; IFAD; FAO; UN; UNDP; UNEP; WHO; WMO; UNESCO; GCC; etc.)

National Financing Institutions / Bilateral Funding Agencies (DFID, JICA, JBIC; KFW; AFD; GTZ; IDRC; CIDA; SIDA; NORAD; etc.)

Arab Coordination Group

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A Strategic Partner A Strategic Partner

for for

DevelopmentDevelopment

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Thank youThank you