Mr. Ahmad Mohamed Ali
at the International Conference on Financing for Development
Excellencies, Distinguished Delegates, Ladies and Gentlemen:
As I address this august gathering, on behalf of the Islamic Development Bank (IsDB), I would like to place on record our gratitude for having been invited to participate in the deliberations of this historic Conference.
Against the backdrop of growing development challenges, the importance and timeliness of this Conference can hardly be overemphasized. For the IsDB, the Conference has much more added significance in view of the fact that most of our member countries are categorized as developing countries facing serious resource constraints in financing their development activities and nearly half of the least developed countries in the world are part of its membership of 53. Many of these countries not only have very low levels of income per capita but also very high incidence of poverty and hunger. It is, therefore, no surprise that almost a half of the total poor in the world belong to the member countries of the Islamic Development Bank.
For us, the Conference has also assumed greater significance in the wake of the post-September 11 developments, which have directly affected a number of IsDB member countries, causing them heavy trade-revenue losses, in general, and those from primary exports, in particular, accentuating poverty, and reversing their overall growth trends. As a result, there is need to mobilize additional development resources at the national and multilateral levels to mitigate the immediate challenges faced by those countries.
It is, however, our belief that some of those challenges would be short-lived as they have been caused by misconception and misinformation. We are, therefore, confident that the collective will and resolve of the global development community will successfully overcome the immediate, as well as the long run, challenges of financing for development. As for the IsDB, it would always stand shoulder to shoulder with its stakeholders and development partners to play its role within the scope of its mandate and resources to ensure the success of efforts at various levels towards alleviating poverty and achieving sustainable development.
It is, however, with a sense of urgency and the need for constructive review of the whole spectrum of development relations constituting the present global development architecture that I would like to address the major issues related to this Conference.
Mobilizing Domestic and International Financial Resources for Development
The IsDB shares the view that the internal conditions for mobilizing domestic savings, sustaining adequate levels of productive investment and increasing human capacity are critical to the common pursuit of growth, poverty alleviation and sustainable development. Accordingly, good governance, sound economic policies, well-developed domestic financial sectors, and improved infrastructure are the basis for achieving these strategic developmental goals. In this respect, the IsDB continues to provide support for capacity-building and infrastructure development to its member countries, particularly to the least developed member countries (LDMCs).
The IsDB, however, believes that there is a need to diversify the sources of growth by promoting micro and small-scale enterprises particularly in the informal sector. In addition, alternative financing institutions that could provide equity financing to such enterprises need to be strengthened. In the IsDB member countries, in particular Islamic banking has the vast potential to emerge as a viable system that could attract more savings, as well as promote banking activities at the grassroots level. In fact, the IsDB initiated a programme in 1999 to finance small and micro enterprises in LDMCs and low-income countries which aims to supplement the domestic resource mobilization efforts. However, we believe that much more needs to be done at the national and multilateral levels to strengthen the capacity of the alternative funding bodies and other institutions in order to mobilize additional financial resources and promote enterprises at all levels.
The innovative financial approaches and schemes to be implemented by these institutions can provide substantial new opportunities for resource mobilization in addition to the well-known sources of development finance, not only in the IsDB member countries, but also for the other developing countries.
It is important, however, to open a special parenthesis at this point for the Least Developed Countries and the poverty-stricken communities as a whole, where the problem of under-capitalization is severe and the possibilities for domestic resource mobilization is highly restricted. Consequently, for these countries concessional financing by the multilateral financial institutions will continue to remain as a major source of development assistance. Furthermore, such financing will have to be increased with the prompt replenishment, augmentation and extension of the concessional windows.
Increasing International, Financial and Technical Cooperation
At this juncture, it would be difficult not to be concerned with the low level of Official Development Assistance (ODA), particularly when viewed against the laudable target of reducing the world poverty by half by the year 2015 set under the Millennium Declaration. In terms of concessional financing received as a whole, the recipient IsDB member countries have experienced a downward trend since 1993. Their share went down from 88 per cent of the total in 1990 to 44 percent in 1997, and improved slightly to 49 percent in 1999. This has happened mainly due to the decline in ODA, which is a crucial source of funding for education, health, public infrastructure development, agricultural and rural development, and food security in the receiving countries.
Of equal concern is the uneven, yet persistent, decline in the flow of foreign direct investment (FDI) to the IsDB member countries. In the total FDI inflow to the developing countries between 1990 and 1999, the share of the IsDB member countries decreased, with minor variations along the way, from around 22 per cent early in the decade to 1.9 per cent in 1999. Out of this, excluding the share of the emerging IsDB economies like Indonesia, Malaysia and Turkey, only a small proportion of the FDI flowed to the overwhelming majority of the IsDB member countries. This calls for a thorough review of the causes of the skewed nature of such flows and the measures that need to be taken up urgently at different levels to promote the flows of such resources to most developing countries, including the IsDB member countries.
The IsDB supports the call to enhance the ODA to the target established by the UN of transferring at 0.7 percent of GNP of OECD countries to the developing countries, and of which 0.15 to 0.20 percent for the Least Developed Countries. We also support the various initiatives for partnership among recipient and donor countries, as well as in the multilateral and bilateral financial and development institutions, with a view to making ODA more effective in reducing poverty. In other words, it is important for the recipient countries to identify sectors where ODA can have the most significant catalytic impact on efforts to alleviate poverty, and to foster economic growth and sustainable development. In this regard, the IsDB would call for strengthening the domestic capacities of developing countries, including the IsDB members, to attract greater foreign direct investment to meet the growing financing needs in the area of physical infrastructure development the greater flow of multilateral assistance to implement pro-poor social sector policies.
Trade as Engine of Growth
Regarding the role of international trade, the IsDB remains committed towards ensuring that trade among its member countries not only continues to play the strategic role of promoting economic cooperation and socio-economic development, but also augments global trade activity. Accordingly, the Bank has significantly increased its trade financing programmes, in particular those devoted to intra-trade financing, so as to realistically increase trade exchanges among its member countries, as a part of its effort to help its member countries to more actively participate in world trade expansion.
Furthermore, the IsDB is of the view that implementing various trade liberalization measures will foster economic growth and sustainable development for all. However, such a commitment should not lead to the conclusion that developing countries, particularly the least developed countries, would no longer need special and differential treatment within the framework of the World Trade Organization (WTO). The Bank feels that without an effice differential treatment, the marginalization of its member countries will persist or even worsen. In this context, the IsDB welcomes the decisions of the WTO, taken in Qatar Conference, to place the needs and interests of developing countries at the heart of its work programme. In the meantime, it urges the industrial countries to improve the market access conditions for the exports of the developing countries, including those of the IsDB member countries, particularly in the value-added export goods.
We, however, feel that there is a need for making a greater effort in order to strengthen the capacity of developing countries to deal with the WTO matters. Since human capacities and skills needed to engage fully in the WTO deliberations and negotiations are highly scarce in most developing and IsDB member countries, multilateral assistance is essential to overcome such constraints. For its part, the IsDB has made arrangements through establishing a special unit to provide Technical Assistance in this particular area, and has been cooperating effectively with the WTO, the ITC and the UNCTAD towards such an end.
Like the other international financial institutions, the IsDB will continue to intensify its support for projects that gradually remove supply-side constraints, improve trade infrastructure, diversify export capacity, support increases in the technological content of exports, strengthen institutional development and enhance overall productivity and competitiveness. There is, however, a need at the multilateral level to promote steady and predictable trade relations between the industrially advanced and developing countries in order to create a conducive environment for growth in the tradable sector.
While recognizing that sustainable debt financing is an important element in mobilizing resources for public and private investment, the IsDB would like to stress on the need for all stakeholders to get involved by way of coordinating their policy actions in a way to make them supportive of sound public debt management practices. In this context, the IsDB is convinced that a good public debt management system is the one that would be based on prudent and efficient fiscal practices, greater accountability and transparency, efficient conduct of domestic financial markets, and a sound risk management framework. However, the Bank would like to warn against taking the so-called "Guidelines for Public Debt Management" as a “one-size-fits-all” prescription tool, particularly for the Least Developed Countries, as it is likely to stretch the implementation capacity of the fiscal authorities.
Additionally, the IsDB maintains that it is crucially important for debt relief arrangements to ensure additionality so that resources provided for debt relief do not impinge upon the fulfillment of ODA commitments. Accordingly, the Bank urges all partners to come together within an international debt workout mechanism to restructure the unsustainable debts in a timely and efficient manner.
The IsDB welcomes the initiative where both the International Monetary Fund and the World Bank would consider, when making policy recommendations, the fundamental changes that may have occurred in countries' debt sustainability on account of natural catastrophes, severe terms of trade shocks or conflicts. In this connection, the IsDB remains committed to participate in the Debt Initiative for the Heavily Indebted Poor Countries (HIPCs) adopted by the Multilateral Development Banks (MDBs), where twelve out of the 22 eligible countries that have so far qualified for debt rescheduling were IsDB member countries from Africa. For its part, the Bank has already implemented debt relief for Uganda, approved HIPC Plan for Burkina Faso, while approvals for Benin, Mali, Mauritania and Senegal are being currently processed.
Enhancing the Coherence and Consistency of the International Monetary, Financial and Trading Systems
It is worth noting that significant international efforts are under way to reform the international financial architecture with a view to enhancing financing for development and poverty eradication. In this regard, sound financial sectors, coherent and consistent international trading systems, strong coordination of macroeconomic policies among the leading industrial countries are important components of an international financial architecture that is supportive of development goals and greater global financial stability. The Bank, however, emphasizes the need to find suitable ways and means to ensure that international capital movements do not lead to financial instabilities in developing countries.
The IsDB continues to support the role of the multilateral financial institutions, in particular the International Monetary Fund, in the prevention of potential crises and the strengthening of international financial stability. As a multilateral development financing institution with developmental involvement in all parts of the world, the IsDB encourages various efforts towards the effective participation of the developing countries and their institutions in reforming the international financial architecture, including the formulation of financial standards and codes. In this respect, the IsDB appreciates the support of the IMF to assist our interested member countries in the development of internationally acceptable prudential and regulatory standards for Islamic financial institutions.
Additionally, the Bank supports actions aimed at strengthening the coordination among the United Nations system and all other multilateral financial, trade and development institutions towards the enhancement of economic growth, poverty eradication and sustainable development. It also continues to encourage policy dialogue among countries at the regional level on macroeconomic, financial, trade and development issues.
IsDB's Role as a Development Financing Institution
As you are aware, the IsDB was established nearly 27 years ago with the aim of promoting economic development and social progress in its member countries. The IsDB is mandated to pursue the same development objectives as followed by other international development financing institutions. However, having been placed in a specific financing environment divested of interest rate, the Bank innovates new financing modes and methods of resource mobilization as it strove to contribute to the development efforts of its member countries spread over various regions of the world. All of this effort made it into a global institution, despite its more limited membership as compared to other major institutions of the world and the specific financial environment, the IsDB had to operate in. The challenges of Islamic financing is a constant source of motivation to explore and to tap new sources of financing, which would otherwise have remained unutilized, and to expand the canvas of financing modes used in promoting development activities in our member countries. The role played by the IsDB in financing for development could be appreciated by looking at its contribution in the main areas of (i) resource mobilization; (ii) contributions to the development of the Islamic financial industry, and (iii) innovative modes of financing and non-banking activities with distinguishing features.
The Bank commenced operation with the authorized capital of around US$ 2.5 billion in 1975 which have been increased three times since then. By the end of 2001, its authorized capital stood at US$ 19 billion, with subscribed capital reaching US$ 10.3 billion. Since the Bank was mandated to raise resources in the form of non-interest-bearing instruments, it had to embark upon a course of innovative additionality in resource mobilization. In this context, the Bank developed a number of schemes and established several institutions with distinct operational rules for catering to the various development financing requirements of its member countries. This has enabled the IsDB to supplement its subscribed capital and leverage its activities by playing a catalytic role in mobilizing resources from national and regional development financing institutions and Islamic financial institutions.
Contributions to the Development of the Islamic Financial Industry
The major contributions of the IsDB in developing the Islamic financial industry covers a number of areas. One of them is where the Bank itself developed a number of viable modes of financing which are compatible with Islamic principles and capable of addressing the diverse financing requirements of member countries. These include: interest-free Loans, Equity, Leasing, Profit Sharing, Installment Sale, Istisna'a and Lines of Financing.
The distinctive feature of an IsDB Loan is that it is a concessionary form of financing, extended to the member countries mainly for financing infrastructure projects. Equity is a mode of financing whereby the Bank participates in the share capital of projects or enterprises. Leasing is a medium term mode of financing, which involves purchasing and transferring of the right of use of tangible assets, such as equipment and machinery, to the beneficiary for a specific period of time during which the Bank retains the ownership of the asset. Profit Sharing is a form of partnership which involves the pooling of funds between two or more parties in order to finance a particular venture, each partner obtaining, in accordance with the terms and conditions of partnership, a percentage of (net) profit accruing to the venture. Installment Sale is a mode of financing whereby the Bank purchases machinery and equipment and sells to the beneficiary. Although the repayment is in installments, the ownership of the asset is transferred to the purchaser upon delivery. Finally, the Istisna'a mode of financing seeks to provide financing for construction of highways, dams, silos and commercial buildings. It is a mode of financing whereby the institution (the purchaser), requiring the item to be manufactured or constructed enters into a contract, on behalf of the IsDB (the vendor), and supervises its implementation. When the project is completed, the purchaser takes it over and pays the price in installments to the Bank within the period specified in the agreement. Finally, Lines of Financing constitute an arrangement, whereby the National Development Financing Institutions (NDFIs) are extended this facility to administer the actual project cycle in the field on behalf of the IsDB. In addition to these, work is currently going on to develop financial products that will better suit the special needs of clientele in sectors such as agriculture and services.
The IsDB provided catalytic initiatives for strengthening prudent Islamic banking practices. It has contributed to the achievement of a steady growth of Islamic banking in several IsDB member countries as well as in some non-member countries. As a result, Islamic banks are viewed as viable financial institutions for the mobilization of savings and promotion of investments. This is witnessed by the existence today of over 200 Islamic financing institutions, including 70 Islamic banks, that practice Islamic banking and finance in different parts of the world. Moreover, many international commercial banks, such as the Citibank, HBSC, etc. are also offering Islamic financing windows.
Besides establishing new Islamic banks and developing new modes of financing, the Bank cooperated with the existing Islamic banks and international financial institutions in developing accounting, regulatory and supervisory standards and procedures for Islamic finance. In this context, the IsDB played a leading role in the establishment of the Accounting and Audit Organization for Islamic Financial Institutions (AAOIFI) in 1991. This important institution is playing a leadership role in the codification of accounting principles for the whole range of Islamic banking activities. It is an institutional arrangement for self-regulating the financial reporting of Islamic banks and financial institutions, as well as standardizing the auditing practices for their external auditors. So far, AAOIFI has produced financial accounting guidelines, various accounting and auditing standards, as well as a code of ethics for accountants and auditors of such institutions, based on good governance, transparency and professional requirements. The AAOIFI is also cooperating with the IMF, the Basle Committee and major international rating agencies, in an effort to develop internationally recognized accounting and auditing standards for Islamic banking. The IsDB has also taken a number of initiatives to play a leading role in the establishment of the General Council of Islamic Banks and Financing Institutions in 1999.
The IsDB is supporting the development of international regulatory standards for the Islamic banking industry, along with the participation of many central banks. In this regard, the IsDB is actively participating in the current wide-ranging consultative process among key players to set up an internationally acceptable and codified prudential framework for the Islamic banking industry. As a result, with the assistance of IMF and several interested central banks, a new institution called the International Financial Services Organization (IFSO) is being conceived to develop internationally acceptable regulatory standards for Islamic financial institutions. Furthermore, the International Islamic Financial Market, as a self-regulating body, is expected to provide crucial infrastructure support for organizing and deepening the emerging Islamic money market. The IsDB has also been instrumental in the creation of the Islamic Rating Agency. These actions are expected to contribute in standardizing Islamic financial products and enhancing transparency and efficiency in Islamic banking and finance.
Main Features of the IsDB's Development Financing and other activities
The additionality in development financing realized through innovative schemes and unique institutions has enabled the Bank to provide a total amount of about US$24 billion of overall development financing to its member countries. Out of this, an amount of over US$ 8.5 billion was in project financing and technical assistance, over US$ 14.5 billion in foreign trade financing, and nearly US$ 650 million through its Special Assistance Programme targeted towards capacity building and human resources development. A unique feature of IsDB development financing to member countries is the promotion of their trade through specialized export and import financing schemes.
Setting proper sectoral priorities in providing development finance and assistance was one other important aspect of the IsDB's operations and activities. This conscious and conscientious choice was not only tailored to the actual financing needs of the member countries and their populations, but has also carried reflections of a wider understanding of the process of overall development in member countries that places proper focus on social sectors. This special development orientation, especially in project financing, technical assistance and in the implementation of the Special Assistance Programme of the Bank, is easily attested to when one observes that, during the period 1976 to 2001, the sectors that received the greatest shares in the IsDB financing were public utilities (28.2%), social sectors (21%) and agriculture (14.5%).
The growing importance attached by the IsDB to poverty alleviation is one important indication that reflects the philosophy of the IsDB underlying its development financing and assistance operations in the member countries. In fact, the relative focus placed in development-oriented sectors, such as agriculture and food security, small and medium scale industries, education and health and transport and communications, is a clear reflection of this preference. Furthermore, in terms of actual operations and activities, the empowerment of the poor by securing effective improvements in and an increased access to basic health and education, promoting increases in productivity, income and employment through access to micro finance and other means have always been of higher priority. Therefore, the public utilities, social sectors, agriculture and transport and communication have consistently received the lion’s shares of the IsDB financing and development activities. Furthermore, substantial concessionality is applied to projects beneficial to the poor.
The overall priority accorded to the projects and activities involving the Least Developed Member countries (LDMCs), which number 29 member countries, is another major orientation for the Bank. Again, the highest levels of concessionality are applied to loans made to these countries in the form of very low fees charged, together with much longer grace and repayment periods. Furthermore, over 50 per cent of Loans which is a concessional facility of the Bank, and over 60 per cent of all technical assistance approved was for these countries, mostly in the form of grants. The Bank also initiated a special LDMC Account to provide additional highly concessional financial support (30 years repayment, 10 years grace and 0.75 per cent service charge) to finance developmental activities in these countries. Following the depletion of the original US$ 100 allocated, a replenishment of US$ 150 million was recently approved.
Special assistance activities of the Bank extends assistance to populations globally suffering natural calamities, special scholarship programmes for needy students, as well as for those in high priority fields selected on merit, and other assistance activities are financed out of a special endowment fund called the Waqf Fund. The Bank is also associated with the Special Programme of Emergency Aid to Sahelian Member Countries and participates in the programme of the Permanent Inter-State Committee on Drought Control in the Sahel (CILSS), which aims at combating the effects of chronic drought in the OIC countries of the Sahel region. The Bank has already committed US$ 20 million for this programme.
The Technical Co-operation Programme (TCP), aims to transfer technical expertise and know-how mutually among the IDB member countries toward promotion of their human resource development. The priority areas identified for the Programme cover agriculture, industry, financial reforms, infrastructure development, education, health, transport, telecommunication, solar energy, environment, and science and technology. Special attention is paid to the requests received from the CIS countries and the least developed member countries of the Bank.
Development of the Bank into the IsDB Group is one of the key strategic actions taken to enable it to respond to the developmental challenges and to meet the growing developmental requirements of the member countries. One of the objectives of establishing various institutions in the Group was to take full advantage of the tremendous opportunities stemming from the recent trend of globalisation and integration of the world’s financial system. The institutions in the Group are expected to play a significant role in supplementing the Bank’s support, in particular, to the development of the private sector in member countries.
The IDB Group includes a number of institutions, of which, Islamic Banks Portfolio for Investment and Development (IBP) is an investment fund which, in addition to promoting intra-trade among the member countries, serves as the nucleus of an Islamic financial market. The IDB Unit Investment Fund (UIF) aims to provide investors with a profitable channel of investments compatible with Islamic principles. The Fund also co-finances projects with other windows of the IDB Group and other Islamic banks and financial institutions in member countries. The IDB Infrastructure Fund, as an independent entity, has a unique structure. The IDB is the lead promoter, the principal sponsor and the overseer; a private sector entity experienced in managing private sector infrastructure funds acting as its manager; and major institutions in member countries are the principal investors. The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) aims to enlarge the scope of trade transactions and the flow of investment among the member countries of the Organization of Islamic Conference by providing export credit insurance and reinsurance, investment insurance and reinsurance against country risks. Finally, the Islamic Corporation for the Development of the Private Sector (ICD) is the most recent initiative of the Bank aimed at providing niche-financing in the private sector, provide a wide range of new financial products and services, and expand access to Islamic capital markets by private companies in IDB member countries. The Islamic Research and Training Institute (IRTI) and the International Center for Biosaline Agriculture (ICBA) located in Dubai complete the IsDB Group. The IRTI is the research and training body of the Group that undertakes research, training and publication activities in the area of Islamic economics and banking, while the ICBA is equipped with laboratories and other facilities on specially allotted land to undertake research on saline irrigated agriculture.
The Bank has established close links with a number of other organizations during its efforts to support the economic development of its member countries, as well as to help promote economic and commercial cooperation among them. The Association of Development Finance Institutions in IDB Member Countries (ADFIMI), the Federation of Consultants from Islamic Countries (FCIC), and the General Council for Islamic Banks and Islamic Financial Institutions can be mentioned in this vein.
The Bank has special links also with a number of national and regional development financing institutions and funds. These institutions and the IDB hold joint meetings where they discuss policy issues related to their financing activities.
The Bank has a close working relationship with the national development financing institutions (NDFIs) in member countries in order to reach the private sector in member countries, and also to contribute to the financing of small- and medium-scale industries. This objective is achieved through provision of lines of financing facilities administered by the NDFIs, which make the Bank's operations cost-effective and extends their coverage to a large number of projects.
Islamic banks and financial institutions constitute yet another group with which the Bank maintains close contacts. Areas of activities with this group include Islamic banking, project co-financing, research on various issues relating to Islamic finance and banking, training, and exchange of information.
The Bank has made various efforts to promote economic co- operation with various sub-regional institutions/organizations, which have common membership with the Bank. The main areas of co-operation envisaged with these regional bodies include trade promotion, project identification, feasibility studies, technical co-operation, co-financing, and exchange of information.
The Bank maintains close contacts and co-financing arrangements with various international institutions, including the World Bank, the IMF, the African Development Bank, the Asian Development Bank, the West African Development Bank, the Inter-American Development Bank, and the European Bank for Reconstruction and Development. The Bank has co-financed projects with the European Investment Bank (EIB), the Asian Development Bank, the IFAD and the EBRD.
The Bank also maintains special ties with most of the United Nations agencies for cooperation in areas ranging from project co-financing and programme co-ordination to exchange of information.
The IsDB, since its inception, has viewed its role as an institution completely at the service of its member countries. The Bank primarily reflects priorities of its member countries - a unique South-South institution in the family of multilateral development financing institutions.
At the same time, the IsDB seeks to ensure that it is a transparent and inclusive member of the global development community. The Bank also believes that the cause of promoting economic development is a common human cause. This basic philosophy reflects the eagerness of the IsDB to undertake joint initiatives with the multilateral financing institutions, the UN system, which include a wide spectrum of activities from co-financing of specific projects to participating in different thematic groups.
As for the future, the IsDB Group has chosen a strategic orientation
in which it is foreseen that the full-fledged establishment of all of the
institutions comprising the Group will be completed as soon as possible.
This would make it possible for the Bank as a whole to reach out to its
members with a view to reducing poverty and contributing to the realization
of the development aspirations of the member countries and to assist them
in their resolve to participate in the development of global economic system
as full partners.
Excellencies and Distinguished Guests:
Regarding the future outlook, please allow me to highlight a few additional points about the Islamic banking industry, which will be relevant not only to the IsDB's future role, but would also impinge upon the global efforts on financing for development.
Role of the Islamic Financing Institutions
It is very encouraging to observe that the alternative approaches to mobilization of resources have already been recognized at the multilateral level. However, the institutions practicing such approaches in different parts of the world would need continuous support and encouragement with a view to enabling them to be more effective development partners. In this regard, it would not be out of place to state that the modes of financing developed under the generic title of Islamic Finance have some specific features more favorable to poverty alleviation and debt reduction. The Islamic finance which operates on modes other than fixed interest rate aims to share profits from activities in the real sector. Hence, financing of development through such modes is likely to avoid undue economic and financial burden on the beneficiaries. Its emphasis on real sector should also contribute in avoiding instabilities in the financial markets.
One of the major areas that has been tapped by various Islamic banks including the IsDB is the development of trust properties for poverty alleviation. It may be mentioned that there has been a long tradition of specialized endowment funds targeting worthy causes and community-level assistance to the needy in most of the member countries, which could be strengthened to mobilize additional resources for poverty alleviation. Along the same lines, the Islamic banks could play a role in the collection of the compulsory contributions that have to be made to the poor by the wealthy in the Islamic tradition, as a substantive contribution to the fund mobilization effort directed to poverty alleviation. In this respect, the IsDB has provided a leadership role by way of establishing an endowment fund called the International Waqf Foundation.
To these ends, however, there is a need to support the efforts made by the IsDB and other Islamic financing institutions to tap resources for development. Similarly, efforts to integrate Islamic financial institutions with the global financial system are most welcome. In this regard, the IsDB supports establishing the International Financial Services Organization (IFSO), in which besides the IsDB, IMF and a number of other multilateral institutions are represented. The International Islamic Financial Market (IIFM) and the Islamic Rating Agency, both of which are IsDB supported initiatives, will contribute in the standardization of Islamic financial products, and to make the industry competitive, transparent, and viable financier of economic development. For their future growth, it is essential that the Islamic financial institutions are provided with an opportunity to operate in a competitive environment in the developing as well as the industrially advanced countries. There should be no ambiguity about their goals and objectives, which is to primarily offer new alternatives and a wider choice to both the investors and users of funds across the world. Needless to say, the Islamic banks are open to all and possess the potential to provide innovative support to global efforts in financing for development.
Finally, the IsDB would like to reiterate its unequivocal, whole-hearted and continuous support to the efforts for enhancing national and international resources for financing for development and to collaborate closely with other multilateral development banks, as well as other international and regional institutions to realize the laudable objectives of alleviating poverty and achieving sustainable development set under the Millennium Declaration.
With these, I wish every success to the deliberations of this Conference.
Statements at the Conference