ASSIGNMENT

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 ASSIGNMENT ON
“Islamic Development Bank”
Course Title: Islamic Finance
Course Code: FIN 507

Submitted To

Dr. Mostafa Ali

Professor
Department of Finance
University of Chittagong

Submitted by

Group Name: The

Serial ID Name
1 16303127 Shaiful Alam
2 16303031 Abu Sayed
3 16303032 Hemel Dey
4 16303054 Md. Kaysar
5 16303062 Rabia Sultana
6 16303086 Kripasree Baidya
7 16303098 Md. Mainul Islam
8 16303125 Md Akramul Haque Rashel
9 16303126 Shatila Arobi Tamanna
10 15303009 Chuty Dhar
11 15303086 Mohammad Raihan Uddin

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 Table of Contents
Topics Page

1 Introduction 5

2 Establishment 5

3 Financial Year 5

4 Language 6

5 Vision 6

6 Mission 6

7 Headquarter & Regional Hubs 6

8 Capital 6

9 Purpose 6

10 Priority areas 6

11 The nature of work 7

12 Where IDB work 8

13 What IDB do/ Functions 10

14 Membership 11

15 IDB & Bangladesh 12

16 Main Products & Services of IDB 15

17 Organization Structure and Management 16

18 IsDB Group 16

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19 IDB Sources of Funds 18

20 Major Activities in last Decades 20

21 Profit 32

22 Specialized Fund/Programmes 34

23 Some successful activities 38

24 Criticism 40

25 Comments and recommendations 40

26 Conclusion 41

27 GLOSSARY 42

28 APPENDIX: Country Membership in the Entities of IDB Group 44

29 Case Studies-1 45

30 Case Studies-2 47

31 References 50

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1.Introduction

Islamic Development Bank (IDB) (Arabic: ‫اإلسالم للتنمية‬

‫ي‬ ‫ )البنك‬is a multifaceted development
financial institution located in Jeddah, Saudi Arabia.
The Islamic Development Bank is working to improve the lives of those we serve by promoting
social and economic development in Member countries and Muslim communities worldwide,
delivering impact at scale.They provide the infrastructure to enable people to lead better lives
and achieve their full potential.

On the 22 May 2013, IDB tripled its authorized capital to $150 billion to better serve Muslims in
member and non-member countries. The Bank has received credit ratings of AAA from
Standard & Poor's, Moody's, and Fitch. Saudi Arabia holds about one quarter of the bank's paid
up capital. The IDB is an observer at the United Nations General Assembly.

2.Establishment
The Islamic development bank is an international Islamic financial institution, established in
accordance with articles of agreement done at the city of Jeddah, kingdom of Saudi Arabia on
24/7/1394(12/8/1974), signed and ratified by all member countries.

At the international level, the Islamic Development Bank, which has been working tirelessly for
the last thirty years, with the active cooperation of which the economy of today's Muslim
countries and foreign trade has been smooth and whose direct participation has facilitated the
establishment of Islamic banks in different countries. There has been very little discussion
about IDB in this country.

Generally, the poorest third world countries, most of which are Muslim, and relies heavily on a
number of international organizations to keep their economies afloat. In December 1973, a
decision was taken at a conference of finance ministers of Muslim countries in Jeddah, Saudi
Arabia, to establish this international economic institution in the Islamic model.

The bank was inaugurated in Jeddah in July 1975 at the inaugural meeting of the proposed
board of directors or the Board of Governors, a symbol of the hopes and aspirations of the
Muslim Ummah. However, the bank officially started operations on 15 Shawwal, 1395 (October
20, 1985).

3.Financial Year
The IsDB’s financial year used to be the lunar Hijra Year (H). However, on 1 January 2016, the
financial year was changed to the Solar Hijra year starting from 11th of Capricorn
(corresponding to 1 January) and ending on 10th Capricorn (corresponding to 31 December of
every year)

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4.Language
The official language of the bank is Arabic, but English and French are additionally used as
working languages.
5.VISION
The Islamic Development Bank strives to become a world-class development bank, inspired by
Islamic principles, that helps to significantly transform the landscape of comprehensive human
development in the Muslim world and to restore its dignity
6.MISSION
To promote comprehensive human development, with a focus on the priority areas of
alleviating poverty, improving health, promoting education, improving governance, and
bringing prosperity to the people
7.Headquarter & Regional Hubs
The IsDB is headquartered in Jeddah, the Kingdom of Saudi Arabia, and has 10 Regional Hubs in
Abuja, Nigeria; Almaty, Kazakhstan; Ankara, Turkey; Cairo, Egypt; Dakar, Senegal; Dhaka,
Bangladesh; Jakarta, Indonesia; Kampala, Uganda; Paramaribo, Suriname; and Rabat, Morocco
with a Centre of Excellence in Kuala Lumpur, Malaysia.
8.Capital
At its 45th Annual Meeting, the IsDB’s Board of Governors approved (via circulation) the 6th
General Capital Increase of ID5.5 billion. As at the end of 2021, the subscribed capital of the
IsDB stood at ID50.6 billion

9.Purpose

The objectives of the Islamic Development Bank are:

1. Conducting interest-free transactions, investments and trade;

2. Providing financial assistance to member countries for economic development and
production oriented projects;
3. Financing of foreign trade of member countries;
4. Participating in the social development of member countries; And!
5. To co-operate in any lawful endeavor for the socio-economic development of the Muslim
Ummah irrespective of country.

10.Priority Areas
To realize these objectives, the IDB Group will focus on the following six priority areas:

• Human development
• Agricultural development and food security
• Infrastructure development
• Intra-trade among member countries

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• Private sector development
• Research and development (R & D) in Islamic economics, banking and finance

11.The nature of the work

The list of jobs accepted by IDB is quite long. However, these programs are pursued for the
overall socio-economic welfare of the member countries. Not only that, it has a program for the
welfare of Muslim inhabited towns of non-member countries. The proposed and adopted
programs of the bank are as follows: -

A.Investing in specific projects to build economic and social foundations in member countries;
B. Providing capital through loan grants to government investment initiatives of member
countries;
D. Leasing to member countries expensive practical equipment (such as oil tankers, cargo and
fishing vessels, equipment, factories, trains, etc.);
E. Taking deposits and increasing funds from member countries;
F. Management of trust funds;
G. Formation and management of special funds to assist the Muslim public in non-member
countries;
H. Arranging special projects and financial assistance for the least developed member
countries;
I. Providing assistance to member countries in foreign trade, especially in the collection of
capital goods;
J. Provide technical assistance to member countries;
K. Provide training to people involved in development work in member countries;
L. To provide financial and banking support to economic and banking institutions in Muslim
countries to participate in various activities in accordance with Shariah in their respective
countries;
M.The surplus money that will not be required for the operation and operation of the bank is
invested in the appropriate sector; And
N. Participate in activities that will help the bank achieve its goals and objectives.

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12.Where we work

The work of the IsDB can be seen around the world, with operations in four core regions: Asia
and Latin America; Europe and Central Asia; the Middle East and North African; Sub-Saharan
Africa.

Beyond our countries we also provide support to Muslim communities in non-member

countries, including those afflicted by conflict and natural disasters. Altogether, our work
touches the lives of 1 in 5 of the world’s population.

Asia and Latin America

By population, Asia and Latin America is the largest of the four regions that the IsDB operates in
with close to 700 million people to support.

There is wide spectrum of income levels in the region, where many nations are low-income
countries, and the remainder either middle-income or high-income. This creates a number of
unique and diverse challenges.

The short-term challenges of the countries in this region range from sustaining growth
momentum and strengthening fiscal and financial stability, to managing capital outflows,
achieving food security and reducing income inequality.

Looking ahead, in the medium to longer-term, the objective is to help promote higher and more
inclusive growth, build infrastructure that will help to boost productivity, address the risk of

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climate change and environmental crises, and promote the development of small and medium
sized enterprises (SMEs).

The Middle East and North Africa (MENA)

The Middle East and North Africa (MENA) is the third largest region by population with over 420
million people.

There is a spread of income levels, with high-income countries such as Saudi Arabia or Bahrain
benefiting from oil-dominated economies, in contrast to lower-income countries such as
Yemen.

As with Europe and Central Asia, the member countries face a diverse range of challenges. In
the short-term, sustaining economic growth, containing the large fiscal and balance of payment
deficits, and building resilience to external shocks are all key. In the medium-to-longer term the
region must improve competitiveness, and diversify its production base and exports, address
youth unemployment, and promote regional integration.

Sub-Saharan Africa
Sub-Saharan Africa is the second largest region by population size, with close to 500 million
people.

The region has the lowest per capita income of the four regions, with only Cameroon, Côte
d’Ivoire, Gabon and Nigeria considered middle-income countries, the rest being low-income.

While significant progress has been made in reducing poverty since 2000, it remains pervasive.
The region faces an enormous infrastructure gap, the investment climate and regulatory
environment are relatively poor, and there are still weaknesses in governance and institutional
capacity. Of the 16 countries worldwide, experiencing ‘alarming’ situations of hunger, five are
IsDB member countries in Sub-Saharan Africa. Consequently, the region’s short-term challenges
include sustaining growth momentum and strengthening fiscal stability, achieving food security,
developing the agricultural sector and tackling youth unemployment. Medium-to-longer term
challenges include the development of human capital as well as infrastructure.

Europe and Central Asia

Europe and Central Asia is the smallest region by population for the four regions, with circa 161
million.

Member countries in the region face a diverse set of challenges due to their differing historical
backgrounds and geopolitical positions. As a result, stability in the short-term is crucial and the
challenges to be overcome include enhancing their resilience to external shocks, strengthening
their fiscal, financial and political stability, addressing food insecurity and reducing income
inequality.

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In the medium to long-term, countries in this region must enhance cross-border infrastructure
in order to support trade with landlocked member countries. They will also need to foster
inclusive growth and create jobs for their young people. Other challenges include moving their
economies away from natural strengthening regional cooperation by lowering regional trade
barriers and bolstering SMEs.

13.What we do /Functions (Sectors Wise)

At the IsDB, we are incredibly proud of the work we do to aid the development of our 57
member nations. The financing we provide reaches, and provides meaningful changes to, nearly
one fifth of the world’s population. In order to have the greatest impact, we believe it is
important to have a diverse portfolio of sectors where we allocate our financing, and we focus
our work on the following areas:

Science, technology and innovation (STI)

Science, technology and innovation are continuously recognized as strategic drivers of
economic growth. With the right tools, and the right environment, innovators and the business
community can tap in to the potential of STI to develop innovative solutions to the
development issues facing their communities.

We launched the first ever online platform for the developing world, Engage, which aims to
connect innovations with market opportunities and funding. To further ensure that innovators,
start-ups and corporations have access to a steady flow of financing facilities, the IsDB
established the Transform fund in tandem with Engage. This $500m fund is one of the largest of
its kind and specifically focused on finding innovative solutions to global development
challenges.

Infrastructure
A resilient, sustainable infrastructure network plays a crucial role in ensuring the continued
economic growth of developing countries. By investing in urban and agricultural development,
as well as the energy and transport requirements that these areas demand, we can continue to
enable our projects to maintain and enhance and their impact under a sustainable model.

Education
Education is the key to unleashing the potential of future generations, and that’s why we fund
skills and education training – especially for women and young people in rural areas – that
enables access to the labour market and improves their life prospects. The IsDB Scholarship
Programmes aim to promote excellence in science within our member countries and amongst
Muslim communities in non-member countries. To date, we have supported over 13,000
students, with funding of US$133.7 million, and 90% of graduates have returned to their
respective countries to join their home institutions.

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Health
As a cornerstone for human development, the Health sector is a priority area for the IsDB. We
focus on the prevention and control of both communicable and non-communicable diseases,
improving access to and the quality of healthcare services, and reducing financial barriers to
access of available resources.

Humanitarian Relief
We believe we have a crucial role to play in providing Humanitarian Relief across the world. Our
member states include 26 of the world’s poorest nations, which are especially vulnerable to
natural disasters and the impact of climate change. By investing in these countries and funding
projects, we aim to improve the quality of life for people living there.

Women & Girls

To combat poverty and drive development, it’s vital to tap, and unleash, the potential of
everyone. That’s why we’re committed to supporting Women and Girls across the world. We do
this by targeting access to finance, education/school enrolment and health programmes,
including maternal health – areas that traditionally have proven to be barriers to greater female
emancipation.

14.Membership
Currently 56 countries are members of the Islamic Development Bank. The main condition for
becoming a member of the bank is that the member country must be a member of the
Organization of Islamic Cooperation (OIC). It will also have to contribute to the financing of the
bank and meet all the conditions of the IDB policy-making board.

Ranked on the basis of paid-up capital (as of August 2015),[9] major shareholders include:

1. Saudi Arabia (26.57%)

2. Algeria (10.66%)
3. Iran (9.32%)
4. Egypt (9.22%)
5. Turkey (8.41%)
6. United Arab Emirates (7.54%)
7. Kuwait (7.11%)
8. Pakistan (3.31%)
9. Libya (3.31%)
10. Indonesia (2.93%)

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15. IDB & Bangladesh

Bangladesh is one of the founding members of the IsDB. The bank has been providing financial
assistance since its inception in the form of grant, project loan, trade financing, private sector
financing, export credit guarantee, etc.

The Islamic Development Bank will officially launch its regional office in Dhaka next week.

The IDB has taken the decision as part of its ongoing decentralisation push – a move that is
expected to help the lender take quick decisions on projects.

Prime Minister Sheikh Hasina will formally inaugurate the regional hub in presence of IDB
President Bandar MH Hajjar on Sunday.

The office will be set up in the IDB Bhaban in Agargaon and will be the 12th hub of the
development lender. According to Economic Relations Division (ERD), the regional office will
cover member countries such as Bangladesh and the Maldives and some non-member Asian
countries such as India, Sri Lanka, Myanmar, Nepal, Bhutan and China.

According to the Foreign Aid Budgetary Account of the ERD, Bangladesh was the fourth largest
recipient of the IDB financing in 2017, receiving $900.6 million. The amount was 9.2 percent of
the IDB's total financing for the year.

Since membership in 1974, IsDB has created 2.2 million jobs in Bangladesh. In addition, the
Bank’s financing assisted the country to reach the following socio – economic results:

• In Energy Sector, the installed energy generation capacity was increased by about 3,400
MW of power, powering 258,000 homes.

• In Agriculture Sector, the Crop production increased by 2.5 Million tons.

• In Education sector, approximately 100,000 students benefited from access to education

and better facilities.

• In Health Sector, about 720,000 patients received treatment each year.

• In Telecom Sector, about 1500km of Fiber Optic Network was built and about 160
million new subscriptions for land/mobile/internet connections were supported.

• In Transport Sector, annual passenger capacity at airports was increased by 5.2 million
and 1,523 km of local roads were built or upgraded.

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• Water and Sanitation related support benefited about 13,500 households with access to
potable water.

• Women and Youth Empowerment Projects improved life of about 10,000 women and
youth.

• Under COVID-19 response on Hygiene facility, more than 6.34 million people will gain
daily access to handwashing facilities as 25,600 standard handwashing stations will be
installed in slums & critical public places across the country. About 3,750 key public
institutions including remotely located health care centers will gain reliable
handwashing and water supply facilities. More than 23,000 frontline WASH workers will
be provided & protected with personal protection equipment.

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16. Main Products and Services of IDB

1. Scholarship Programs member countries

2. Science & Technology Program
3. Special Assistance
4. Trade Financing & Promotion of Intra-Trade, Regional Integration
5. Capacity Development & Technical Cooperation
6. Insurance of Investment & Export Credit
7. Project Financing (Public & Private)
8. SMEs,
9. Microfinance/ Fund / Asset Management
10. Research and Training (Islamic Economics & Finance)
11. Development of the Islamic Financial Services Industry
12. Technical Cooperation among member countries
13. Debt Relief

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14. Emergency Relief
15. Insurance
16. Information Service

17. Organization Structure and Management

1. Structure and Management The administrative branch of the bank consists of the Board
of Governors, the Board of Executive Directors, and the President.

2.1 Board of Governors member country on the Board of Governors. It meets once a
year to review the activities of the Bank for the previous year and to decide future
policies.

2.2 Board of Executive Directors The Board of Executive Directors (BOD) is composed
of eleven members, of whom five are appointed, one from each of the five member
countries having the largest number of shares (Saudi Arabia, Kuwait, Libya, Turkey and
UAE), and the remaining six elected by the Governors of all other member countries.
Executive Directors hold office for a term if three years and may be re-elected. The BOD
is responsible for the direction of bank. Board of Governors: A Governor and an
Alternate Governor represent each country on the Board of Governors. It meets once a
year to review the activities of the Bank for the previous year and to decide future
policies.

2.3 President: The Board of Governors elects The President for a renewable term of five
years. He is the Chief Executive of the Bank and the Chairman of the Board of Executive
Directors. He conducts the business of the Bank under the direction of the Board of
Executive Directors.

2.4 Vice Presidents: Three Vice Presidents assist The President. A Vice President holds
office for a renewable term of three years. He exercises such authority, and performs
such functions in the administration of the Bank, as may be determined by the Board of
Executive Directors.
There are three high-powered committees consisting of executive directors. They are: a)
steering committee; B) Finance and Administrative Committee and c) Long Term Trade
Finance Committee. In addition, there are a number of special committees which are
responsible for the management of scholarships and pensions for Muslim students in
the least developed member countries, Islamic Bank Portfolio, Unit Investment Fund,
non-Muslim countries.

18. IsDB Group

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Islamic Development Bank Institute (IsDBI)

IsDBI was established in 1401H (1981) to help the Bank in discharging its functions in the fields
of research and training assigned to it by its Articles of Agreements. IsDBI's objectives are: to
undertake research and provide training and information services in member countries and
Muslim communities in non-member countries to help bring their economic, financial and
banking activities into conformity with Shariah and to further accelerate economic
development and enhance cooperation amongst them.

Islamic Corporation for Insurance of Investments and Export Credits (ICIEC)

ICIEC was established in 1415H (1994) with the objective to enlarge the scope of trade
transactions and investment flows among the member countries of the Organisation of Islamic
Conference (OIC). ICIEC offers the following services to exporters, banks, and investors: (i)
export credit insurance to cover the risk of non-payment in relation to cross border trade and
trade finance transactions; (ii) investment insurance to cover country risk in relation to foreign
investments among member countries; (iii) reinsurance of operations covered by ECAs in
member countries.

Islamic Corporation for the Development of the Private Sector (ICD)

ICD was established in Rajab 1420H (November 1999) as an independent entity within the IDB
Group. The mission of the ICD is to complement IDB through the development and promotion
of the private sector, as a vehicle for economic growth and development in member countries.
The main objectives of the ICD are: to identify investment opportunities in the private sector in
the member countries so as to accelerate economic growth, to provide a wide range of Shari'ah
compatible financial products and services and to expand access to Islamic capital markets by
private companies in member countries.

International Islamic Trade Finance Corporation (ITFC)

The IDB Board of Governors approved the establishment of the International Islamic Trade
Finance Corporation (ITFC) in its meeting held in Jumad Awwal 1426H (June 2005). The ITFC
Articles of Agreement were cleared during the Annual Meeting of the IDB held in 1427H (2006)
in Kuwait. The purpose of the Corporation is to promote trade of the member countries of the

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Islamic Development Bank through providing trade finance and engaging in activities that
facilitate intra-trade and international trade.

World WAQF Foundation (WWF)

WWF was established by IDB in 1422H (2001) in response to a need to create a global entity for
Waqf, in collaboration with Waqf organizations governmental, NGOs and philanthropists from
the private sector. The objectives of the WWF are as follows: (i) Promoting and activation of
Awqaf to contribute to the cultural, social and economic development of member countries
and Muslim communities, and to alleviate hardship among the poor, as well as sponsoring and
supporting Waqf organizations with expertise and coordination. (ii) Supporting organizations,
projects, programmes and activities in the educational, health, social, and cultural fields. (iii)
Providing support in the conduct of studies and scientific research in the field of Waqf. (iv)
Assisting countries and organizations in drafting Waqf legislations.

The Islamic Solidarity Fund for Development (ISFD)

“The Islamic Solidarity Fund for Development (ISFD) was established as a special endowment
fund (Waqf) in 2007 with the mandate to alleviate poverty in OIC members; Since its inception,
the Fund has focused on providing concessional finance for programs that: * promote pro-poor
growth, *support human development, especially healthcare and education, *provide social
safety nets for the poor and, * enhance good governance and access to public services by the
poor. As a Waqf, ISFD operations are financed generally through the net income realized from
the investment of its capital resources.”

19.IDB Sources of Funds

Ordinary Capital Resources (OCR)

EQUITY
i. The capital subscribed in accordance with Article 5; ii. Deposits placed with the Bank
pursuant to Article 8; iii. Amounts received in repayment of loans, from the sale of equity
holdings; iv. Amounts received in repayment of loans, from the sale of equity holdings
and as income from investments related to ordinary operations and; v. Any other funds
received by the Bank or placed at its disposal, or income received which does not form
part of IDB Waqf Fund Resources and Trust Fund Resources.
RESOURCE MOBILIZATION

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 i. Funds mobilized from the Islamic capital market for medium and long term funding
requirement; ii. Funds mobilized from the Islamic capital market by issuing Sukuk
(Islamic Bonds) on a Public and Private Placement basis; iii. Funds mobilized from the
Islamic money market for short-term funding requirement; iv. Funds mobilized from the
Islamic money market on a short and medium term basis through commodity Murabaha
placements.
Islamic Solidarity Fund for Development (ISFD)

ISFD is a Waqf/trust fund under the IDB. Its capital consists of voluntary contributions from the
Member Countries (MCs) of the Organization of Islamic Cooperation (OIC) as well as IDB. For its
activities, the Fund utilizes:

1.income from the Waqf;

2.funds derived from its operations; and

3.other resources received by the Fund.

IDB Waqf Fund

In 1417H, the “Special Accounts of the Islamic Development Bank - Ordinary Capital” consisted
of

• Special Reserve;

• Special Assistance; and

• Special Account for Least Developed Member Countries.

In 1418H, the balances of the these accounts, together with the related assets and liabilities,
were transferred to the Special Account Resources Waqf Fund (the “Waqf Fund”).

The balance of ‘Special Reserve Account’ formed the balance of the Waqf Fund principal
amount. The Waqf Fund derives its income from the following sources:

I. Return from cash and cash equivalents and fixed deposits with banks;
II. Profit on managed investment;
III. Net income from deposits of the Unit Investment Fund (UIF); and
IV. Investment in Murabaha and other funds.

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20.Major Activities in last Decades

As an internationally important financial and social institution, IDB has already gained
recognition in all walks of life and has been able to rise to a prestigious position. As its
cooperation on various issues has kept the economies of the member countries strong, the
bank itself has made huge profits. This fact can only be captured by taking a brief account of the
activities undertaken by ledeger.

A.Fundraising
Since the bank is a financial institution, it has to participate in investment and business
activities, earn money to meet operating expenses. Making a profit will also be one of his goals.
For this we need sufficient funds to invest. Although the paid-up capital of the shareholders is a
large part of this fund, the bank has to raise funds from other sources.

In the case of ordinary commercial banks, the funds deposited by the depositors provide this
fund. But since IDB is a special type of bank, there is no way for it to raise funds from
conventional sources. So it had to take special steps. Sources of finance for the bank include
paid-up capital of member countries, deposits received from investment deposit schemes and
contributions made by member countries to special assistance funds. Thus the amount of funds
is gradually increasing and the bank is conducting financing activities from it. In addition, three
special initiatives have been taken to increase the fund: (1) Unit Investment Fund, (2) Islamic
Banks Portfolio for Investment and Development and (3) IDB Infrastructure Fund.

1. Unit Investment Fund (UIF): The Bank launched a new initiative called 'Unit Investment
Fund' from January 1, 1990 (1410 AH) to increase its own funds and assist in the
collection of valuable assets in the member countries. It will be managed differently but
will remain in charge as the President of the IDB. The fund is made up of an initial
approval and paid-up capital of USD 100 million. Funds are divided into units and valued
at ০ 1.0 per unit. Companies wishing to participate in the investment have to buy units
at a minimum of one lakh US dollars or its multiples. In the first phase, fifteen Islamic
financing institutions bought the entire unit of the fund. Of these, five are from Kuwait,
four from Saudi Arabia, three from Malaysia and one each from Bahrain, Qatar and
Denmark. Within four years the initiative was a huge success. As a result, the authorized
capital was increased by US দশ 100 million in January, 1994 (Shawwal 19, 1414 AH) and
was repaid immediately. In this context, in 1995, a further increase of ক োটি 300 million
was approved. Units worth US সোড়ে 75 million have already been sold from this increased
fund. At present, the total paid-up capital stands at. 32.50 billion.

The funds are being used mainly for the collection of goods or materials for sale in leases

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 and installments. As a result of this new initiative, the bank's investable funds have
increased, and the institutions that have surplus money in their hands have opened up
new avenues for them to invest in compliance with Shariah. As per the rules, 75% of the
net profit should be distributed among the unit buyers; Islamic Development Bank
maintains 10% as Mudarib and 5% as reserve to keep the value of capital stable. The
amount invested from this fund in the last five years was 32.49 crore US dollars. The
amount of capital invested is more than the paid-up capital as a result of reinvesting the
part that has already been recovered from the previously invested money. By the way,
the amount of investment return from this fund is very satisfactory. As a result bonus
shares have been issued to the initial unit buyers.

2. Islami Bank Portfolio (IBP): The program was adopted in February, 1986 (Jamadius
Sunny, 1407) with the aim of increasing the IDB funds as well as helping the member
countries to make profits by using the surplus funds of Islami Bank. Its full name is
Islamic Bank’s Portfolio for Investment and Development.
Under the scheme, Isrami banks are issued 25-year certificates worth the equivalent of মোর্ ি ন
100 each. Banks can also buy and sell these certificates at market price if required. This
opportunity is also open for IDB itself. The funds will be used for leases, equity
investments and foreign trade between member countries. 90% of the profits earned
from the money invested will be distributed among the shareholders. IDB will get 5% as
Mudarib and the remaining 5% will be kept as reserve to keep the value of capital stable.
So far, 21 Islamic banks and financing institutions, including IDB, have taken part in it.

The authorized capital of the scheme is ৮ 370 million, and the paid-up capital is ০ 90 million.
In addition, IDB has allocated US ১৫ 15.0 crore for leases and an additional US ০ 6.0 crore
for commercial activities. The first year will be 1424 AH. Under this program, US ৩ 339
crore has been sanctioned for 214 projects in 19 member countries. Islamic banks are
reaping three benefits from this initiative:
1. Indirectly with minimal risk they are gaining the advantage and experience of financing in
international trade;

2. Have the opportunity to make a profit by using the surplus money effectively, and

3.Banks have benefited from expanding the scope of product selection for their large
customers as well as introducing new products to meet the required funding gap.

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 2. IDB Infrastructure Fund (IIF): The formation of the IDB Infrastructure Fund on behalf of
the IDB was an exceptional attempt to welcome private investment in building the
economic infrastructure of the member countries. The fund was established in 1997
with a target of ক োটি 1 billion in equity capital. As the main entrepreneur, IDB owns 51%
of the capital. The activities of the fund will be conducted from Bahrain. The minimum
equity investment of the fund will be one crore US dollars. The maximum equity in any
project will be one billion US dollars. The fund will seek to build large syndicates in close
collaboration with Islamic banks and other Islamic financial institutions in different
countries. Priority will be given to investment in telecommunication, petrochemical
industry, transportation, natural resource extraction, power generation etc. From this
fund, US ২০ 20.6 billion has been invested in five projects of four member countries in
1424 AH.

B. Project financing method

The IDB has been using various methods from its Shariah approved methods to utilize its funds.
The policy to be followed in the use of funds can be divided into three parts:

(1) project financing, (2) commercial financing and (3) special support financing. Initially, only
loans and equity were used to finance the project. Subsequently, leases (198), profit sharing
(198), installment sales (1985), istisna (1997) etc. were gradually adopted. There is also a
program to provide technical assistance to member countries under the project financing
program. Under project financing, a total of 712.89 crore Islamic dinars has been allocated till
2004 (1424 AH) according to various investment methods. Of this, 251.13 crore Islamic dinars
(32.96%) in the credit sector, 18.50 crore Islamic dinars (21.99%) in the lease sector and 26.42
crore Islamic dinars (3.83%) in the equity sector to the national development finance
institutions. Providing assistance of 16.7 crore Islamic dinars (2.48%), 6.24 crore Islamic dinars
(0.62%) for profit sharing activities, 120.52 crore Islamic dinars (15.62%) for istisna and 13.23
crore Islamic dinars for technical assistance (1). 84%). An illustration of this financing can be
found from the table.

Debt: In order to strengthen the financial base of the member countries, IDB has been
providing valuable foreign exchange through the grant of funds for the development and
growth of the economic infrastructure of those countries. A total of 251.13 crore Islamic dinars
have been sanctioned in 43 member countries in this sector since its inception. The above
amount has been used for construction and development of roads and harbors, expansion of
power plant construction and distribution system, expansion of irrigation facilities, construction
of sewerage, drinking water supply in rural areas, construction of government factories,
establishment of hospitals, expansion of education etc. [see Table 2]. 80% of this has been
spent on cooperation in the least developed countries. The repayment period of project grant
under this scheme is quite long - 15 to 25 years. In addition, a discount of 3-6 years is given at
the beginning. The bank charges a maximum service charge of 2.5% per annum to cover the
actual expenses. However, in the case of least developed member countries, the rate is only
0.75%. The bank's executive council also increased the amount of single project financing in

Page 22 of 51
1992. As a result, the amount has now increased from 30.0 lakh Islamic dinars in 1991 to 49.0
lakh Islamic dinars.

Leasing: Since its inception, the IDB has taken steps to lease various practical materials to
member countries. These include oil tankers, freight and fishing vessels, machinery, railway
wagons, freezers, cattle transport vehicles, housing and road construction equipment, etc.
Since its inception till date, the Bank has sanctioned 184.50 crore Islamic Dinas in this sector.
[Note Table-2] 128 projects have been completed with this money. Of these, only in 1424 AH, 6
leases have been settled in 6 member countries. Leases are usually given for a period of 6 to a
maximum of 12 years. However, in the beginning, a grace period of 2-3 years is given. In this
case, if the mark-up is paid within the stipulated time limit, the country concerned gets a 15%
discount on the total mark-up. The mark-up rate has been reduced from 8% -9% per annum to
6.5% -8.5% in 1992.

Sale in installments: Under this program, expensive equipment and equipments [such as power
generation, water supply, installation of oil pies] are sold to the recipient member countries in
installments. Usually the price has to be paid within 10-12 years along with the prescribed
mark-up. Usually the price has to be paid within 10-12 years along with the prescribed mark-up.
Like the lease, the mark-up rate has also recently been reduced from 8% 09% to 8.5% -8.5%.

Ownership is also given at the time of transfer of any content to the customer of this scheme.
Investment activities in this manner started in 1405 AH and till date 155.91 crore Islamic dinars
have been invested in 164 projects.

Table-2
Figure 1421–1424 AH of methodical investment of Islam Development Bank. (Crore Islamic
dinars)
Table 2: Methods wise Investment scene of Islamic Bank
Year 1421-1424 Hijri

Page 23 of 51
 In crore Islamic Dinner
Method 1421 1422 1423 1424 1396-1424
number amount number amount number amount number amount number amount
20.27
(34.03% 20.69 22.08 23.65 251
Debt 52 ) 49 (29.14%) 48 (31.39%) 53 (28.63%) 579 (32.97%)
0.52 0.31 0.44 .19 28.42
Equity 4 (0.87%) 2 (0.44%) 1 (0.62%) 2 (0.23%) 108 (3.73%)

3.55 11.80 10.92 13.78 167.55

Lease 2 (5.96%) 6 (16.62%) 4 (15.50%) 8 (16.68%) 127 (21.99%)
23.58
(39.60% 8.73 20.46 7.90 155.9
Sales in installment 8 ) 10 (12.30%) 14 (29.09%) 11 (9.56%) 168 (20.47%)
6.25
Partnership in profit 0 0 0 0 0 0 0 7 (0.82%)
23.58
(39.60% 25.85 14.70 36.30 120.52
Istisna 16 ) 13 (36.41%) 7 (20.88%) 19 (43.93%) 70 (15.82%)
1.10 2.74 1.00 18.78
Lines of Financing 1 (1.84%) 2 (3.86%) 1 (1.42%) 0 0 19 (2.46%)
1.13 .87 0.78 0.8 13.23
Technical Assistance 33 (1.90%) 39 (1.22%) 29 (1.1%) 24 (0.97%) 432 (1.74%)
70.99 70.38 82.62 761.79
Total 116 129 (100%) 104 (100%) 117 (100%) 1506 (100%)

Source: Annual Report of Islamic Development Bank, 1424 AH.

Equity Finance: The bank has invested 26.42 crore Islamic dinars in this sector since its
inception. [Note Table-2]. This money has been invested in various projects of the member
countries. Many of the projects have already started production. The projects in which the
money has been invested include cement factories, yarn and textile mills, board and paper
mills, pipe industries, wood furniture factories, agro-processing factories, etc. Banks receive
dividends on equity investments.

Istisna: Istisna means the seller will deliver the goods at a fixed price within a specified time as
per the specific specification or order of the cabra. The system was introduced in 1997. Its main
objective was to expand trade and increase the production capacity of capital goods among the
member countries. It also has the potential to be used to build infrastructure in the private
sector. So far, 120.52 crore Islamic dinars have been allocated here.

Collaboration with National Development Finance Institutions: One of the most important
sectors of IDB fund investment is the joint financing of members with the National
Development Finance Institutions. From the very beginning, banks have been participating in
various projects of member countries in this manner. The Bank is investing in socially useful
public utility projects in partnership with various Arab national funds, African Development
Banks and governments of member countries.

Page 24 of 51
Later, in 1993, the IMF and the World Bank group took part in the annual meeting of the IDB to
restructure the investment program in this manner. Under this program, IDB has so far
approved investments of a total of 16.7 crore Islamic dinars in 25 member countries.

Profit Sharing: Investment based on profit sharing is one of the programs of IDB. The bank has
suspended investment in this system for a few years and has resumed investment from 1424
AH. The bank has so far invested a total of 7.24 crore Islamic dinars in seven projects. In 1424
AH, the bank invested ১ 1.15 billion to build a commercial complex in Sharjah, United Arab
Emirates.

Technical Assistance: Under this program, financial assistance in the form of grants or loans or
partial loans or partial grants is given for the work of feasibility study, survey, research,
consultation or advice etc. before any project is undertaken in the member countries. Technical
assistance is also provided for detailed design of project implementation stage, appointment of
consultants etc. From the year of its establishment till 1424 AH, the bank has disbursed a total
of 13.23 crore Islamic dinars in 432 such activities in 39 member countries. In 1424 AH alone,
72.0 lakh Islamic dinars have been approved in 24 projects. In addition, a total of 13.7 million
Islamic dinars (or ৯ 18.9 million) has been approved in Europe for six projects in Albania and five
Central Asian member states - Azerbaijan, Kyrgyzstan, Tajikistan, Kazakhstan and Turkmenistan.

It would not be irrelevant to mention here that the IDB, through its policies, procedures and
strategies, continues to strive for the socio-economic development of the Muslim population,
not just of the member countries. Twenty-one least developed countries are given priority
among the member countries. These countries include Afghanistan, Yemen, Uganda, Comoros,
Gambia, Guinea, Guinea-Bissau, Djibouti, Niger, Burkina Faso, Bangladesh, Benin, Maldives,
Mali, Mozambique, Mauritania, Shad, Senegal, Sierra Leone and Sudan. The Bank attaches great
importance to the expansion of agriculture in these countries, development of industry,
extraction and processing of mineral resources, transportation and transportation, education
and social development, and establishment and development of public utilities (power
generation and distribution, water supply, hospital establishment, etc.).

Project Based financing

In financing the project, the bank has not given much importance to the social needs in the past
but has given more importance to the profitability of the project. This has changed since 1995.
Following the adoption of the Strategic Agenda for the Medium Term Financing this year, the
areas that IDB has prioritized are: Development of agriculture and food security, small and
medium scale industries, social sector and transport and communication system. The
completed and ongoing projects funded by IDB can be divided into five major categories.
Namely: (a) Agriculture and agro-based industries (b) Industries and mines, (c) Social
development, (d) Transport and communication and (e) Public utilities. The details of

Page 25 of 51
 allocations in these sectors in recent years can be known from Table-3. Below is a brief analysis
of these.

Table-3

Investment in General Activities of Islamic Development Bank (1424–1424 AH) (crore Islamic
dinars)

1421-1424 Hijri
Sector/year 1421 1422 1423 1424 1396-1424

Num Amount Numb Amount Numbe Amount Number Amount Number Amount
ber er r

Agriculture 16 3.5 15 3.95 15 11.12 23 13.37 310 114.16

and
Agriculture (5.88%) (5.57%) (15.80%) (16.19%) (14.99%)
related
Industry

Industry ----- ---- 3 4.20 1 3.40 1 2.78 104 60.63

and mine
(5.93% (4.83%) (0.34%) (7.96%)

Transportat 14 12.12 23 174.41 18 15.62 17 17.65 261 143.20

ion and
Communica (20.46%) (24.57%) (22.20%) (21.36%) (18.80%)
tion

Social 53 19.13 48 21.60 39 20.77 38 21.60 408 177.82

Developme
nt (32.12%) (30.43%) (29.52%) (26.14%) (23.34%)

Mass 21 22.14 18 20.57 14 15.02 22 28.19 261 218.13

Utility
(37.17% (28.98%) (21.35% (34.13%) (28.63%)
) )

Others 12 2.60 14 3.20 17 4.43 16 1.52 162 47.84

(4.36%) (4.52%) (6.30%) (1.84%) (6.28%)

Total 116 59.56 121 70.99 104 70.38 117 82.62 1506 761.79

(100%) (100%) (100%) (100%) (100%)

Page 26 of 51
Source: Annual Report of Islamic Development Bank, 1420 AH

Public utility: It is currently in the first place in terms of the amount of programs and project
financing adopted by the bank. Among the programs undertaken in this sector are the provision
of safe potable water supply, development of renewable energy, expansion and modernization
of sanitation facilities. Compared to the past, the allocation in this sector has been increasing
continuously since 1995. So far, a total of 216.13 crore Islamic dinars have been allocated,
which is 26.83% of the total allocation.

Social Development: Education and health development are the most important sub-sectors of
this sector. The Bank has been providing financial assistance in the areas of curriculum
development, teacher training, book publishing, collection of school textbooks, provision of
primary health care facilities, etc. For this, a total of 16.62 crore Islamic dinars has been
allocated so far which is 23.34% of the total allocation. Although its position has been the
second in the last four years, its average position has declined due to not giving such
importance in previous years.

Agriculture and agro-based industries: The main objective of the Bank's financing in this sector
is to help the member countries to cope with the food crisis and to become self-sufficient in
food along with the development of agricultural systems. In addition to providing more
employment in the agricultural sector as well as helping to alleviate poverty and build agro-
based industries, 114.16% crore Islamic dinars have been allocated so far. This amount is
14.99% of the total project allocation. In terms of importance, the sector has been in the third
position for the last 3/4 years.

Industry and Mining: IDB's strategy in this regard is to strengthen and expand the industrial
base of the member countries through the support of small and medium scale entrepreneurs.
Apart from assisting small and medium entrepreneurs through government financing
institutions of the member countries, assistance is also being provided for the implementation
of the project through leasing. Extraction of mineral resources and location of mining based
industries (such as petroleum refining plant, mineral fertilizer) is also one of the objectives of
this financing. The share of this sector in the total disbursements of the bank is 80.83 crore
Islamic dinars or 8.96%. As can be seen from Table-3, the importance of this sector has changed
in different years.

Transportation and communication: Transportation is civilization. In addition, globalization and

trade liberalization have hit IDB member countries. They want wide and long modern roads,
improved clothing, freight ships, trains and planes to expand trade. We want fast and safe
transportation and communication system from small town to capital and industrial area and
port. So it is not surprising that IDB will allocate large sums of money for the development of
this sector.

Page 27 of 51
In addition to the construction of affordable long roads, port development, especially loading
and unloading of modern means of safe shipping, has gained special importance in this regard.
So far, a total of 143.20 crore Islamic dinars has been used for these works in the total
allocation of which 18.60%.

Others: The bank has so far disbursed 48.64 crore Islamic dinars (8.28%) to newly established
Islamic banks in different parts of the world to alleviate the crisis in financing their projects and
to meet the special needs of financing institutions interested in Shariah-compliant investments
in different countries.

D. Commercial activities

Financing of Import Trade: This program was started in 1986 (1396 AH) to assist the member
countries in import trade. Earlier it was called Foreign Trade Financing Operations. It has been
renamed Import Trade Financing Operations (ITFO). The Islamic Development Bank has so far
contributed ৬৮ 1.61 billion to the project.

The products for which this financial assistance has been provided are: crude oil, refined
petroleum products, urea fertilizer, cement, sulfur, rock phosphate, edible oil, paper and pulp,
sugar, gypsum, jute products, cotton, sunflower seeds, , Various intermediate manufactured
materials, iron ore, ammonia, copper, bicycle, plywood, rubber, petrochemical, aluminum,
kaolin etc. Except for the oil-rich member countries, all have received financial assistance in the
form of foreign exchange under the scheme.

Export Financing Activities: This special program started from 1976 (1406 AH). Formerly it was
called Longer Term Trade Financing Scheme. It has been renamed Export Financing Scheme
(EFS). Its main purpose is to co-operate in the purchase and sale of obsolete goods and capital
goods. In this case, both the importing and exporting countries must be members of the Islamic
Development Bank and the Organization of the Islamic Conference. So far 23 member countries
have joined the scheme.

These countries include Saudi Arabia, Malaysia, Tunisia, Kuwait, Turkey, etc. Products and
capital goods that have been traded on a long-term basis include telephone cables, plywood,
tires, calcium carbonate, palm oil, aluminum conductors, rolling mill machinery and equipment.
A total of ১২ 123.31 million has been approved for investment in the program so far.

F. Waqf fund activities

Among the IDB member countries are a number of countries whose people live below the
poverty line. The bank has adopted special assistance schemes in various developmental
programs undertaken by the government to improve the lot of the people of those countries
whose per capita income is also the lowest. According to a decision taken by the Board of
Governors of the bank in 1399 AH, a separate fund called Special Assistance Account was

Page 28 of 51
formed with the proceeds from the accounts receivable and deposit accounts. Later in 1418 AH
its name was changed to Waqf Fund. The purpose of this fund is to:

1. Conduct training and research activities in order to bring the economy, finance and banking
activities of the member countries in line with Shariah;

2. Providing assistance to member countries in the event of natural disasters and catastrophes;

3. Assist in the implementation and development of the Islamic way of life; And

4. Provide special technical assistance to least developed member countries.

The Islamic Research and Training Institute (IRTI), one of the important institutions of the bank,
is being run from the funds of this fund. Happily, the amount of funding is increasing every year.
Activities are also increasing. For example, in 1409 AH, the amount of this fund was 8.64 crore
Islamic dinars. The following year it increased to 72.61 crore. In 1419 AH, the amount of this
fund was 79.40 crore Islamic dinars.

There is provision for member countries to provide financial assistance from these funds in
cases where special assistance is required but cannot be sanctioned from the statutory sector.
In addition, the fund also helps in the education and development of the Muslim population in
non-Muslim countries. Since its inception in 1399 AH (1989), USD 58.55 crore has been
sanctioned for 1016 projects. Of this, ৩ 8.43 billion has been allocated for Muslims in member
countries. 643 projects have been allocated for Muslims in non-Muslim countries at a cost of ১৯
19.53 billion.

Among the non-Muslim countries, India has the largest Muslim population at around 12 crore.
To help them, especially the unemployed and meritorious youth to get vocational training and
general education, IDB has sanctioned a special allocation of USD 300 million in 1405 AH. From
this allocation, the bank is assisting in specific and selected projects every year. So far, a total of
প্র ল্প 2.99 million has been allocated for 160 projects from the fund to assist Indian Muslims in
education and vocational activities. In addition, US ৫ 55.90 million has been allocated for 23
special projects to facilitate Islamic education and Arabic language practice for Muslim
minorities in 11 non-Muslim countries. These countries include the United States, United
Kingdom, South Africa, People's Republic of China, Burundi, Ethiopia, etc. The Bank's support
for education, health and rehabilitation programs for Afghan refugees arriving in Pakistan
deserves special mention.

Scholarship Scheme: IDB has launched Scholarship Scheme since 1983 (1404 AH) to facilitate
higher education and professional training in non-Muslim countries, especially in Eastern
European countries, Muslim countries of the defunct Soviet Russia and Muslim non-Muslim
countries in Africa. Muslim students can then avail this scholarship for higher education in

Page 29 of 51
reputed selected educational institutions in the country or in selected educational institutions
of IDB member countries. This money is given in the form of Hasana. At the end of the
education life, the students will enter the career and gradually pay this money. The students
will deposit the money in the waqf fund created by IDB in their respective countries and from it
the scholarships of meritorious students will be sanctioned again. This system has also been
introduced in the least developed member countries. Bangladesh is already enjoying this
benefit. There are opportunities for higher education and professional training in medicine,
engineering, agriculture, animal husbandry, pharmacy, accounting, finance, economics, etc. So
far, 6,626 meritorious students from 51 countries have been awarded scholarships under this
program, amounting to more than US ৫ 5.05 crore.

For the expansion of higher technology and scientific training in the member countries, a three-
year Ph.D. in IDB High Technology from 1409 AH. Decided to introduce scholarship for degree
and one year term post doctoral research. The scheme was launched in 1993 (1413 AH). In the
first phase, the project was adopted for 5 years, but at the end of the term, it has been
extended again for 6 years. MSc in Science and Technology for meritorious students from LDCs.
IDB has introduced a separate scholarship program from 1996 (1419 AH) to facilitate the
degree.

NGO and Women's Development: The work of these two new programs under the Waqf Fund
started from 1418 and 1419 AH respectively. So far, লক্ষ 600,000 has been spent on 24 projects
for training and capacity building at the grassroots level for the implementation of poverty
alleviation programs for the development of Islamic NGOs and women in member countries.

Welfare Program: Under this program, millions of animals sacrificed during the Hajj season in
Saudi Arabia are stored in cold storage in special processes and distributed to the least
developed and famine-stricken member countries. Millions of previously sacrificed animals
were bulldozed and buried in the sand. But this program was adopted from 1973 (1403 AH)
considering the needs of the Muslim Ummah, especially the nutrition of the people of the least
developed member countries. So far, the bank has delivered more than 14 million sheep and
camel meats to the poorest member countries and the poor Muslim population of non-Muslim
countries under this program.

G. Investment and export loan insurance

Another subsidiary of IDB is Islamic Insurance Corporation for Investment and Export Credit
(ICIEC). The organization was established in 1994 (1415 AH) for the purpose of increasing the
exports of the member countries and insuring the money invested in exports. The president of
IDB is also the president of this corporation. Its authorized capital is ten crore Islamic dinars.
Twenty-three countries have paid 50% of the IDB, the remaining 50%. Since July 1995, the
company has introduced investment insurance schemes in the light of Shariah policy against
foreign currency investment risks in trade, war, possible breach of contract by the contracting
government, political turmoil, etc.

Page 30 of 51
H. Special measures for private sector development

1. ICD: At the 25th Annual Meeting of the Board of Governors of the IDB (1420 AH), another
body, the Islamic Corporation for the Development of the Private Sector, was formed to
develop the private sector of the member countries. It will be managed by independent
management but the president of IDB will be the president of this corporation. Its authorized
capital is ক োটি 1 billion. IDB will pay 50% of the capital. Member countries will purchase 20% of
the capital. The remaining 20% will be purchased by government agencies of member
countries. As a result of this initiative, IDB's participation in the multilateral development of
member countries in the public sector as well as in the private sector has now been ensured.

2. World Waqf Foundation (WWF): This fund was established in 1422 AH (September 2001) for
the purpose of conducting Waqf activities worldwide and accepting donations from
philanthropists. Anyone can become a member by donating one million US dollars to this fund.
IDB itself has contributed US ২ 2.5 billion as initial capital to the fund. The president of IDB is
also the president of this foundation. The Foundation will continue to work for meaningful
development in the cultural and social spheres of the member countries.

3. Awaf Property Investment Fund (APIF): This fund was formed in 1417 AH for the purpose of
reviving the waqf as a special tradition of Islam and developing the role of awqaf and managing
the waqf architectural property of member and non-member countries as well as social and
cultural development of the Muslim Ummah. IDB has already contributed ৫ 5.0 million to the
fund and members have pledged পর্িশ 5.5 million in capital.

I. Islamic Bank Establishment

The Islamic Development Bank has also played a strong role in establishing Islamic banks in
various Muslim countries of the world. The parts of the capital of Islami Bank which have been
assisted by this international bank with various advices and technical knowledge including
special supplies are as follows:

1.Dubai has sanctioned 42.70 lakh Islamic dinars for Islami Bank's housing project; 2. IDB owns
15% of the total shares of Bahrain Islami Bank. Bought which means 30.5 lakh Islamic dinars; 3.
Islami Bank has provided 8.5% of the total paid up capital of Bangladesh; 4. Gambier has paid
7.5% of the total paid-up capital of Islami Bank.

In addition, the International Islamic Bank for Investment and Development in Egypt, Jordan
Islamic Bank for Finance and Investment, Kuwait Finance House, Faisal Islami Bank (Sudan and
Egypt), Bank Islamic the Niger, Bank Islamic the Sudan and Bank Islamic the Guinea are
established. Islamic Development Bank has provided various assistance. The success and
effectiveness of this bank has also served as a source of inspiration for the establishment of
Islamic banks in other countries.

In addition, the Auditing and Accounting Organization for Islamic Financial Institutions (AAOIFI)
is one of the most important institutions that IDB has already set up for the development of
Islamic banks and Islamic financial institutions around the world, compliance with Shariah,
Page 31 of 51
auditing and rating. Islamic Financial Services Board (IFSB). International Islamic Financial
Market (IIFM), Liquidity Management Center (LMC), International Islamic Rating Agency (IIRA),
General Council for Islamic Banks and Financial Institutions (GCIBFI).

K. Cooperation at the international level

Since its inception, the IDB has been actively participating in the socio-economic development
of the newly formed countries as well as in the interest of global human welfare with various
international organizations and forums. Since its inception, IDB has partnered with the World
Bank, the International Monetary Fund (IMF), the Asian Development Bank (ADB), the African
Development Bank (AFDB) and the European Bank for Reconstruction and Development
(EBRD). It also maintains close contact with OIC and its various affiliates such as Comstech,
COMIAC, ICCI, ISESCO, IDDT, SESRTCIC, especially COMCEC. Among the organizations with
which the IDB maintains regular contacts to expand and strengthen cooperation at the inter-
regional level are the Arab-Maghreb Union (AMU), the Gulf Co-operation Council (GCC), and the
Economic Union of West African States (ECOWAS). The Customs Union of Central African States
(CU CAS), the Association of Southeast Asian Nations (ASEAN), the South Asian Association for
Regional Cooperation (SAARC), and the D-8 comprising eight Muslim countries. In addition, IDB
maintains special relations with the United Nations and its affiliates, including the World Health
Organization (WHO), the World Food Program (FAQ), UNDP, UNICEF, UNESCO, the United
Nations Conference on Trade and Development (UNCTAD). In addition, the Common Market for
Eastern and Southern Africa (COMESA), The Association for National Development Financial
Institutions (ADFIMI), the World Trade Organization (WTO), the International Fund for
Agricultural Development (IFAD), the World Intellectual Property Organization (WIPO), etc. As a
result, both sides are gaining a golden opportunity to benefit from the exchange of experiences,
participation in development programs and expert advice.

21.Profit
All the activities of this international bank are interest free. Therefore, the six main ways in
which a bank earns money for its management and other expenses need to be mentioned.
These are respectively: -

1. Income from participating in foreign trade activities;

2. Service charges for project finance;

3. Income from equity financing in member countries;

4. Income from lease;

5. Income from joint financing; And

6. Service charge for technical assistance.

Page 32 of 51
Through these activities or methods adopted in 1415 AH. A comparative picture of the profit
earned by the bank from 1424 AH can be found in Table-4. In addition to deducting
administrative and operating expenses and wastage of fixed assets from the total income as per
the rules for determining profit, Islamic Development Bank allocates a minimum of 20 lakhs to a
maximum of 15 million Islamic dinars in different years from 1403 AH to 1411 AH to maintain
the capital value of equity investment. Left. However, no such separate meaning was kept from
1412 to 1415 AH. So far, the total amount is 9.55 crore Islamic dinars. This is to compensate for
the depreciating value of equity money due to unfavorable economic conditions of member
countries, currency devaluation, economic recession, etc. and to compensate for possible
losses. A total of 2.39 crore Islamic dinars equity, which is unlikely to be recovered from this
money, has been canceled.

From this table it can be seen that the profit of the bank has increased and decreased in the last
ten years. But there is no big change. The money kept in the depreciation and provision sector
is satisfactory. However, the amount of depreciation and provision kept in 1424 AH is obvious.
This is because the IDB has lost 290 million Islamic dinars this year due to the global currency
devaluation and exchange rate instability. This meaning has been shown to be associated with
provision.

Table-4

Details of profit of Islamic Development Bank: 1415 AH-1424 AH. (Lakh Islamic Dinar)

PROFIT STATEMENT OF ISLAMI DEVELOPMENT BANK: 1415-1424

Depreciation
Year Revenue Expenditures & Provision Profit

1415 1020 250 110 660

1416 960 260 110 590
1417 1090 310 100 680
1418 1120 350 180 590
1419 1360 370 230 760
1420 1400 400 280 720
1421 1510 440 290 780
1422 1710 530 450 730
1423 1610 490 390 730
1424 2220 530 1100 590
Source: Annual Report of Islamic Development Bank.

Page 33 of 51
22.Specialized Fund/Programmes

Waqf Fund
The Waqf Fund was established in 1399H (1979). It is a trust fund designed to cater to the needs
of Muslim communities and organizations in non-member countries as well as Least Developed
Member Countries (LDMCs) with particular focus on social sector development. At the end of
1432H, the net assets of the Waqf Fund stood at $1,328 million.

Awqaf Properties Investment Fund (APIF)

APIF was established in 1421H (2001) with the objective to invest and develop Awqaf real estate
properties that are socially, economically and financially viable in IDB member countries and
Muslim communities in non-member countries in accordance with the principles of Shari’ah.
Its capital reached
$71.8 million at the end of 1432H. To support the expansion of its activities, APIF also has
access to an IDB line of financing for $100 million and a technical assistance pool of $200,000.
Between 1421H and 1432H (February 2001 to November 2011), APIF approved $1 billion for
47 projects in 22 countries. In 1432H, the Fund approved $179 million for six projects.
World Waqf Foundation

This Foundation was established in 1422H (2001).

Objectives
• Promote and enhance Awqaf with a view to contributing to the cultural, social and
economic development of member countries and Muslim communities in non-member
countries;
• Alleviate hardship among the poor as well as sponsor and support Waqf
organizations;
• Support organizations, projects, programmes and activities in the educational, health,
social and cultural fields;
• Provide support for the conduct of studies and academic research in the field of Waqf;

• Assist countries and organizations in drafting Waqf legislations.

IDB Infrastructure Fund

This Fund was established in 1422H (2001) to focus on infrastructure development in member

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countries.
Objectives:

• Seek long-term capital appreciation by making equity and equity- related investments in
infrastructure projects and infrastructure-related industries in IDB member countries;
• Promote the use of Islamic finance for such projects.

Since its inception, the Fund has approved $611 million for 10 projects in nine member
countries.

Asian Development Bank-IDB Islamic Infrastructure Fund

The IDB established this Fund in 2009 in collaboration with the Asian Development Bank (ADB)
with the aim of investing in public-private partnership (PPP) infrastructure projects in 12
common member countries. The fund aims at mobilizing up to $500 million, including $150
million and
$100 million already invested by IDB and ADB, respectively.

Objectives:

• Assist private sector interventions in infrastructure projects;

• Promote Islamic equity investments; pool the resources of IDB and

ADB to support their common member countries.
In 1432H, the two Banks signed a new Framework Co-financing Agreement (FCA) worth $6
billion over a period of three years (2012-2014). IDB Group and the ADB are to provide, under
the agreement, $2.5 billion and $3.5 billion, respectively, to common member countries.

Islamic Solidarity Fund for Development (ISFD)

The Islamic Solidarity Fund for Development was established in 2006 in the form of a Waqf
with a target capital of $10 billion. It commenced operations in Muharram 1429H (January
2008). By the end of 1432H, the contributions received from member countries stood at $1,633
million out of the total pledged amount of $2,639 million with $400 million provided by IDB
and
$1,233 million coming from member countries.
Objectives:

• Help combat poverty;

• Eradicate illiteracy, diseases and epidemics in member countries,

particularly in Africa.
Moreover, the Fund has launched two thematic programmes, namely: Vocational and Literacy

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 Programme for Poverty Reduction (VOLIP) and Microfinance Programme for Africa (MPA). In
1432H, the ISFD approved 7 projects amounting to $46 million in seven countries.

Special Assistance Programme

This programme was launched in 1400H.
Objectives:

• Assist Muslim communities in non-member countries;

• Help develop and strengthen the institutions offering social services (education and
health) with a view to improving the wellbeing of the masses and preserving their Islamic
and cultural identity;
• Alleviate the plight of communities affected by natural disasters or conflicts in both
member and non-member countries.
By end-1432H, $723.4 million had been approved by the Programme for 1,415 operations:
$444 million for 511 operations in member countries, and
$279.4 million for 904 operations in Muslim communities and organizations in non-member
countries.

Scholarship Programme
IDB has three scholarship programmes:
i. IDB Scholarship Programme for Muslim Communities (SPMC);
ii. Merit Scholarship Programme for High Technology (MSP); and
iii. M.Sc. Programme for Science and Technology (MPST).
Cumulatively, the number of graduates from the three programs has exceeded 7,000 students
from both member and non-member countries as at the end of 1432H.

Special Programme for the Development of Africa (SPDA)

The SPDA was launched in 1429H as an offshoot of the Ouagadougou Declaration. It is a five-
year programme (2008-2012) with an allocation of $12 billion for the benefit of African member
countries in the areas of agriculture and food security, water and sanitation, energy and
transport, infrastructure and capacity-building, education and health, and communicable
diseases control.

Objectives:

• Contribute effectively to poverty alleviation;

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 • Promote sustainable economic growth and support regional integration.

The cumulative approvals by IDB Group to SPDA member countries under this programme
(1429H-1432H) amounted to $3,976.6 million for 364 operations. In 1432H, $1,123.7 million
was approved for 88 operations including projects, trade financing and technical assistance
(TA) operations. The programme, which ends at 1433H (December 2012), has already achieved
99 percent approvals of the planned allocation of US$4 billion.

Jeddah Declaration for Food Security

In 1429H, IDB adopted the Jeddah Declaration in response to the global food crisis, which
severely affected IDB member countries. In the Declaration, IDB Group committed a financing
package of $1.5 billion for a period of five years to assist the affected member countries in
ensuring food security and revitalizing the agricultural sector. By the end of 1432H, IDB Group’s
approvals for food security projects stood at $845.4 million, representing 56.4 percent of the
total target amount.

IDB Group Business Forum, “THIQAH”

IDB Group officially launched its Business Forum “THIQAH” in 1430H (2009). Thiqah which
means ‘trust’ in Arabic, seeks to be a leading forum for business leaders committed to
collaborating in investment opportunities. The forum promotes dialogue, inclusive
cooperation, partnership and enhances interaction between IDB Group and the private sector.
Objectives:

• Be the front office, which facilitates communication between IDB

Group and the private sector in member countries;
• Encourage the private sector to participate in investments introduced by
members of IDB Group and their partners;
• Leverage IDB Group competencies including knowledge, reputation, research, economic
products and services, insurance and credit for exports in the promotion of investment
in member countries; and
• Work closely with ITAP (Investment Promotion Technical Assistance Programme) to
promote new investment opportunities for investors in member countries.

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23.Some successful activities

Mali's Gao Bridge: A few years ago, crossing the Niger River in Gao meant waiting for a ferry
that may or may not be in motion again. It hindered progress and discouraged trade. Currently,
a new bridge has given a new lease of life to the isolated Gao region of eastern Mali. [6]

Khanark Canal in Northeast Azerbaijan Transforms Agriculture: The Samur-Absharn Canal,

built 60 years ago, irrigates agriculture in Northeast Azerbaijan and supplies drinking water to
the capital, Baku. Due to many years of neglect, the canal's water supply has become
inadequate and is failing to meet the demand for irrigation and drinking water. The re-
excavation of the canal was the most important task for the Azerbaijani government

Road modernization planning and design in Yemen: Road development is the main task for the
development of Yemen and its people. Road construction and management is very difficult due
to deserts and mountains. The paved road connection is very low and yet many remote places
are isolated. Proper road connectivity is essential for bringing these isolated areas with the core
population and for national development.

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Concluding Aspect

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24.Criticism

Dr. Ali had previously declared that IDB was in charge of the financing of al-Quds Intifada Fund
and al-Aqsa Fund, both established during an Arab summit in Cairo in October 2000. According
to the final communiqué of the summit, "Al-Quds Intifada Fund will have capital of 200 million
dollars to be allocated for disbursement to the families of Palestinian martyrs fallen in the
Intifada.
According to a US State Department cable sent in 2007 and later released by Wikileaks, a State
Department investigation found no "evidence sufficient to corroborate Israeli and press
allegations of IDB links to terrorism".However, according to NGO Monitor, a pro-Israeli NGO
based in Jerusalem, the Islamic Development Bank is a major contributor to Islamic Relief
Worldwide, an organization considered by some to support terrorism and extremism. For
example, the United Arab Emirates listed Islamic Relief Worldwide as a terrorist organization in
2014. However, the British government undertook a national investigation into the matter at
the request of the UAE government and the final report cleared the international
charity. Neither the Islamic Development Bank nor the Islamic Relief Worldwide organization
has ever been designated a terrorist entity or as an organization funding terrorism by the UN or
the US government

25.Comments and recommendations

1.IDB's annual reports show that project loans accounted for 33% of the total grants during the
period 1397-14234. Undoubtedly this initiative is commendable. About half of the bank's
member countries are underdeveloped. This program needs to be continued for another ten
years to develop their socio-economic infrastructure.

2. The profit sharing system is at its lowest ebb among IDB's financing activities. That shouldn't
have happened. The IDB should have taken the responsibility of rectifying its shortcomings
through the widespread use of the Islamic investment system. Because just making a profit can
never be the ultimate goal of IDB. Since this bank is at the top of the international stage, it
cannot be the ultimate goal.

Since this leading bank at the international level is not giving due importance to the use of the
system, other Islamic banks have refrained from taking effective steps in this regard.

3. The time has come to take the initiative to introduce IDB's micro credit or micro-credit
program in member countries. Social problems become more widespread and concentrated
without the involvement of debt with culture; Disputes break down, society breaks down. Third
world countries including Bangladesh are vivid examples of this. In these countries, foreign-
funded NGOs are inciting anti-Islamic culture and anti-lifestyle activities through their

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programs. It is time for IDB to take initiative to prevent and redress this. There is no way to
prevent the inevitable catastrophe that will result if we do not strengthen the financial base of
the poor through employment by providing small-scale financial assistance at the grassroots
level.

26.Conclusion

In light of the brief discussion given above about the various activities of IDB, it can be said
without any doubt that the success of the Bank over the last thirty years is indeed commendable.
By the way, IDB is a development oriented institution like the World Bank.

The World Bank is not really a commercial bank. The Bank contributes to the economic,
commercial and social development activities of the member countries in exchange for interest
and service charges. The alternative is the Islamic model IDB. The work that this bank has already
done, including the activities of IRTI, is quite significant. The contribution of this bank to the socio-
economic development of the Muslim Ummah is therefore to be taken seriously.

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27.GLOSSARY

Build-Operate-Transfer (BOT):
It is a contractual arrangement whereby a private sector entity undertakes the construction,
including financing, of a given infrastructure facility, and the operation and maintenance
thereof. The private sector entity operates the facility over a fixed term during which it is
allowed to charge facility users appropriate tolls, fees, rentals, and charges not exceeding those
proposed in its bid or as negotiated and incorporated in the contract to enable the private
sector entity to recover its investment, and operating and maintenance expenses in the project.
The private sector entity then transfers the facility to the government agency concerned at the
end of the fixed term

Hijra Year (H): An Islamic lunar calendar system comprising 12 months: Muharram, Safar, Rabi
al-Awal, Rabi al-Thani, Jumadal-Awal, Jumada alThani, Rajab, Sha'ban, Ramadan, Shawal, Dhul
Qa'da, and Dhul Hijjah. It contains 354 days which is about 11 days less than the Gregorian
calendar system.

Instalment sale: A mode of financing whereby IDB purchases machinery and equipment, then
sells them to the beneficiary at a higher price, repayment being in instalments. The ownership
of the asset is transferred to the purchaser on delivery.

Islamic Dinar (ID): The unit of account of the IDB, which is equivalent to one Special Drawing
Rights (SDR) of the International Monetary Fund.

Istisna’a: A medium-term mode of financing. It is a contract for manufacturing (or construction)

whereby the manufacturer (seller) agrees to provide the buyer with goods identified by
description after they have been manufactured/constructed in conformity with that description
within a predetermined time-frame and price.

Leasing or Ijara: A medium-term mode of financing, which involves purchasing and

subsequently transferring of the right of use of the equipment and machinery to the beneficiary
for a specific period of time, during which the IDB retains the ownership of the asset.

Line of Financing: A financing facility made available to financial institutions in member

countries to finance projects and trade operations of small and medium enterprises.

Loan: A mode of financing used by the IDB to finance projects in member countries, particularly
its least developed countries. It is carries only a service fee intended to cover the actual costs of
administering the loan. The repayment period ranges from 15 to 25 years including a grace
period of 3 - 7 years.

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Mudarib: A contracting party in a Mudaraba financing which acts in a fiduciary capacity as the
agent or fund manager.

Murabaha: A contract of sale between a buyer and a seller in which a seller purchases the
goods needed by a buyer and sells the goods to the buyer on a cost-plus basis. Both the profit
(mark-up) and the time of repayment (usually in instalments) are specified in an initial contract.

Shari’ah: Islamic law, governing the life of Muslims, which is derived from the Holy Qur’an and
Sunnah

Subscribed Capital: Amount of issued capital that has been subscribed by the IDB member
counties.

Sukuk: An asset-backed bond which is designed or structured in accordance with Shari’ah and
may be traded in the market.

technical Assistance (TA): A mode of financing provided by the IDB for conducting feasibility
studies, detailed design and preparation of tender documents, as well as consultancy services
for the supervision of projects.

Waqf: An endowment or a charitable trust devoted exclusively for Islamic purposes.

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 28.APPENDIX: Country Membership in the Entities of IDB Group
Membership of the
Country IDB ICIEC ICD ITFC Entities (out of 4)
1 Afghanistan √ × × × 1
2 Albania √ √ √ × 3
3 Algeria √ √ √ √ 4
4 Azerbaijan √ × √ × 2
5 Bahrain √ √ √ √ 4
6 Bangladesh √ √ √ √ 4
7 Benin √ √ √ √ 4
8 Brunei Darussalam √ √ √ √ 4
9 Burkina Faso √ √ √ √ 4
10 Cameroon √ √ √ √ 4
11 Chad √ √ √ × 3
12 Comoros √ √ × × 1
13 Côte d’Ivoire √ √ √ √ 4
14 Djibouti √ √ √ √ 4
15 Egypt √ √ √ √ 4
16 Gabon √ √ √ √ 4
17 Gambia √ √ √ √ 4
18 Guinea √ √ √ × 3
19 Guinea-Bissau √ × √ × 2
20 Indonesia √ √ √ √ 4
21 Iran √ √ √ √ 4
22 Iraq √ × √ × 2

23 Jordan √ √ √ √ 4
24 Kazakhstan √ √ √ × 3
25 Kuwait √ √ √ √ 4
26 Kyrgyz Republic √ × √ × 2
27 Lebanon √ √ √ √ 4
28 Libya √ √ √ √ 4
29 Malaysia √ √ √ √ 4
30 Maldives √ × √ × 2
31 Mali √ √ √ × 3
32 Mauritania √ √ √ √ 4
33 Morocco √ √ √ √ 4
34 Mozambique √ × √ √ 3
35 Niger √ √ √ √ 4
36 Nigeria √ √ √ √ 4
37 Oman √ √ × × 2
38 Pakistan √ √ √ √ 4
39 Palestine √ × √ √ 3
40 Qatar √ √ √ √ 4
41 Saudi Arabia √ √ √ √ 4
42 Senegal √ √ √ √ 4
43 Sierra Leone √ × √ × 2
44 Somalia √ × × √ 2
45 Sudan √ √ √ √ 4
46 Suriname √ × √ × 2
47 Syria √ √ √ √ 4
48 Tajikistan √ × √ × 2
49 Togo √ × × × 1
50 Tunisia √ √ √ √ 4
51 Turkey √ √ √ √ 3
52 Turkmenistan √ × √ × 2
53 Uganda √ √ √ √ 4
54 U.A.E. √ √ √ √ 4
55 Uzbekistan √ × √ × 2
56 Yemen √ √ √ √ 4
Total 56 40 52 37 -

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 CASE STUDIES-1

Health Services Transformed: A New Hospital in Coastal Albania

The biggest impact of Kavaja’s new hospital is clearly for its patients. Today, the city’s 120,000
residents benefit from modern healthcare facilities. But before the new hospital building was
constructed, people in this coastal, rural area lived with low standards of healthcare, similar to
those found across many regions outside of Albania’s capital, Tirana.

The previous building in the city, which is an hour by road from the capital city, could not fully
function properly: providing proper treatment and care for patients was very difficult in the 92-
bed facility. The building was in a poor state, and the lack of space and protection meant that
medical equipment could not be used safely. The new facilities and increase in staff capacity at
the new hospital have completely transformed standards for the residents of Kavaja and
beyond.

Space to grow in new facilities

In recent decades, Kavaja faced problems similar to many rural regions of Albania: a major
population shift to Tirana and other large cities for more economic opportunities. But people
do not leave only in search of jobs; people also seek a better quality of life, including services
such as healthcare.

To address this, the Government of Albania decided to raise healthcare standards outside of
the capital. IsDB, responding to the country’s request, agreed to support the construction of the
new hospital in Kavaja in August 2004.

The total cost was US$8.57 million, with IsDB providing US$5.52 million as an ordinary loan, to
cover construction costs. Further financing for the medical equipment and furniture was
provided by the OPEC Fund for International Development (US$2.41 million), and by the
Government of Albania (US$0.64 million) for half of the civil works costs.

In the area where the facilities were needed, setbacks with the land and essential connections
required for the hospital delayed construction, but the Kavaja Hospital Project was fully
completed in December 2010. And despite the delay, the final project cost was 2 per cent
below the estimates at appraisal.

Occupancy at the old hospital in Kavaja ran at just 23 per cent, because people were using the
better facilities in Tirana or at the regional hospital in Durrës. By contrast, facilities at the new
hospital include two operating theatres (one for general surgery and another for obstetrics and
gynaecology) and a polyclinic providing both general and specialist examinations and
treatments.

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Patient care is transformed
Bardha Ndrea, who is Deputy Director (Finance) at Kavaja hospital, has given 25 years of service
and remembers the former facilities.

“Even the rain and humidity were coming into the building. The medical devices were old and
used for a very long period. Surgery, intensive care and physiotherapy simply did not exist
before.”

She adds that the building had no air conditioning – in a town where temperatures are often
around 40 degrees Celsius in the summer months.

Now, patient care has improved beyond recognition. Serving a population of 120,000 local
people, the hospital also has the capacity to care for the annual influx of people who come
from other parts of Albania and further afield in the summer – an estimated extra 70,000
people. The services are provided free at the point of care for citizens, delivered by Albania’s
public health system. Patients who go to the hospital directly without being referred by a family
doctor pay less than one euro – 70 cents – for their consultations.

A step change in healthcare

There is no doubt that the healthcare facilities now available to the people of Kavaja have been
transformed by the new hospital. There is further capacity to take advantage of the new
building to accommodate more services, such as specialised cardiology. But the services already
on offer represent a clear improvement compared with the previous facilities, in which surgical
operations were not even possible.

The project has also helped Albania with its efforts to develop a network of healthcare services
at the district level, rather than just in the capital city. As the government continues to support
district hospitals, it is also helping alleviate rural and coastal poverty, and easing the burden on
healthcare provision in Tirana. The district hospital in Kavaja is playing its part in this - thanks to
the high standard of new facilities.

A first-rate service for Kavaja

The district hospital in Kavaja still faces challenges. It continues to be challenging to attract
some of the specialists needed to provide a complete set of healthcare services; Dr Beu would
especially like to improve the number of surgical and intensive care specialists employed here.

But despite this, the signs are promising for the future. Fewer patients are having to make the
trek to the capital for specialist care, and occupancy in the new building has been growing
steadily.
Success factors

• Clear need. There was an acute shortage of healthcare services in rural and coastal
Albania. The new Kavaja hospital helps to address this shortfall.

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 • National relevance. The new hospital supports Albania’s efforts to rebalance its
healthcare provision, which previously focused on the capital city and left other areas
underserved.
• Further capacity for expansion. The hospital is seeing year-on-year growth in its
occupancy. The full potential – the capacity planned in at the project’s conception
should be reached within the coming years, supported by government efforts to retain
specialist doctors and improve logistics such as emergency dispatch and patient
transport.

CASE STUDIES-2

Digital Bangladesh: High-Speed Connectivity via Mobile Phones and

the Internet
In the early years of the 21st century, Bangladesh was one country in South East Asia lagging
behind the rest. Its citizens relied on out-of-date satellite systems while neighbouring countries
were already benefiting from high-speed fibre-optic cables connections. This disadvantage was
slowing down Bangladesh’s development. To address the issue the Bangladeshi government,
supported by the Islamic Development Bank developed a submarine fibre-optic cable, to
provide fast reliable and secure access to the internet and to improve mobile phone
connections.

Huge increase in internet users

The IsDB provided US$60 million for the project with the government of Bangladesh
contributing the remaining US$8.02 million. This covered the cost of the 1,065km cable which
was installed by the international submarine cable consortium South East Asia (SEA), Middle
East (ME), Western Europe (WE) along with technical partners Alcatel- Lucent of France and
Fujitsu of Japan. The cable already served 13 other countries starting from France via Saudi
Arabia, to Singapore and now connects Bangladesh at Cox’s Bazar, in the south east of the
country.

The new cable has had substantial impacts for Bangladeshi people and businesses. In 2004
there were just 23,000 internet users, but since the completion of the project, the number of
users has soared, reaching 54 million by December 2015. The number of mobile phone users
has crept up rapidly as well from 3 million users in 2004 to 133 million by December 2015.
People are using the improved connectivity for a diverse range of functions such as better
overseas communication, online transactions, business and trade and simply for the transfer of
knowledge.

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Improving education opportunities
Students in Bangladesh are benefiting profoundly from the increased connectivity brought by
the new cable. The high-speed connectivity on campus enables students to access lecture
notes, video lectures, emails and social networks as well as allowing them to get into contact
with people in their field all over the world. As well as helping students, the improved internet
connection makes life easier for staff and allows for more enhanced teaching.

Visitors to the country can also now enjoy the improved connectivity. Mr Salman Kabir,
Assistant director of Marketing and Public Relations at Dhaka’s Pan Pacific Sonargaon Hotel
emphasised the increasing necessity for faster connectivity in the area. The majority of
travellers visiting Dhaka are for business purposes so it was imperative that their needs were
catered to. Broadband became available in 2008, and in 2011, the hotel installed a ‘360-degree’
Wi-Fi system. This meant that its clients were now fully and reliably serviced with internet
connectivity throughout the building – just in time for the Cricket World Cup, which Bangladesh
co-hosted.

Away from the bustle of Bangladesh’s business sector, people young and old are enjoying the
faster internet connections when logging on at home. This helps families stay connected with
relatives all over the world, helps young people with schoolwork, playing games and enables
them to access social media.

Making the whole country digital

Improving mobile and internet coverage will, in time, help develop many poorer rural parts of
the country as well. This will be a step towards the government’s long - term goal in making the
whole of Bangladesh’s aim to make the whole country ‘digital’ by 2021. At present rural areas

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are restricted to 2G and 3G technology and the remotest rural areas still rely on microwave and
satellite connections but there are plans to establish at least one ‘data centre’ per group of
villages. The rural connectivity is already proving beneficial to the local Bangladeshis one
example being ‘telemedicine’. Doctors in remote villages hold online conferences with
counterparts in Dhaka who help them with diagnoses. This service is set to become even more
widespread.

The submarine fibre-optic cable will form the basis of Bangladesh’s internet and mobile
provision for years to come, but it has a lifespan of 25 years, and so a replacement plan must be
in place long before this. The country has already signed a contract with the SEA-ME-WE
Consortium to build a second submarine cable link. This will future-proof the technology to
ensure that it can cope with increasing internet traffic.

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31.References
•Articles of Agreement (2nd ed., 1983),
Islamic Development Bank Jeddah. pp.6-7.
• Annual Report (1996),
IDB Unit Investment Fund, Jeddah, p. 12.
• Rahman, Shah Muhammad Habibur (1988), "The Role of the IDB in Economic Development of
Member Countries: An Appraisal". In Frontiers and Mechanics of Islamic Economics; University
of Sokoto, Nigeria, p.140.
• Annual Report 1418H (1997-98), Islamic Development Bank, Jeddah, p. 103.
• Ibid. p.130
• Wilson, R. & Khan, M. Fahim (1995). Role of Islamic Banks in Economic Development. In
Encyclopedia of Islamic Banking, pp. 86-87, London.
• Annual Report (1417H), Islamic Corporation for the Insurance of Investment and Export
Credit, Jeddah, p.15.
• Twenty-Four Years in the Service of Development (1998), Islamic Development Bank, Jeddah;
p. 32.
• Wilson, Rodney (1997), Islamic Finance, London, p.63.

Page 50 of 51
ASSIGNMENT
Islami Devlopment Bank

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