2. IDB’s Microfinance Development Program
Islamic Financial Services Industry Department
Islamic Development Bank
Presentation at 5th Global Islamic Microfinance Forum,
Kuala Lumpur/Malaysia, November 24-25, 2015

3. Islamic Development Bank

4. Introduction (Membership and Characteristics)
A Unique Model of South-South Cooperation
Global MDB: Membership started with 22 countries in 1975, now 56 Countries spread over 4 continents

5. IDB Mission & Strategic Thrusts
“To promote comprehensive human development, with a focus on the priority areas of alleviating poverty, improving health, promoting education, improving governance and prospering the people.”

6. IDB Group Financing Approvals

7. IDB’s Sectoral Financing

8. IDB Approvals by Region

9. Islamic Financial Services Industry

10. Islamic Financial Services Industry Components

11. Enormous potential Growing 50% faster than Conventional Banking
Islamic Finance Industry – Points to Ponder
Growing 50% faster than Conventional Banking
25% of the world’s population is Muslim
Less than 10% of the world’s Muslim population has access to Islamic Finance
Only 1% of the world’s financial assets are sharia- compliant by design
Across MENA region, less than 20% of adults have a formal bank account
Enormous potential

12. Wide ranging products: Simple retail to structured wholesale
Market size estimate in approximately US$ trillion (in terms of Assets) in over 800 institutions
Presence in over 75 countries. Growth rate of over 20% for the past decade
Expected growth rate of 15-20% p.a. in foreseeable future. Slight slowdown predicted due to lower oil prices.
Major Islamic banks spread across Middle East and East Asia. Emergence of multinational banks with Islamic windows/subsidiaries in new jurisdictions
Wide ranging products: Simple retail to structured wholesale

13. Islamic Financial Services Industry Department

14. IDB – Microfinance Development Program

15. Challenges
Lack of specially tailored regulation and supervision and no regulatory impact assessments (RIA) to-date
Limited outreach of the Microfinance Institutions up to the gross root level due to small size.
Poor legal, supervisory and institutional infrastructure
Lack of capacity building programs for the management & staff of Microfinance Institutions, the functionaries of civil organizations and the beneficiaries.
The exclusion of ultra poor, particularly the rural poor
Lack of clear policy, vision and coordination among the stakeholders
Low awareness about iMFI’s Products

16. IDB-MDP Aims
Traditionally, the extreme poor are rarely reached by microfinance.
IDB-MDP would endeavor to reach even the destitute by channeling resources from the wealth owners to the poor.

17. IDB-MDP Components
The MDP aims to increase outreach of microfinance to reduce poverty through the development of Islamic Microfinance industry
Several modes of intervention, both Financial and Technical, designed to address the wide ranging microfinance needs in member countries, thus avoiding the one-size-fits-all approach
Leverages resources and partners with established Microfinance organizations – such as Grameen, BRAC, AGFUND and Government agencies such as AFD (France) DFID (UK), and GIZ.

18. Improving Access to Islamic Finance IDB’s Interventions
Sudan:
Bank Al-Usra - Capacity building TA for microfinance completed successfully
Irada - Equity in MFI with Bank Al-Khartoum
Ibdaa Bank - Equity participation in MFI with Agfund
Senegal:
Phase I - Developing the Enabling Environment - (a)MOF-Senegal (b) BCEAO
Phase II – Equity Investment in MFI with Government, Local MFI and other local/international institutions

19. Improving Access to Islamic Finance IDB’s Interventions
Indonesia:
$50m Islamic Microfinance Fund - in collaboration with Government and local financial institutions
Tunisia:
Equity investment in a new Islamic MFI with Zeitouna Bank.
Pakistan
Initial discussions held with a few parties desirous of starting Islamic microfinance.
Various intervention options being explored.

20. Improving Access to Islamic Finance IDB’s Interventions
Tajikistan
Local sponsors being identified
Egypt:
Next set of countries sent to Management for approval

21. Improving Access to Islamic Finance

22. Thank You Together we build a better future

23. AlHuda Center of Islamic Banking & Economics - Pakistan
AlHuda CIBE FZ LLE - U.A.E
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AlHuda Center of Islamic Banking & Economics - Pakistan
Ph: (92-42) , Fax: (92-42)
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