The Kingdom of Saudi Arabia assumed the G20 Presidency in December 2019 and set the theme of “Realizing Opportunities of the 21st Century for All” with a focus on: Empowering People, Safeguarding the Planet and Shaping New Frontiers.
The Islamic Development Bank Group (IsDBG) was invited by the Kingdom of Saudi Arabia’s G20 Presidency to participate as a regional multilateral organization in the 2020 G20 summit. As a member of the IsDB Group, the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) participated and contributed to the G20 throughout 2020.
ICIEC’s involvement focused on the Finance Track, especially the International Financial Architecture (IFA) Working Group. The Corporation supported the IsDB Group and the Saudi Presidency of the G20 by providing its technical expertise in investment and export credit insurance.
The 2020 G20 Summit was defined by the COVID-19 global pandemic and for the first time in the G20’s history, almost all events were held virtually. ICIEC had the privileged opportunity to attend alongside the world’s largest economies and international organizations as they gathered in March 2020, under the chairmanship of the President of the G20, Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud, to coordinate a global response to the pandemic.
In the Finance Track of the 2020 G20 summit, the pandemic’s negative effects on the global economy were addressed in the Framework Working Group on COVID-19 and Recovery. G20 Finance Ministers and Central Bank Governors developed an action plan to ensure that global economic activity continues to recover through financial policies, risk management, and the mobilization of funds.
As such, the IsDB Group implemented the comprehensive integrated Strategic Preparedness and Response Facility (SPRF) with an initial envelope of USD 2.3 billion. In addition to this initiative, in October 2020, ICIEC and IsDB jointly launched the innovative USD 2 billion COVID-19 Guarantee Facility to support the private sector to combat the pandemic. The Facility is being implemented jointly by IsDB and ICIEC to support COVID-19 hit industries in the OIC member countries and attract cross border foreign and local investments.
ICIEC’s CEO, Mr. Oussama Kaissi, stated that “the framework agreement opens the door for new forms of cooperation between IsDB Group entities. ICIEC is very focused on addressing the challenges our Member Countries are facing in mitigating the repercussions of COVID-19 and we are dedicated to ensuring that the Corporation will meet all the framework’s requirements for the COVID-19 Guarantee Facility to be implemented successfully.”
In the Finance Track’s International Financial Architecture Working Group the G20 discusses the systems and institutions that provide and support international finance institutions (IMF, World Bank, regional development banks and institutions, investment and export credit agencies, and other specialized institutions). In late 2019, Br. Mohamud Khalif, Acting Director of the Underwriting Department at ICIEC, made a presentation on political risk insurance (PRI) and its role in supporting equity and debt investments in the IsDB’s member countries. The presentation spurred a detailed discussion on the subject of political risk insurance and its positive role in facilitating equity and debt investments in low-income countries.
Resulting from the PRI presentation and subsequent discussion, and in recognition of ICIEC’s expertise in Political Risk Insurance, the Corporation was mandated by the G20 Saudi Presidency to develop, in coordination with the MDBs, a Stock-Take on “Best Practices of MDBs and Specialized Multilateral Insurers in Political Risk Insurance for Equity Investments, Medium and Long-Term Debt Investments and other Insurance Solutions”. Br. Djamel Ghrib, former Advisor to ICIEC’s CEO, led the coordination of this exercise.
Political Risk Insurance’s catalyzing effect for private sector investment without causing debt levels to rise makes it a critical tool for advancing economic development in the Corporation’s member countries. ICIEC engaged organizations around the world through an online survey on the demand and supply sides of the PRI market for equity investments and debt investments. This study is a valuable resource for G20 Finance Ministers and Central Bank Governors to guide MDBs on the possibilities of expanding their insurance and guarantee offerings and enlarging their complementary role for equity.
IsDB Group and ICIEC participation proved valuable to the G20 process, as the leading Shariah compliant development finance group and the only Shariah compliant multilateral trade and investment insurer. The benefits of Islamic finance are increasingly recognized in global fora for their innovations and sustainability, particularly in times of crisis when conventional finance fails. For example, during the 2008-2009 financial crisis, Shariah-compliant equities performed far better than their conventional counterparts. Islamic finance is well positioned to finance the recovery from the pandemic, and it is to the benefit of the world that the G20 are starting to explore it. ICIEC had the privilege to spread awareness on Islamic finance at the G20.
ICIEC and IsDB Group’s involvement in the G20 process this year has been pivotal for the voice of Islamic finance to be at the G20 table. Since the IsDB Group is comprised of 57 member countries across four continents – touching the lives of 1 in 5 of the world’s population – IsDB and ICIEC stand ready to serve as advocates for Islamic finance in future G20 presidencies.
