Introduction
Collaboration and partnerships are potent enablers of economic development. One inherent and highly influential collaboration for ICIEC stems from being a member of the Islamic Development Bank Group (IsDB Group). All the IsDB Group member institutions work together towards the same goal – delivering economic prosperity across the OIC by supporting sustainable development through Shari’ah-compliant solutions. Enhancing synergies between ICIEC and the IsDB Group is a strategic priority for the Corporation. It allows ICIEC and its group entities to deliver on both their shared and individual goals more effectively. Partners in the IsDB Group are integral to ensuring ICIEC’s success as the Corporation works to deliver on its mandate to support trade and development throughout the OIC.
The Islamic Development Bank (IsDB) and the IsDB Group:
The Islamic Development Bank (IsDB) established in December 1973 as a Multilateral Development Bank (MDB) under the auspices of the Organisation of Islamic Cooperation (OIC). The Bank commenced business activities in October 1975 with the key objective of facilitating the economic development and social progress of its Member Countries and Muslim communities across the world more broadly. The Bank currently serves 56 Member Countries and is continuously looking to grow its membership.
Since IsDB’s inception, several entities have been launched by the Bank, including ICIEC, the International Islamic Trade Finance Corporation (ITFC), the Islamic Research and Training Institute (IRTI), the Islamic Corporation for the Development of the Private Sector (ICD) and the World WAQF Foundation (WWF). Together with the Bank, these sister institutions make up the IsDB Group and work together to serve OIC member states.
The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC):
The Islamic Development Bank Group established ICIEC in 1994 as the trade credit and investment insurance arm of the IsDB Group. ICIEC is mandated to expand the scope of trade transactions and increase investment flows among OIC Member Countries by providing takaful solutions for cross-border transactions. Specifically, ICIEC provide exporters, investors, and financial institutions with the following services: 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 export credit agencies (ECAs) in Member Countries, and iv) promotion of Islamic Finance and Takaful.
These services enable exporters, importers, investors, financial institutions and ECAs to transact and conduct business with ICIEC Member Countries by limiting their potential loss. ICIEC’s takaful solutions limit the potential losses that policyholders can incur by mitigating against certain risks, including the risk of expropriation, non-payment, and many others.
The Islamic Research and Training Institute (IRTI):
IRTI was established in 1981 to ensure that the IsDB could perform its intended functions in conducting research and providing training. IRTI’s core objective is to undertake research and provide training and information services in Member Countries and Muslim communities in non-Member Countries around the topic of Shari’ah-compliant finance. The intention behind this research and the training is to help bring these target communities’ economic, financial and banking activities into conformity with Shari’ah and further accelerate economic development and enhance cooperation amongst them. IRTI’s current activities include producing publications, conducting research projects relevant to Islamic Finance, providing capacity development services, and online training courses.
The Islamic Corporation for the Development of the Private Sector (ICD):
ICD established in 1999 to complement the IsDB through the development and promotion of the private sector as a vehicle for economic growth and development in Member Countries. The ICD delivers on this mission by providing finance for private sector projects, promoting competition and entrepreneurship, providing advisory services to governments and private companies and encouraging cross border investments.
The ICD’s primary aims are: i) to identify and support investment opportunities in the private sector in Member Countries, ii) to provide a broad range of Shari’ah-compliant financial products and services and iii) to improve the access that private companies have to Islamic capital markets.
The ICD’s activities are wide-ranging, including the provision of lines of finance to financial institutions in member states to promote the provision of Shari’ah-compliant finance, investment into the equity of Islamic Banks, advisory services to financial institutions, asset management services and investing in projects and corporates.
The Islamic Trade Finance Corporation (ITFC):
The International Islamic Trade Finance Corporation (ITFC) established in 2005 with the mandate to promote trade of the Member Countries of the Islamic Development Bank through providing trade finance and engaging in activities that facilitate intra-trade and international trade. ITFC’s trade finance division provides Shari’ah-compliant trade financing for OIC Member Countries, emphasizing financing intra-OIC trade. ITFC considers providing all Shari’ah-compliant modes of trade financing. The three main financing methods under which it currently provides trade financing include: i) Murabaha, ii) Installment Sale, and iii) Istisna’a. In addition to providing trade financing, the ITFC also provides trade promotion and trade facilitation services. Its trade promotion activities include enabling businesses to attend trade fairs, identifying new markets and business opportunities, and establishing trade partnerships with new contacts and financial institutions. Its trade facilitation services include working with international partners to eliminate regulatory and procedural barriers to trade and facilitate knowledge sharing between Member Countries in trade and transport facilitation. Overall, apart from its trade financing activities, the ITFC aims to provide capacity-building tools to Member Countries and their corporates so that they can effectively trade beyond their domestic borders.
World Waqf Fund (WWF):
Considering the need for a global Waqf entity that can collaborate with and connect governments, organizations, NGOs, philanthropists and corporates alike, the WWF was established by IsDB 2001. The WWF has a host of objectives, including i) the promotion of Awqaf for sustainable development, ii) supporting organizations, programs and projects in the areas of education, health, culture and social life, iii) providing support for research conducted in the area of Waqf, and iv) assisting countries and organizations in drafting legislation regarding Waqf.
ICIEC and the IsDB Group
ICIEC’s relationship with the IsDB Group is vital, as ICIEC and the various members of the Group work together to achieve more significant trade and investment volumes into and between OIC countries. As part of the IsDB Group, ICIEC’s mission, vision, and core values were all created to align amongst members. Enhancing synergies between ICIEC and its partners in the IsDB Group is a crucial priority for the Corporation. Synergies cut across the three strategic objectives of ICIEC’s 10-Year Strategy – enhancing impact, efficiency, and resilience.
ICIEC is working with its sister institutions to support initiatives they are pursuing and is exploring cross-marketing, staff rotation, and undertaking upstream and downstream programs.
Collaboration between ICIEC and IsDB
ICIEC works in the closest collaboration with the IsDB. The Bank and ICIEC have a long history of working together to support strategic transactions and undertake joint initiatives that support Member Countries both in good times and in times of crisis.
An example of this partnership in times of crisis includes the response to the adverse effects of the COVID-19 pandemic. ICIEC is collaborating with the IsDB in several ways. First, ICIEC provided USD 450 million as part of IsDB’s ‘Strategic Preparedness and Response Facility’ to ensure the continuous flow of strategic imports, protect investments, and minimize economic volatility. Later, the two entities established a collaborative USD 2 billion credit guarantee facility known as the COVID-19 Guarantee Facility (CGF). ICIEC serves as the administrator of this facility by deploying its standard credit and political risk insurance solutions through the fund to sustain the import of strategic commodities and protect investments in its Member Countries.
ICIEC has worked particularly closely with the Islamic Solidarity Fund for Development (ISFD) during the crisis. The ISFD sits within the IsDB and works to reduce poverty, build productive capacities of Member Countries, reduce illiteracy, and eradicate diseases and epidemics. ICIEC has formed a bespoke partnership with ISFD known as the ICIEC-ISFD COVID-19 Emergency Response Initiative (ICERI) throughout the pandemic. ISFD has allocated a funding grant of USD 400 million to ICIEC, used to subsidize the premium charged on the insurance cover ICIEC provides to facilitate the procurement of medicine, medical equipment and other essential commodities to eligible countries. In addition to its collaboration through ICERI, ICIEC is exploring the option of using its insurance/guarantee mechanisms as a tool to mobilize resources for financing ISFD’s One Wash Program to address cholera and sanitation issues in OIC MCs.
Building on the success of the ICERI, further collaborations between ICIEC and ISFD are underway. Through such partnerships, the institutions can catalyze support to LDMCs in strategic sectors, including education, health systems, youth empowerment, and economic recovery initiatives of fragile and conflict-affected. This approach is aligned with ISFD’s mission and will enable ICIEC to boost trade and investment flow in LDMCs of OIC Member States.
During the COVID-19 crisis, ICIEC also hosted and participated in knowledge-sharing events with the IsDB and sister entities. As an example of this, ICIEC participated in the « IsDB Group Private Sector Action Response to COVID-19 Webinar, Launching New Online Initiatives ». The webinar hosted many participants from various industries and discussed challenges facing both the private sector and the global economy more broadly during the COVID-19 outbreak. All IsDB Group members participated and used the platform to discuss investment and trade opportunities in IsDB member countries and outlined various pursued initiatives to withstand the economic effects of the pandemic better.
Beyond the crisis, the ICIEC and IsDB entities have collaborated for the mobilize-to-channel line of financing designed to mobilize private capital and deliver much-needed funding to SMEs in ICIEC’s Low Income Member Countries (LIC). The mobilization of this funding is to be done with minimal utilization of ordinary capital resources through partnerships with regional DFIs.
ICIEC and the IsDB are also exploring further partnership in several vital areas, including increased access to finance for women-owned enterprises and infrastructure project risk mitigation. IsDB and ICIEC are currently considering a partnership on Affirmative Finance Action for Women in Africa (AFAWA), a women enterprises and women-friendly SMEs support program designed by AfDB and funded partly by the G-7 States. Additionally, there is a proposal by ICIEC to launch the Infrastructure Investment Fund Pool (IIFP) alongside the IsDB. This proposal by ICIEC aims to increase non-funded project support mechanisms such as credit and political risk insurance instruments.
ICIEC is also working towards integrating the IsDB’s policy framework into its mainstream activities. The integrated policies include the IsDB’s sector policies and other policies related to compliance, anti-corruption, integrity and ethics. By doing so, ICIEC will foster greater alignment with the IsDB.
Collaboration between ICIEC and IRTI
ICIEC regularly works with – and benefits from the services of – IRTI. ICIEC has taken part in seminars and events organized by IRTI to improve the understanding of its personnel related to various topics within the sphere of Islamic Finance. ICIEC also uses IRTI’s courses to build the capacity of its people, as ICIEC offers staff the option to participate in the many Islamic Finance courses offered by IRTI. Additionally, ICIEC personnel often uses IRTI’s research and publications to inform its decision-making related to its products, transactions and other components of its operations.
ICIEC has also contributed to IRTI as well. Specifically, senior personnel from ICIEC have acted as trainers for courses offered by IRTI in the past. As such, the relationship between ICIEC and IRTI is one characterized by knowledge-sharing and collaboration.
There is room to expand the relationship, primarily in jointly producing learning material on investment and trade credit takaful, often not well understood across the OIC.
Collaboration between ICIEC and ICD
ICIEC’s relationship with ICD is robust as the institutions share the objective of supporting the private sector in Member Countries by strengthening companies and facilitating infrastructure projects across the OIC through Islamic financing. ICIEC has participated in multiple Sukuk deals led by ICD.
Additionally, ICIEC has participated with ICD in the financing of various projects. For example, ICD and ICIEC supported a power plant project in Mali called the « Albatros Energy Mali (AEM) ». ICD financed part of the project, while ICIEC issued a Foreign Investment Insurance Policy (FIIP) to one of the equity participants in the transaction. With their participation and other DFIs, the project was made financially viable and was able to attract the capital needed for construction.
Increasing collaboration with the ICD is an ICIEC aim. Working more closely concerning ICD’s syndication mandates, its Line of Financing business, and enhancing ICD’s guarantee program for SMEs would prove beneficial for both entities.
Collaboration between ICIEC and ITFC
The visions and missions of ICIEC and ITFC both aim to boost intra-OIC trade through Shari’ah-compliant financial instruments. The institutions have worked together on many initiatives and transactions in the past. Currently, ICIEC is supporting over USD 484 million of ITFC’s finance operations for Member Countries.
The most salient recent initiative that the institutions have worked on is the Arab-Africa Foreign Trade Bridge (AATB) program. The AATB is a regional trade promotion program aimed at addressing some of the challenges of promoting trade between the two regions. The AATB program is essential for ICIEC’s mission and values. It allows the Corporation to more effectively encourage intra-OIC trade and Arab and African inter-regional collaboration more specifically. Thus far, the program has seen a high degree of participation by governmental bodies, trade support organizations and private sector organizations alike. ICIEC has seen the significant potential of the AATB program, as the Corporation has closed upwards of USD 5.6 billion worth of transactions through the program over the last ten years. ICIEC aims to work closely with its partner ITFC to contribute to and consistently grow the program.
ICIEC aims to improve synergies with ITFC by collaborating more closely on the AATB Program, LC Products, syndication enhancements, cross-selling, and incentivized business-level agreements for project referrals. With enhanced collaboration across these elements, the business volumes for both entities would expand.
Collaboration between ICIEC and WWF
ICIEC’s relationship with the fund remains limited. However, the Corporation foresees potential opportunities to explore in the future where the WWF may be able to utilize ICIEC services to support development in strategic sectors.
Conclusion: Coming Together for Growth and Resilience
ICIEC’s partners are critical to the Corporation’s ability to facilitate sustainable economic growth for Member Countries. With this in mind, ICIEC has worked hard to foster strong relationships with its IsDB partners and will continue to strengthen IsDB Group synergy going forward. While ICIEC has a longstanding history with most of its IsDB Group peers, the Corporation is still in the process of exploring deeper collaborative options with others. ICIEC acknowledges the importance of all of its partners in the IsDB Group. The difficulties that have come with the COVID-19 pandemic have shown the Corporation that the Group can only withstand and recover from crises if the members join forces and leverage each other’s strengths. Enhancing the partnership amongst the IsDB Group is a goal that ICIEC remains committed to ensuring that all members of the IsDB Group and our shareholders can achieve their development goals.
