ICDNewsletter Issue 02 Quarter 1-1434H

ICDNewsletter Issue 02 Quarter 1-1434H

THE ISLAMIC CORPORATION FOR THE DEVELOPMENT OF THE PRIVATE SECTOR (ICD) editorial BACKGROUND The Islamic Corporation for the Development of the Private Sector (ICD) is a multilateral developmental organization affiliated with the Islamic Development Bank (IDB) Group. Its authorized capital stands at $2 billion. Its shareholders consist of the IDB, 52 member countries, and five public financial institutions. Headquartered in Jeddah, KSA, the ICD was established by the IDB Board of Governors during its 24th annual meeting held in Jeddah in November 1999. The mandate of the ICD is to support the economic development of its member countries through provision of finance to private sector projects in accordance with the principles of Sharia a law i.e. Islamic Law. FUNCTIONS The ICD finances projects that are specifically geared to creating employment opportunities and boosting exports. Furthermore the ICD mobilizes additional resources for projects and encourages the development of Islamic financing and capital markets. It also attracts co-financiers for its projects and provides advice to governments and private sector groups on policies aimed at encouraging the establishment, expansion and modernization of private enterprises, development of capital markets, best management practices and enhancing the role of the market economy. ICD MEMBER COUnTRIES Albania Algeria Azerbaijan Bahrain Bangladesh Benin Brunei Burkina Faso Egypt Gabon Gambia Guinea Guinea Bissau Indonesia Iran Iraq Libya Malaysia Maldives Mali Mauritania Morocco Mozambique Niger Senegal Sierra Leone Sudan Suriname Syria Tajikistan Tunisia Turkey In today s world the engine of growth is the private sector. It could come from anywhere be it in Latin America, East Asia or the Middle East. Yet Islamic countries are falling short in keeping up with the trend in supporting the private sector needs. ICD s mission, within the IDB group, is to support the private sector, by extending finance, investing in the private sector and providing assistance in order for our 52 member countries to flourish. The small and medium sized enterprises (SMEs) have a crucial role to play in a country s growth and development, and ICD has big plans for them. This is an important sector in all the member countries, including the higher income ones. ICD is now focusing on this sector by establishing Ijara companies and establishing investment funds. ICD is making great efforts to respond to the emerging challenges in member countries by creating new employment opportunities. Employment growth, which is positively and significantly associated with GDP growth, is a vital mechanism for improving income distribution and ensuring a sustainable reduction in poverty. Cameroon Jordan Nigeria Turkmenistan Chad Comoros Côte d Ivoire Kazakhstan Kuwait Kyrgyzstan Pakistan Palestine Qatar UAE Uganda Uzbekistan Khalid Mohammed Al Aboodi CEO, Islamic Corporation for the Development of the Private Sector (ICD) Djibouti Lebanon Saudi Arabia Yemen 02 03

Agreements and Memorandum of Understanding The Islamic Corporation for the Development of the Private Sector (ICD), a private sector arm of the Islamic Development Bank Group, has signed several agreements and memorandum of understanding to support private sector development in a number of member countries. The agreements are listed below: ICD and CDC to Provide Seed Capital Fund for Tunisian SMEs Signing of Line of Financing Agreements between the Islamic Corporation for the Development of the Private Sector (ICD) and three Turkish banks in Istanbul Caisse Des Depots Et Consignations (CDC), the ICD and with support from KIPCO group, Albaraka Bank and the Bank of Financing SMEs (BFPME) are taking the lead initiative by creating an integrated full solution to the problems of SMEs financing, with the largest CMF regulated and first ever Tunisian SME Shari ah Compliant Fund. The principal purpose for this is to address the small and medium enterprises (SMEs) funding gap by providing financial assistance in the form of growth capital to suitable SMEs that are poised for exponential growth. THEEMAR is an innovative integrated solution for SMEs as it addresses the entire financing issues that face most SMEs ranging from equity to technical assistance needs. It tackles the equity needs by way of direct investment and mezzanine finance. It solves the issue of debt financing by way of partnership with Albaraka Bank, the Bank of Financing SMEs (BFPME) and Alzatouna Bank. THEEMAR also addresses the working capital problems through the lines of finance from the International Trade Finance Corporation (ITFC), a member of the Islamic Development Bank Group. At the same time a technical assistance grant will be used to compliment THEEMAR by assisting those SMEs to better enhance their capabilities and growth strategies. THEEMAR invest in SMEs in various industry sectors in Tunisia with special attention given to promising sectors and to inner regions. THEEMAR is managed by United Gulf Financial Services, North Africa. On November 2012, the ICD CEO signed three Lines of Financing agreements totaling USD 60 million with Turkish Banks, namely: Bank Asya, Albaraka Turk and Aktif bank. Through these agreements ICD allocated USD 20 million to each bank for financing SME projects. These transactions are part of the USD 80 million Global Line of Financing facility for Turkey approved by the Board of Directors of ICD in May 2012. ICD hosted a high-level meeting to study the launch of new national home finance company, named Bidaya The ICD hosted a high-level meeting with committed shareholders for a new national home finance company being launched under the brand name of Bidaya. The meeting was held to discuss the status of Bidaya s development and to plan and agree upon on the crucial next steps leading to the company s launch. Commenting on the project, Mr Khaled Al-Aboodi, CEO of ICD, said: The commitment of ICD and the Public Investment Fund are now augmented by an influential group of investors, which includes some of the Kingdom s top institutions and family offices. These investors recognize Bidaya s social impact in facilitating home ownership across the Kingdom and agree that the time is ripe for a platform like this. 04 05

Islamic Corporation for the Development of the Private Sector African Guarantee Fund signed MoU to spur the development of SME s in Sub-Saharan Africa Signature of three agreements between the Islamic Corporation for the Development of the Private Sector (ICD) and Small and Medium Enterprises Financing Bank (BFPME) ICD s CEO, Mr. Khaled Mohammed Al-Aboodi, and AGF CEO, Mr. Felix Adahi Bikpo, ink the MoU in Jeddah. As per the MoU, ICD and AGF will join forces to cooperate in the development of the SME sector in Africa, particularly in the Sub-Saharan region through providing term financing, equity investment, lines of financing or guarantees. Both institutions will cooperate in structuring, establishing, promoting, marketing and launching funds that will promote the development of the SME sector in the said region. Under the aegis of Mr. Riadh Bettaieb, Minister of Investment and International Cooperation, and within the framework of cooperation between ICD and BFPME, three agreements were signed to promote BFPME business, acquire additional skills in providing assistance to developers and finance the various needs of small and medium enterprises in Tunisia. These three Agreements aiming at accompanying the BFPME in the implementation of Islamic products oriented towards SMEs in Tunisia, providing technical assistance by the staff of the BFPME for ICD s 52 member countries wishing to establish SME banks, similar to BFPME. This was achieved with the support of experts from ICD and cooperation between the BFPME and United Gulf Financial Services - North Africa. ICD and Afriland First Bank signed an agreement to launch Islamic banking products in Cameron The ICD and Afriland First Bank signed, on December 20, 2012, an agreement for the establishment of an Islamic window in Cameroon. The contract in question is to advise Afriland First Bank in the structuring and implementation of an Islamic branch to satisfy the growing demand for banking and financing alternative means compliant with the ethics and principles of Islamic finance. 06 07

Inauguration of Tuwairqi Steel Mills Project in Karachi, Pakistan OperatioNAL Performance in the first quarter of 1434H (2013) In the beginning of the construction of the project, in 2006, ICD came forward to support the project with a syndicated financing facility of USD 85 million, where ICD alone contributed USD 15 million. Later, ICD arranged another tranche of USD 20 million, where ICD s share was USD 10 million. In the whole financing process, ICD s role was always instrumental in driving the project. During the first quarter (Q1) of 1434H, 7 new projects for a total amount of USD 43.78 million were approved. The new approvals have increased ICD s Gross Approvals since inception to 247 projects in addition to 39 approvals to increase ICD s participation in the equity of investee companies, thus increasing ICD s total amount of Gross Approvals to USD 2,623.32 million. By the end of Q1, 1434H, ICD s exposure spread over 8 different sectors, where the Finance sector has the largest share of the exposure with 53% followed by Industry and Mining Sector with 21%. ICD s exposure stretches over 31 countries and 1 Regional Project. Saudi Arabia holds the highest portion of ICD s exposure with 14.6% followed by Uzbekistan with 8.9% and Yemen 7.3%. $43.78 Million 7 new projects approved $2.623 billion gross approvals The present sponsoring groups have a future vision to implement forward linking projects and ICD would be glad to associate them selves again if such plans materialize. 08 09

Organized events SOCIAL NEWS The ICD Maze Winner The ICD Maze was conceived as an Action Learning Project (ALP) initiative which was derived from ICD s Leadership Effectiveness Acceleration Program (LEAP) with a core focus in developing ICD s professional skills. The objective of the program was to inculcate innovation, problem solving and building relationships and cooperation among individuals and teams towards achieving a common path. It was launched in May 2012 with positive responses from 8 teams. A summary project brief of the 6 teams was as follows: a. Pacesetter The development of a new Banking Model named Biniog Sathi, which will be able to solve the default problem of the contemporary Banking Industry b. ICD Man The development of an online web application for ICD clients with the minimum cost c. Pathfinders The development of a website that focuses on entrepreneurial development d. ICMe A networking session to tap into the experiences of ICD s personnel. e. Kili A charity Fund Raising event to climb Mount Kilimanjaro for a Solar Project in Benin. f. TRIP The development of the online Back to the Office Report (ebtor) system. The official presentation to the Management Committee Members (MCM) was conducted on December 2012 and the MCM members unanimously decided that the winners of the piloted ICD Maze competition were: 1. TRIP 2. Kili 3. Pathfinders ICD Cricket Team The ICD and IDB Group Business Forum (THIQAH) cooperated to organize IDB Group Days to create awareness about IDB Group activities, services and products in the member countries. In addition, to promoting the Islamic finance industry, ICD sponsored many regional and world conferences in its member countries. The Islamic Development Bank Group (IDBG) cricket tournament is organized by IDB s social and Cultural Forum and held at the Bank s Green Lawn Ground. ICD got the better of IDB by 21 runs after putting 105 runs on the board. ICD is now qualified to play in the final match taking place on 9 March 2013. The result will be announced in the next newsletter issue. The table below shows the major event organized and sponsored during 1434 H (2012-2013): Event Date Location IDB Group Day in Jordan 18 November 2012 Amman - Jordan The World Islamic Economic Forum 4 December 2012 Johor Baharu Malaysia The World Islamic Banking Conference 9-11 December 2012 Manama, Bahrain IDB Group private sector Forum 20 December 2012 Yaoundé - Cameroon Islamic Finance News Roadshow 05 February 2013 Dhaka - Bangladesh 10 11

Islamic Corporation for the Development of the Private Sector P.O.Box 54069, Jeddah 21514 Kingdom of Saudi Arabia Tel: +966 2 646 8217 Fax: +966 2 644 4427 www.idb-icd.org