JEDDAH, 19 April 2004 — The Islamic Corporation for the Development of the Private Sector (ICD) approved $194.5 million for 32 projects in 2003 in areas such as technology, telecom, private health care, pharmaceuticals and modern manufacturing.
ICD, considered the private sector arm of the Islamic Development Bank (IDB), applies Islamic modes of financing in operations that include installment sales, leasing, and equity participation.
ICD began its operations financing projects in the Middle East and North Africa but now spans North Africa and South Asia, from Burkina Faso to Malaysia. “42 countries are our members and we’re expanding,” Khaled M. Al-Aboodi, deputy general manager of ICD said in an interview with Arab News.
“It will take a while for us to serve all of them, as we’ve been moving gradually,” he said, adding that ICD’s contribution to projects averages 21 to 25 percent.
ICD, which is headed by Ali A. Soliman as chief executive officer and general manager, examines a project and conducts a feasibility study before moving further. “We can get into all sectors except armament and recreation because we don’t finance hotels as they tend to offer alcohol and gambling facilities,” Al-Aboodi added.
ICD was established in November 1999 by the IDB and has its own board of ten directors chaired by IDB President Dr. Ahmed Muhammad Ali.
ICD aims to promote the economic development of its member-countries and encourage the establishment, expansion and modernization of the private sector, Al-Aboodi said.
ICD, with an authorized capital of $1 billion, finances private sector entities and facilitates their access to other sources of finance. Of its authorized capital, $500 million is currently open for subscription: 50 percent for the IDB, 30 percent for IDB-member countries and 20 percent for public financial institutions of ICD-member countries.
Shareholders comprise of 43 member-countries that have ratified the articles of agreement.
Recently, Sobhi Batterjee, president of the Saudi German Hospital Group was chosen as an “outstanding” investor. “We chose him for the award because we had a very successful experience with him,” Al-Aboodi said.
“We entered into a syndication with him to bring in $70 million for his project. We provided $10 million from our own resources and $60 million from other Islamic banks. He was able to use this money and transform it into a project of three hospitals.” Banks participating in the syndication with ICD included Samba Financial Group, Saudi Hollandi Bank, Dubai Islamic, and Faisal Islamic Bank.
Al-Aboodi said that ICD looks at each project and advances funds depending on its merits. He added that IDB created ICD because it felt the need for an agency to finance only the private sector.
Al-Aboodi, who began his career with the Saudi Ministry of Economy and Finance in 1982, is also the chairman of the year-old Islamic International Rating Agency (IIRA). The agency has 14 shareholders including IDB and ICD.
Its mission is to provide rating services to mainly Islamic financial institutions and corporations as well as member-countries. IIRA, which is set for its launch this month, will do two kinds of rating — technical which will analyze the ability of an underlined identity like any other rating agency and, second, Shariah compatibility rating, said Al-Aboodi.