Islamic Bank set to join forces with China-backed AIIB

By Tuba Sahin

ANKARA

The most successful and largest development organization in the Muslim world, Islamic Development Bank Group (IsDB) is set to form a partnership with the China-backed Asian Infrastructure Investment Bank (AIIB) to address infrastructure challenges in the member countries.

"The IsDB Group and AIIB plan to sign a cooperation Memorandum of Understanding later in the year. Many of our member countries overlap so it is a natural partnership," Bandar Hajjar, IsDB Group president, said in an interview with Anadolu Agency.

“Many of our member countries overlap so it is a natural partnership. Our focus will be to address the drastic infrastructure gap in common member countries.”

The AIIB, which has 84 member countries, was set up by China with $100 billion in committed capital. Its mission is to invest in infrastructure projects across Asia and beyond.

Hajjar said 57 member countries of the IsDB Group need about $150 billion a year to finance infrastructure in the energy sector alone.

“There are about 650 million people in Africa without access to electricity -- this specific partnership jointly with other international partners including the World Bank and French Development Agency, will help solve these issues.” Hajjar added.

Stressing that protectionist and isolationist tendencies pose a major danger for the global economy as well as IsDB Group member countries, Hajjar said multilateral cooperation was a key to tackle these global challenges.

"We are supportive of a rules-based multilateral trading system and believe that regional and global cooperation initiatives such as the new Silk Road Initiative, BRICS Bank, and the Asian Infrastructure Investment Bank should be seen as building blocks for broader international cooperation," Hajjar said.

Hajjar added that such initiatives could contribute to generating important stimulation for the global economy, which is why the bank's five-year plan focuses on promoting, enhancing and deepening partnerships.

He highlighted that the current model of financing projects in IsDB member countries were heavily dependent on state institutions, thus heavily indebting their resources and inefficiently implementing of projects.

"Further, the allocation of financing resources to isolated projects that are not integrated into a value chain will not help member countries to climb the global value chain ladder," Hajjar said.

Hajjar said that the IsDB Group was pursuing a different development model to transform it from a development bank to "a bank for development and developers".

"IsDB Group’s role would be to build partnerships, bringing development partners to work together within a specific value chain, and define the role of each partner in the chain on the basis of innovative solutions derived through science and technology," he said.

'The IsDB Group will enhance its cooperation with Turkey'

Praising Turkish economic growth performance -- at 7 percent on annual average since 2009, Hajjar said:

"We are confident that the growth drivers along with strong investor and business confidence are expected to keep the high growth momentum in the coming years."

He noted that Turkey was the fourth largest beneficiary of IsDB Group financing which has an overall portfolio of $11.2 billion in the country for 483 operations.

Hajjar added that the bank invested more than $700 million in renewable energy and energy efficiency enhancement projects.

"The IsDB Group is firmly committed to continue supporting Turkey in strategic priority areas," Hajjar said.

"In the energy sector, the focus is expected to be in renewable energy, energy supply security through storage infrastructure and transmission networks; in the transportation sector, the support would be mainly on enhancing Turkey as a logistics hub through high-speed trains and motorways," the IsDB group president said.

The IsDB Group, the development arm of the Organization for Islamic Cooperation (OIC), was established in 1975 to foster economic development and social progress in member countries. The bank currently has 57 members with its head office in Jeddah, Saudi Arabia.