1 / 29

Islamic Financial Sector Development Department

Presentation to the 6 th Global Awqaf Conference Islamic Development Bank Experience in Financing Awqaf Projects Achievements and Challenges. Islamic Financial Sector Development Department. Table of Contents. 1. Brief on the Islamic Development Bank. IsDB Mission.

adelinej
Download Presentation

Islamic Financial Sector Development Department

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Presentation to the 6th Global Awqaf ConferenceIslamic Development Bank Experience in Financing Awqaf Projects Achievements and Challenges Islamic Financial Sector Development Department

  2. Table of Contents

  3. 1. Brief on the Islamic Development Bank

  4. IsDB Mission “To promote comprehensive human development, with a focus on the priority areas of alleviating poverty, improving health, promoting education, improving governance and prospering the people” Expansion of the Islamic financial industry including Awqaf is one of the nine key strategic thrusts of IDB

  5. AAA Rating Europe: 2 Countries Asia: 26 Countries Africa: 27 Countries Latin America: 2 Countries Now: 57 Countries Capital: ID 100 Billion(authorized) ID 50 Billion (subscripted) 1975 22 Countries Capital: ID 2 Billion

  6. 2. Current Business Model for Awqaf Financing“Awqaf Properties Investment Fund”(APIF- started 2001)

  7. APIF’s Mission • To Contribute to the Revival of the Islamic Sunnah of Waqf Through the Development of Awqaf Properties (Lands and Buildings),with the Aim of Increasing their Returns, which May in Turn Be Used for the Socio-Economic Development of the Ummah (Poverty Alleviation, Education, Health, Etc.)

  8. 2. “Awaqf Properties Investment Fund”- Business Model Participants • 2 International Org. • 5 Awqaf Ministries/ Auth. • 8 Islamic Banks • Others/ NGOs/ Businessmen?? APIF • (Global Awqaf Fund) • Managed by IsDB/Shareholders • Financing: over 10 to 15 years • US$ 4 to 15 million • Capital: US$ 100 million • (paid up US$ 78,4 million ) • Planned to increase to: • $250m phase-I - $500 m in pahse II • IsDB Support: • Line of Fin: US$ 100 million • Technical Assistance Grants Capital Share YearlyDividends • Awqaf Projects • Development of land (56 Projects) • Purchase of Property (3 Projects) Beneficiaries • Awqaf Authorities • NGOs/ Trusts/ Foundations Isl. Financing Repayments

  9. APIF Shareholders & Their Contribution

  10. Financial And Social Impact

  11. Achievements – 18 years Total Projects Cost: US$ 1.12billion 59Projects in 18 years 30 Countries IDB Contributions: US$495 million

  12. Types of Projects • Residential buildings (residential apartments of high standing/ furnishedapartments) • Commercial buildings (office blocks, commercial centres/shopping malls) • Mixed-use development • on land that are well located in city centres or CBD in order to maximise the return potential of the project

  13. MODES OF FINANCING • Leasing • Istisna’a • Murabaha (purchase of existing buildings) • Diminishing Participation • B.O.T. • Other appropriate Islamic modes of financing • Technical Assistance (grant) for Capacity Building, Preparation of Feasibility Studies and Creating Enabling Environment

  14. Project Financing Process • Stage 1: Project Concept Clearance • Official request for Financing • Legal Documents (registration certificate and articles of association of the Waqf/charitable organization). • Copy of the Title Deed of the Land/ Property • Copy of the Waqf deed/Trust deed, if any. • Detailed information about the organization & its financial statements. • Brief profile of the trustees and members of management • Stage 2: Appraisal & Approval Phase • Detailed Feasibility study. • Proposed security for the financing; like mortgage, sovereign guarantee, bank guarantee, etc. • Recommendations/ No Objection Letter • Stage 3: Implementation Phase • Construction of Building (Tendering – Disbursements: 2 to 3 years) • Purchase of Ready Building (3 to 6 months)

  15. APIF Corporate Structure/ Governance • IsDB • Islamic Finance Investment Division • Legal Division • Risk Department • Shariah Auditor • Finance Department • Compliance Division 4

  16. 3. Sample of Projects Financed by IsDB/ APIF

  17. APIF – Selected Success Stories Project 1 - Bangladesh Islamic Solidarity Education Waqf • Beneficiary: IDB- BISEW • Project Cost: US$ 13.40 + Land • Mode of Financing: Grant and Soft Loan • IDBG Input: Financing US$ 13.40 M • Output: Waqf Office Tower in Dhaka • Outcomes: • Generating annual rentals of US$ 4.0 million allocated to vocational and educational programs. • More than 12,000 students have benefited from the Waqf since inception in 1997, most of whom have been placed in the job market. Every year around 1000 new beneficiary. • IT scholarships • Vocational training for Madrasah students • Vocational training for school drop outs • Supporting orphans. 4

  18. Project 2 – Al Magzoub Commercial & Residential Complex, Sudan • Beneficiary: Al Magzoub Organization, Sudan • Project Cost: US$ 9.5 M • Mode of Financing: Leasing • IDBG Input: Financing US$ 7.5 M • Output:Al Magzoub Commercial & Residential Complex • Outcomes: • Supporting 3,300 students in memorizing Quran in a scientific manner. • Sponsoring 1,000 orphans. • 200 Vocational training internees. • Rehabilitation of prisoners. • Medical education. • Impact: Contribution to the socio-economic and human development of the community through education & capacity building. 4

  19. Project 3 - Extension and Renovation of Bazerkan Commercial Center in Beirut, Lebanon • Beneficiary:Makassed Philanthropic Islamic Association, Lebanon • Project Cost: US$ 21.5 M • Mode of Financing: Leasing • IDBG Input: Financing US$ 5.0 M • Output: Extension And Renovation Of Bazerkan Commercial Center • Outcomes: • Supporting community in education, health and social services: 45 schools, university, vocational college, hospital serving 65,000 patients annually. • Maintenance of 3 cemeteries etc. • Impact: Contribution to the socio-economic benefits to underprivileged segment of the society. 4

  20. APIF – Selected Success Stories Project 4 - Commercial & Residential Building in Fujairah, UAE • Beneficiary: Fujairah Welfare Association • Project Cost: US$ 20.0 M • Mode of Financing: Leasing • IDBG Input: Financing US$ 6.0 M • Output:Fujairah Commercial & Residential Building • Outcomes: • Supporting 40,000 deserving families. • 2339 women benefited from rehabilitation workshops. • 4,000 students were provided support for studies. • 4.5 million meals distributed through Food Saving Project. • Impact: Contribution to the socio-economic and human development of the community.

  21. APIF – Selected Success Stories Project 5 - Waqf Office Tower in Chittagong, Bangladesh • Beneficiary: International Islamic University of Chittagong • Project Cost: US$ 5.5 M • Mode of Financing: Leasing • IDBG Input: Financing US$ 4.0 M • Output: Waqf Office Tower in Chittagong • Outcomes: • Financial assistance to 250 students for accommodation, food, books, etc. • 30 university staff already obtained PhD degrees. • Impact: Contribution to the improvement of literacy rates in Bangladesh. 4

  22. 4. Challenges & Way Forward

  23. Main Challenges • Increasing the Size of APIF • Increasing the Capacity of Awqaf Authorities/ Trusts/ NGOs • Lack of Enabling Environment (Islamic Finance & Waqf Laws) in most countries • Foreign Investment and Tax Regulations Challenges 4

  24. 1. Rationale for the APIF’s Capital Increase to $ 250 m • Benefit from economies of scale (reduce admin. expenses & enhance APIF returns) • Allow APIF to fulfill the unmet demand for Waqf Real Estate projects • Target larger projects • Build on the accumulated experience of APIF over the last 18 years and its diverse network of participants and beneficiaries • Benefit from IsDB’s existence in 57 member countries and its tax exemption • For investors: US$ Stable Returns Fund with dividends of 2.5 to 4 % annually – Partnerships for Awaqf development

  25. 2. Increasing the Capacity of Awqaf Authorities/ Trusts/ NGOs • Most Beneficiary are receiving financing for the first time • Changing mindset for Awqaf Projects to business (not charity) • Training and monitoring • Use Specialized Consultants/ Construction management firms/ Property management firms for Awqaf Investments • IsDB provides Technical Assistance Grants for capacity building of beneficiaries

  26. 3. Lack of Enabling Environment (Islamic Finance & Waqf Laws) • Alternatives to Waqf Law: Trust Law – Foundation Law • Allow IsDB provides Technical Assistance for capacity building of beneficiaries 4. Foreign Investment and Tax Regulations Challenges • Selection of appropriate mode of Islamic financing • Tax exemptions for Awqaf/ charitable activities • Repatriation of Funds • Currency exchange risk (APIF is US$ Fund)

  27. Thank You

  28. Back up Slides

  29. Potential of the Awqaf Sector • Awaqf Properties worth billions of dollars are underutilized or unutilized • Saudi Arabia: US$ 93 billion to US$ 145 billion (US$ 14 billion are managed by the General Authority of Awqaf). • Malaysia: 11,511 hectares of Waqf land worth USD 30 billion, but only 0.72% of it was developed. • Indonesia: around 4.4 billion sqm with an economic value of US$ 27 billion. • Turkey – Egypt – Bangladesh – Indonesia – Morocoo

More Related