Ayman Sejiny, CEO, Islamic Corporation for the Development of the Private Sector (ICD) • Interview

Demand for Islamic finance products and sukuk are driving growth for ICD, also boosting fee income.

How has the pandemic shifted the core priorities of development finance and how has ICD adapted to this new situation?

I think we are going to emerge from this era with a stronger focus on our business and this means reaching out and understanding SMEs, which are the best fit for our resilience targets, and ensuring SDG compatibility. Islamic Development Bank Group (IsDBG) has set a USD3.2 billion of funding target focusing solely on COVID-19-related transactions, of which we as ICD have earmarked a total of USD250 million. This includes a line of finance that is currently being provided as funding for financial institutions for on-lending to SMEs that have been affected greatly by the pandemic. We believe in partnering with local financial institutions because they are on the ground in the countries that we operate in. In this regard, they do a much better analysis and are more well-versed and equipped in understanding their local markets. These local financial institutions ensure that lending is monitored correctly and undertake collections and facilitate redistribution to other SMEs that can benefit the most from our funding.

How has the attitude toward Islamic finance changed during the crisis?

Sharia-compliant or Islamic banking has witnessed significant growth over the years and will continue edging toward the mainstream moving forward. There is a growing demand and a pressing need for sharia-compliant financial solutions in our member countries. Globally, interest toward ethical and impactful investments focused on serving the needs of inclusive and sustainable economic development has also increased, specifically in 2021—in essence, this is the crux of Islamic finance.

Where does the sukuk fit into your overall financing strategy and how have you planned to use those funds?

The sukuk that that we have issued recently is the largest in ICD’s history. It was successful despite being in the midst of the pandemic, and the demand was high. The book was oversubscribed three times, including orders from joint lead managers. It attracted participation from 37 international and regional investors, and this is a testament to the strength of our business. Investors are confident regarding ICD’s credit story and our initiatives in promoting private-sector activities, as well as our new strategy, which we have been working on diligently over the past three years. Additionally, the capital raising will support ICD’s development activities including advisory projects, which create competition, entrepreneurship, employment opportunities, and export potential among our 55-member countries, all while encouraging the development of Islamic finance activities such as debt, equity, and capital markets. In the future, we look forward to engaging in blended finance transactions given its potential in supporting the global development agenda. For example, let’s say we target USD100 million in funding, and meanwhile a project in a member country required USD1 billion. We would be part of a syndicate and provide USD1 billion to those transactions by issuing a sukuk. Our USD100 million becomes one of the subscribers and this ensures that the transaction is known globally, and that there is continuity in the relationship, in turn making sure also that we have a bigger impact with our USD100 million. That is what we would like to focus on more in the future, and with that approach we will be increasing our fee income as an institution, and we as ICD also then become much more sustainable.