The Islamic Development Bank President Dr. Ahmad Muhamed Ali, said recently that the IDB over the past three decades has played a pivotal role in the development of the Islamic Financial Services Industry including, investing in the equity capital of Islamic financial institutions, financing Awqaf projects, and building a capacity in the field of Islamic banking, Takaful, Islamic Microfinance, Corporate Governance, Awqaf and Zakat.
This was stated by Dr.Ali during a speech to the participants of t a forum organized lately by Harvard Law School on the subjected titled ”The Role of the Islamic Finance in the Economic Development.”
The IDB President elaborated further by saying that the Bank has nurtured the development of standard bodied such as, Islamic Financial Services Board (IFSB), the Accounting and Auditing Organization for Islamic Financial Institution (AAOIFI), the General Council for Islamic Banks and Financial Institutions (CIBAFI), the International Islamic Financial Market (IIFM), the Islamic International Rating Agency (IIRA) and the International Islamic Center for Reconciliation and Arbitration (IICRA).
He highlighted the unique features of the Islamic Finance that promote the economic development and growth, saying that the Islamic finance requires debt creation to be tightly linked to asset creation. Then, he illustrated that the Islamic instrument, like deferred sale (bai ajil), Leasing, Salam, and others, make debt an inseparable part of real transactions that improve productivity and thus create wealth, adding that debt, in Islamic finance, cannot grow without control and the current global financial crisis is the biggest result of the uncontrolled debt.
The president, also, pointed out the role of Zakat on the economic development is highly important from an economic point of view. “Thus, the economic development cannot be achieved by markets only, while the society suffers from extreme wealth concentration. Therefore, the needy segment of the society needs to be supported through non-profit arrangements, including interest-free loans and direct transfers such as Zakat.” He added.
Dr. Ali concluded his statement emphasizing the important role of Zakat in which it works as a safety-net for those who become unable to fulfill their financial obligations, inviting to pay more attention to Zakat Institutions and to promote their essential role in order to achieve the desired end.
Besides the IDB’s President, The two days forum was also attended by DR.Umer Shapra, a scholar at the IDB Islamic Research and Training Institute, Prof. Samuel Hayes from Harvard Business School, and Dr.Frank Vogel, the Funding Director of the Islamic Legal Studies Program in Harvard. ,