Islamic Development Bank: 50 years of social impact

Member countries

The IsDB's approach starkly contrasts with that of traditional international institutions and their counterparts. It helps countries in urgent need of financing without placing stringent conditions on that assistance.

Its member countries vary in economic dynamics, levels of financial literacy, and adherence to liberal development policies. Countervailing influences may include the customs and traditions unique to each society.

Traditional donor institutions like the IMF or World Bank often require the recipient nation to make painful reforms, such as by removing subsidies or increasing taxes. These measures often hit the poorest hardest, perpetuating poverty.

Borrowed funds should be used judiciously to avoid deeper indebtedness and corruption. Without care, borrower countries can fall into a downward cycle, sometimes sacrificing sovereignty just to break free.

The IsDB is a global leader in Sharia-compliant finance, offering a sustainable, ethically grounded, long-term financing structure to bolster its project investments.

With success in Islamic capital markets, it is now the largest global issuer of Sukuk, a Sharia-compliant bond-like financial instrument, which it uses to fund research and training aimed at advancing the future of Islamic banking and finance.

Over the past two decades, it has garnered the coveted triple-A rating from the agencies, allowing it to attract and expand its investor base while being committed to preserving Islam's rich heritage.

The IsDB also aligns with the 17 UN Sustainable Development Goals, which include supporting innovation, science, and technology to bolster skills, expertise, and knowledge.

The global south

One of the IsDB's most notable characteristics is its member countries in the global south. This includes 27 African states, many facing similar political, economic, and social challenges.

The solidarity among these nations epitomises a genuine desire to collaborate and enhance their capabilities through targeted development solutions, addressing needs and priorities via projects and financing worth billions of dollars.

The least developed countries comprise 90% of the IsDB's members. Funds are channelled towards infrastructure projects, stimulating public-private partnerships, and supporting small and medium-sized enterprises.

The loans aim to help these states develop their economies, industries, skills, and education, which in turn will develop national capabilities. Many member countries already possess a wealth of natural resources, including food-related ones.

Together, they account for almost a third of the world's agricultural land, produce 18 of the world's top 20 most traded agricultural varieties, and contribute up to 15% of its cereal and vegetable production.

At COP-27, the IsDB and the Arab Coordination Group pledged to provide $24bn in financing until 2030 to contribute to addressing the climate change challenge.

Additionally, in 2022, they launched a financing package worth $10.5bn in response to the food crisis triggered by the war in Ukraine.

The scale of its initiatives, its geographical reach, and the substantial economic weight of its members only serves to enhance the status and expansion of the IsDB.

Education and health

The IsDB has forged partnerships and initiatives with civil society groups and charities active in healthcare, education, culture, food security, entrepreneurship, and energy. These sectors play a significant role in achieving economic diversification, as well as peace, stability, and prosperity.

This aligns with one of the main pillars of Vision 2030, initiated by the Kingdom of Saudi Arabia, which has been the incubator of the IsDB since its inception.

Vision 2030 emphasises the development of human capital and the cultivation of advanced skills to prepare the younger generation for future employment demands.

Benefitting from IsDB support in 600 projects over the past 50 years are hundreds of thousands of refugees and tens of thousands of students in more than 100 countries.

The IsDB estimates that today's generation stands to lose $17tn in their lifetimes from disrupted or interrupted education caused by the pandemic and other crises.

In many of its lower-income members, such crises only reduce education budgets, so the Smart Education Financing Initiative spans 37 member states, reaching 28 million out-of-school children.

In an era where funding scarcity ranks high on the ladder of development challenges, heavily indebted nations cut budgets to avoid bankruptcy. The IsDB is not immune to such challenges.

However, its resilience through turbulent times and its ability to consistently attract investors (despite the constraints imposed by Sharia) evidence the success of its approach and its credibility in international financial markets.

The IsDB distinguishes itself by its priority: to make a difference and effect comprehensive societal transformations in the regions it serves, particularly among women, children, and vulnerable and marginalised groups.

Beneficiaries will be hoping for at least another 50 years.