Islamic Financial Advisory Services (IFAS) company will complete studies on exploring the possibility of introducing Islamic financing principles in Azerbaijan by the end of this year, a source in Islamic Development Bank (IsDB) told Trend.
The Islamic financing project is carried out jointly with the Agency for the Development of Small and Medium-sized Enterprises (SMEs) in Azerbaijan.
“IFAS is actively working on this,” the source said. “Experts are studying local legislation and in the near future will come up with proposals on how to apply Islamic financing in Azerbaijan.”
In January 2017, IsDB signed a Technical Assistance Grant Agreement with Azerbaijan for development of legal and regulatory framework for Islamic Finance which marks a key milestone for the development of Islamic Finance sector in the country.
The preparation of an action plan began in June. IsDB provided technical assistance in the amount of $200,000 in order to develop the legal framework for Islamic financing.
Earlier, in an interview with Azernews, Saleh Jelassi, the Regional Director of the Islamic Development Bank Group Regional Hub Turkey, noted that Azerbaijan has a very thriving private sector whose further engagement with IsDB Group’s private sector development arms, ICD and ITFC can lead to a more mutually beneficial cooperation to support investments and income and employment generation.
IsDB Group’s cooperation with Azerbaijan is growing stronger with each year since the country joined the IsDB on July 4, 1992.
Currently, IsDB Group has an overall portfolio of about $1.1 billion in the country comprising $947 million financing by IsDB, $52 million of trade financing by ITFC (International Islamic Trade Finance Corporation which is IsDB Group’s international trade financing arm) and $130 million of ICD/UIF financing. ICD (the Islamic Corporation for the Development of the Private Sector) is IsDB Group’s private sector development arm.
IsDB’s Ordinary Capital Resources (OCR) development portfolio in Azerbaijan consists of 35 operations with approvals of $945 million (excluding cancelled operations) which includes 31 completed operations worth $676 million and 2 active projects (4 operations) worth $266 million. The largest portion of IsDB development operations in Azerbaijan is in the Energy Sector (53 percent), followed by Water & Sanitation (27 percent) and Agriculture (13 percent).
IsDB is currently providing support to Azerbaijan’s National Water Supply and Sanitation Program in Six Regions through a Project worth $200 million. This project aims to provide clean and safe drinking water and sewerage connections to more than 320,000 inhabitants (including refugees and internally displaced people) in the six regions by constructing new water and wastewater treatment plants and installation of new water distribution networks and sewerage collection systems.
IsDB is also implementing an Integrated Rural Development Project with an approved amount of $66 million to support reduction in rural poverty in Agdash, Yevlakh, Sheki and Oghuz regions through increased food security and enhanced income earning opportunities for small farmers. The Project is assisting the farmers in achieving better productivity and profitability as well as environmental sustainability from both irrigated and rainfed crop production and livestock.
The views expressed in this article are the author’s own and do not necessarily reflect Saray Consultancy’s editorial stance.