As the Islamic Development Bank marks its 50th anniversary, Ugo Aliogo, who attended the annual general meetings in Riyadh, Saudi Arabia, looks at the opportunities for Nigeria as a member
This year, the Islamic Development Bank (IsDB) is commemorating its 50 years of continuous development interventions aimed at promoting human dignity and advancing Islamic cooperation and solidarity.
IsDB’s 50-year journey is marked by significant growth and substantial financial commitments to meet the aspirations of its member countries. The bank’s efforts reflect its dedication to promoting human dignity, sustainable development, and resilience in the face of evolving global challenges.
From its humble beginnings in 1974, the bank has grown from a single entity to a group of five development entities, with a network of 10 regional hubs. The membership has increased from 22 to 57 member countries. The capital and annual financing approvals have also expanded greatly. The accumulated approvals from inception to the end of 2023 reached $182.1 billion.
The President of IsDB, Dr. Muhammad Al Jasser, stated that the global economy would reach $15 trillion to finance long-term solutions, sustainable infrastructure projects, adding that the world needs long-term solutions, and sustainable infrastructure projects, and financing these projects requires a paradigm shift.
He averred that the bank’s asset-based and risk-sharing principles perfectly align with the needs of least-developed countries for long-term infrastructure projects.
Al Jasser further explained that the Islamic finance, with its emphasis on environmental responsibility, is perfectly positioned to support these endeavours.
According to him, “Asset-based and risk-sharing financial products for infrastructure financing remain a niche area within the overall financial system. Multilateral development banks can play a vital role in developing the necessary financial infrastructure to attract private capital flows toward developing countries. A collective effort by MDBs can significantly boost investor confidence.”
As part of activities marking the IsDB 50 years anniversary, the bank organised the 2024 IsDB Group Annual Meetings and the Golden Jubilee marking the 50th anniversary of the Bank in Riyadh, Saudi Arabia with the theme: “Cherishing our Past, Charting our Future: Originality, Solidarity, and Prosperity,” that brought together member countries, investment partners, and players in the financial markets. One of the member countries is Nigeria.
Nigeria is one of the member countries of IsDB. Nigeria joined the IsDB on 15 June 2005 with a capital subscription in the bank at 0.3 per cent, which later rose to 7.69 per cent becoming one of the nine major shareholders. The country is a key beneficiary of the IsDB financing in Africa with a total portfolio of approved operations amounting to $1.8 billion. IsDB Group’s financial support for Nigeria is diverse, covering broad sectors of the economy. Agriculture infrastructure projects account for 29 per cent of IsDB’s financing for Nigeria, followed by health (18 per cent), transportation (17 per cent), and water (15 per cent), among others.
FG’s Position
The Coordinating Minister of the Economy and Minister for Finance, Mr. Wale Edun, represented Nigeria at the annual meetings.
Speaking, Edun stated that President Bola Tinubu is focused on increased domestic revenue generation by mandating national revenue generating agencies to remit 50 per cent of their revenue proceeds to the federal government, deviating from the norm of remitting earnings after deducting operational costs.
He also stated that the surplus funds from these efforts are utilised for crucial infrastructure development, social welfare programme and job creation.
He revealed that with oil serving as a key revenue source, steps were taken to bolster pipeline security and increase crude production, resulting in a current output of 1.6 million barrels per day through collaborative tax force efforts.
He appealed to the bank to expand its portfolio of projects with more concessional loans facilities to support government ongoing efforts to develop the economy.
Edun remarked that in view of the fragility of the country relating to insecurity and climate issues, the federal government is seeking for more grants and technical assistance from the bank for Nigeria.
He requested the assistance of the IsDB to mobilise resources from the Arab Coordination league for infrastructural development.
“We wish to request for the visibility and presence of IsDB affiliates (ICD, ITFC, ICIEC) in the regional hub of Abuja to intensify their support to the private sector who are important growth drivers and to support the renewed hope initiative of Mr. President,” he stated.
The minister commended the bank for their continued support to the economic development of Nigeria; especially for approving the I-dice project aimed at creating the next unicorn in the Nigeria technology space and the Special Agro Processing Zone Project (SAZP) to support the country’s import substation drive.
According to him, “President Tinubu’s renewed hope encapsulates a comprehensive vision for Nigeria’s future, built on the pillars of economic prosperity, social development, and political stability. Crafted to address the pressing challenges facing the nation while leveraging its vast potential, this agenda aims to instil optimism and confidence among Nigerians and international stakeholders alike.
“President Tinubu recognises the need to reduce Nigeria’s dependence on oil revenue and promote diversification across multiple sectors, including agriculture, manufacturing, and technology. By harnessing the nation’s abundant natural resources and human capital, the administration aims to unlock for growth and prosperity.”
SAPZ Project
In 2022, the Islamic Development Bank (IsDB) and the government of Nigeria signed a $150 million financing agreement for a flagship project that provides extensive support to the country’s food security.
The agreement signed on August 8, 2022 is part of a mega co-financing effort for the launching of the Special Agro-Industrial Processing Zone (SAPZ) Project in the Federal Republic of Nigeria.
IsDB President, Dr. Muhammad Al Jasser, had stated: “The Project can play a key role in pushing Nigeria’s economic recovery in the post-pandemic period. Given that Nigeria has a high agricultural potential, SAPZ will help in boosting the country’s agricultural supply chain. With this in mind, tapping prospects in a special agro-industrial processing zone and pushing for its advancement is one way to achieve inclusive growth and sustainable development in Nigeria.”
Signatories to the agreement were IsDB President and Group Chairman, H.E. Dr. Muhammad Al Jasser, and Dr. Zainab Shamsuna Ahmed, Federal Minister of Finance of the Government of the Federal Republic of Nigeria.
The project aims to support the poverty alleviation strategy of the Government of Nigeria, stimulate sustainable activities for low-income households, and enhance the competitiveness of the agriculture sector through the promotion of select value chains in the country.
In addition to the Federal Capital Territory (FCT), SAPZ Program will cover seven other states namely Kaduna, Kano, Kwara, Imo, Cross River, Ogun, and Oyo. IsDB Project will cover FCT, Kano, and Kwara.
The SAPZ Programme bears an estimated cost of $575 million financed by other international partners including the African Development Bank (AfDB) Group and the International Fund for Agricultural Development (IFAD).
Once operational, the project will support inclusive and sustainable agro-industrial development and enhance the competitiveness of the agriculture sector through the promotion of select value chains.
AFDB Viewpoints
Also speaking at the event, President of the African Development Bank (AfDB), Dr. Akinwunmi Adesina, stated that the IsDB has partnered the bank and the International Fund for Agricultural Development (IFAD) to launch a $538 million programme to develop special agro industrial processing zones in Nigeria.
Adesina remarked that in 2017, the AFDB set a goal financing target of $2 billion, adding that it has overachieved on that by reaching $2.4 billion which he noted would support 19 projects across 14 African countries.
The AfDB boss, who spoke during yesterday in Riyadh, Saudi Arabia, during the IsDB Golden Jubilee celebration and gala dinner, hinted that the IsDB Group has committed $7 billion to efforts in support of Africa to feed itself.
“I was delighted when the Chairman IsDB Dr. Muhammad Al Jasser, announced this at the Feed Africa Summit held in Dakar, Senegal in 2023. You have joined forces with the African Development Bank and the International Fund for Agricultural Development as we jointly launched a $538 million programme to develop Special Agro Industrial Processing Zones in Nigeria.
“You also joined forces with us to create the Alliance for Special Agro Industrial Processing Zones to jointly mobilise $3 billion to develop these zones across several countries. You are a strategic partner of choice for us. As you look into the future. We have shown our commitment to do more together,” he stated.
In his address, the Co-chair, Board Member, Bill and Melinda Gates Foundation, Bill Gates, disclosed that the organisation’s collaboration with the Muslim leaders, especially the Sultan of Sokoto, Saad Abubakar, helped drop the polio virus to zero in northern Nigeria in the year 2020.
He also noted that many thought the foundation would not succeed in its effort to eradicate the polio virus because the reputation of the virus in Nigeria was under huge challenge.
Call for More Investments
The Managing Director, Lotus Bank, Kafilat Araoye said $1billion capital funding support from Islamic Development Bank (IsDB) to Nigeria would help would fix infrastructure and reduce the pressure on the Naira.
She also stated that the funding would put in place infrastructures, and businesses, adding that this would help the federal government generate foreign exchange from some of the things that the funding would be used for.
Araoye said fixing infrastructure in Nigeria requires monitoring as was done with the Sukuk fund project that was implemented with high level of trust and discipline.
“When you invest money in Sukuk fund, all you are saying is that you are partnering in the project, and it is a project that is monitored from beginning to the end and what the money will be used for. So, the fund is helping us to have infrastructure that we didn’t have in Nigeria before,” Araoye said.
She urged the IsDB to identify projects and also areas where Nigeria has competitive advantage, so that they can fund it in order to drive economic growth in the country.
She siad one of the goals of Lotus bank at the conference is to advocate for more funding, and collaboration for Nigeria.
According to her, “The Islamic Development bank is into oil and gas. We have lithium, we need to start mining, lithium and selling. In terms of the capital funding support, there are three broad areas. There is the sustainability, where you are concentrating on the key areas of sustainability, women, education, environment and others. Then, there is also the side that has to do with reducing the pressure on foreign exchange, to generating foreign exchange the export side of the businesses (export mining) and commodity generally.
“The third aspect is infrastructure. There is no way we can grow as a country without opening our roads, there are too many bad roads, and connection must be easy. Just we are having rail lines in Lagos, we need to have connected rail across the country. Most people are concerned about their returns in investments, but the fact lies that as you invest, you get your returns in the investment. The Islamic Development bank is development focused and geared towards the development of member countries.”
