Read Full Magazine Here. Commercial opportunities for the Islamic finance sector include tapping into emerging global liquidity pools seeking aligned products and increasing tactical alignment with development bank financiers.
The focus of Islamic finance products and services should be on the evaluation of wider societal impact. Islamic financial institutions should build capabilities. With assets expected to reach US $3.8 trillion in 2022, through its adeptness at innovative financial structuring Islamic finance is particularly well placed to create innovative instruments that drive capital towards the SDGs.
The Islamic Corporation for the Development of the Private Sector (ICD) is a multilateral development financial institution and a member of the Islamic Development Bank Group (IsDBG). ICD was established in November 1999 to support the economic development of its member countries through the provision of finance for private sector projects, promoting competition and entrepreneurship, providing advisory services to governments and private enterprises, and encouraging cross border investments. Today, ICD is rated A2’ by Moody’s, ‘A-’ by S&P and, A+ by Fitch. Goldman Sachs was ICD’s rating advisor for the period 2019-2020. ICD establishes and strengthens cooperation and partnership relationships with an aim to establish joint or co-financing. Since 2019, ICD applies financial technology (Fintech) and digital solutions to make its investment products more efficient and affordable. FinTech will offer new services that will enable inclusion and will impact the way consumers, SMEs and institutions operate, grow and scale. Financial services institutions within ICD’s member countries are benefiting from fintech innovations by using artificial intelligence, robotics, blockchain, data analytics, and cloud computing services. ICD created a platform a “BRIDGE” platform based on its relationships with 119 financial institutions, through which, IsDBG in general and any other potential financier can have access to member country and identify available financing opportunities. The platform allows financial entities to collaborate in identifying investment opportunities, sharing market information and laying the groundwork for actual financial transactions within the member countries and across borders.
Ayman Amin Sejiny is the CEO of the ICD. Sejiny is highly accomplished financial industry leader with in-depth knowledge and more than 29 years of experience in investment and corporate banking in the local, regional and international markets.
Previously, Sejiny acted as CEO of Barclays Capital Saudi Arabia, Assistant General Manager in Citibank Saudi Arabia (SAMBA), as well as and Senior Manager in Abn Amro’s affiliate in Saudi Arabia (Saudi Hollandi Bank). Regionally, Sejiny was a CEO, Chairman and Board Member in many regional financial institutions.
Additionally, he is board member of Kidana Development Company which is a joint-stock company owned by the Royal Commission for Makkah Al-Mukarramah and the Holy Sites and mandated to develop the holy sites. Moreover, Sejiny is a member of the investment committee in King Abdullah Foundation (Almadena Almonawara).
Ayman is vice-chairman of the International Development Finance Club (IDFC) which is the leading group of 26 national and regional development banks from all over the world, a majority active in emerging markets.
Sejiny is C-Level performer with vast experience in FinTech. He holds a BA from Eastern Michigan University, USA.
With almost three decades experience in leading roles across banking and Islamic finance, Ayman Amin Sejiny shares his views on the key areas of the Islamic finance and the new plans and strategies of ICD for the year 2022.
BUSINESS LIFE reporter had obtained an exclusive interview with Ayman Amin Sejiny, the CEO of the ICD to talk about his 2022 strategies, which looks at ICD’s growth plans as well as the special challenges facing the finance sector nowadays.
BL: How are you going to support the development of the member countries during 2022 and what are your thoughts to explore ways to do so?
Ayman Amin Sejiny: ICD developed its 3-year business to achieve long-term strategy objectives. The main spirit behind the medium-term business plan is ICD’s Board-approved 10-year upgraded strategy, lessons learnt from our recent performance as well as the ICD member countries’ needs and priorities. In order to prepare this medium-term business plan, we worked on different scenarios, taking into account the potential implications of the ongoing COVID-19 pandemic. The main theme of our next Medium-Term plan for the years 2022-2024, is centered on enhancing ICD’s relevance to member countries’ development aspirations by fostering broad-based growth and job creation.
Our plan for 2022-2024 aims at focusing on core offerings on financial institutions, implementing new innovative products and channels, growing the business in financially sustainable way, serving countries based on their development needs, and leveraging partners within and beyond the IsDBG to mobilize additional resources. Our plan is also informed by the main challenges faced by member countries. This includes areas in which ICD can play an important role such as promoting the private sector, boosting COVID-19 recovery, driving green economic growth, building inclusive human capital development and scaling up the BRIDGE platform (ICD’s digital platform connecting 119 financial institutions).
It is also worth mentioning that ICD has built up a well-experienced Management Team with strong track record and qualifications to lead the organization for serving in the best manner to its member countries. For instance, the Strategy, Policy and Research Department (SPRD) of ICD is currently headed by, Osman Buyukmutlu (Director, SPRD) who has 18 Years of experience in the Corporate Strategy, Finance, Economic & Policy Analysis spanning public, private and MDB sectors. He obtained his MBA Degree from Harvard Business School, USA and BSc degree on Business Administration from Middle East Technical University in Turkey.
BL: What is the equity orientation of ICD for the upcoming year? Improving access of SMEs to finance is among the priority policy directions perused by ICD, why?
Ayman Amin Sejiny: Supporting small- and medium-sized enterprises (SMEs) remains a primary focus of our work. It has proven to be a powerful lever in helping us to achieve our broader goal: the promotion of sustainable and inclusive private-sector development in our member countries. Today, this focus on SMEs as a means to bring about development goes well beyond their economic contribution. It recognizes and stresses SMEs’ potential to build social cohesion, reduce income inequalities, foster resilience, empower marginalized groups, and restore community security. At the same time, this focus allows us to address matters of urgency, such as resilience, climate change, innovation, and disruptive technologies. Our work in sustainable infrastructure financing, for example, strengthens the productive potential of the private sector, and enhances the ability of businesses to compete and thrive in challenging environments.
The key products from the core mandate portfolio contributing to the operating income will be line of finance, term finance and institutional equity investments, which will generate considerable revenue for ICD in 2022.
Over the next three years, ICD will give priority to core credit products (line of finance and term finance) and remain very selective on new equity investments with a focus on brownfield projects. Based on ICD’s Board-approved strategy, the disbursements aimed at allocating more resources to credit than to equity investments.
Effectively, ICD aims at taking the following two major actions to achieve higher returns and increase its portfolio quality: exit from some of its current equity projects and approve low risk but growth-oriented profile projects. In fact, the Corporation plans to exit from some equity projects, and for this purpose, the Management identified a shortlist of existing equity investments with exit potential. The total exit target for the next three years will enable the Corporation to achieve a balanced Equity portfolio with stable business models and positive earnings. In addition, ICD is in the process of selecting high quality brown-field equity investments in Banking, Non-banking and Corporate equity transactions.
We believe these actions are projected to bring significant contribution to ICD’s financial performance in the next three years.
I would like to mention that Global Markets Equity & Line of Finance Department is headed by Aamir Khan who has 25 year experience in Private Equity Investments, Strategy, and Corporate Finance at ABN Amro, Barwa Group and Energy Industry. Aamir has a MBA from Chicago Booth School of Bus and BSc degree in Accounting & Finance from the University of Houston in USA
BL: What are your mid and long-term forecasts?
Ayman Amin Sejiny: As I said earlier, we have a 3-year business plan which envisions robust growth in our operations over the next three years (2022-2024). Furthermore, expanding operations will enable us to achieve growth in revenues. The ICD business plan projections have been prepared based on two over-arching goals of ICD: a) ensuring financial sustainability; and b) creating development impact to contribute to the achievements of the Sustainable Development Goals (SDGs) of member countries (with a focus on SDG #7, #8 and #9). Overall, the plan aims to achieve robust core portfolio growth, by doubling it between 2022 and 2024.
On the other hand, A major requirement for financial inclusion is financial literacy and capability. In this regard, ICD has developed its Financial Literacy Platform (FinLit) to promote access to financial services in underserved financial markets in MCs. The training and awareness tools and services will include building awareness about bank account ownership, making payments, savings, financing, and managing risks. The FinLit platform will be collaborating with leading MC financial institutions, educational institutions, training institutions, corporations, governments, development institutions, nonprofit organizations, investors, and service providers to deliver financial literacy education and access to diverse financing solutions. The target groups for the FinLit platform and the financial education events in general are emerging enterprises and entrepreneurs, families especially the heads of the families, housewives and young men and women from ages 18 to 26. The FinLit contributes directly and indirectly to achieving SDG1 (No Poverty), SDG4 (Quality Education), SDG5 (Gender Equality), SDG8 (Decent Work and Economic Growth), SDG9 (Industry, Innovation, and Infrastructure), SDG 11 (Sustainable Cities and Communities), and SDG17 (Partnerships for the Goals). ICD has also participated in a number of innovative partnerships to help its MCs deal with COVID-19, contribute to the achievement of the SDGs and to update and strengthened its partnership arrangements.
The Development Effectiveness Department in ICD is headed by Dr. Mohammed Alyami who has more than 20 years of experience in program and policy evaluation, impact evaluation, and research methodology & design. Alyami has a
PhD in Evaluation and Master in Human Resource Development from Western Michigan University is USA and BSc degree in Business Administration from King Saud University in KSA.
BL: Would you highlight ICD activities, services, initiatives and joint solutions in member countries including Europe?
Ayman Amin Sejiny: As of year-end 2021, the gross cumulative approvals of IsDBG’s private sector arm, ICD, stands around USD7 billion, with cumulative disbursements exceeding USD3.5 billion. Majority of ICD’s project approvals directly benefited SMEs in member countries, with much-needed Shari’ah compliant financing extended to beneficiaries through local financial institutions in order to support post-COVID-19 recovery efforts. COVID-19-related challenges most frequently cited for SMEs are cash flow issues and reliable access to capital - ICD’s targeted support and initiatives aim to bridge this gap and alleviate these difficulties.
Our investment also reflects ICD’s wide geographic reach. Since its inspection, ICD investment operations covered 50 member countries, in addition to a number of regional and global-level projects covering several economies. The Middle East and North Africa (MENA) region accounts for 29% of gross approvals, followed by Europe and Central Asia (ECA), with 22%, Sub-Saharan Africa (SSA) with 18%, and the Asia region with 14%. The share of regional/global projects covering several countries across different regions represents 17% of gross approvals.
BL: What are the new diversified sources of funding?
Ayman Amin Sejiny: ICD has an authorized capital of $4 billion. Currently, the shareholders of ICD are the IsDB, 55 member countries, and 5 public financial institutions.
In 2020, ICD returned to the Sukuk market after a four-year hiatus with a highly successful US$600 million senior unsecured Sukuk due in 2025. The issuance was upsized to US$600 million from the initial target size of US$500 million, double the size of the inaugural 2016 issuance, on the back of a strong orderbook and solid transaction momentum. The orderbook reached US$1.4 billion with strong demand from new SSA-focused investors (2.3x oversubscription). ICD had mandated Goldman Sachs International, HSBC and Standard Chartered to act as the global coordinators to the transaction and to arrange a series of meetings with global and fixed-income investors across Asia, the Middle East and Europe for a five-year US dollar denominated Sukuk.
The three banks were joined by Bank ABC, Boubyan Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, Gulf International Bank, ICD, KFH Capital, LBBW, Mizuho Securities, Samba Capital, SMBC Nikko and Warba Bank as joint lead managers and joint bookrunners.
In 2021, ICD was able to secure its first funding with tenure of more than 5 years by securing a US$100 million bilateral facility from a regional bank. The facility has a tenure of 7 years. In addition, ICD also closed its first club facility from two international banks. The amount of the club facility is US$150 million for a tenure of 3 years.
BL: Is there a proper environment for the role of SUKUK on infrastructure development?
Ayman Amin Sejiny: As you may be aware, the financing gap for infrastructure projects in our member countries is growing. Sukuk can play a key role in filling this gap, providing viable investment projects to local and international investors. This is an opportunity for issuers from our member countries to extend the overall duration of their liabilities. This is even more relevant in instances where countries are looking to raise funds for sustainable infrastructure projects. We are noticing dedication from private players in the energy and infrastructure sectors from Africa to Europe with green ambitions, are turning to Islamic finance for a sustainable solution.
Since 2016, energy infrastructure firms have engaged Islamic multilateral financiers – mainly the Islamic Development Bank (IsDB) and its private sector arm, the ICD – to mobilize Shari’ah compliant funding toward sustainable projects. The next step would be for our member countries to issue Sukuk for such projects.
ICD has played a key role in the debut sukuk issuances for six of its member countries. There was strong demand for these issuances and the proceeds from these Sukuk were all used for infrastructure projects. This included the development of airports, buildings, roads and bridges for these member countries. Currently, the ICD is in discussions with some of its member countries on issuing sustainable Sukuk for their green and social projects. This is still in its early stages, however there is a strong push globally for such issuances. ICD is dedicated to facilitating infrastructure development in its member countries as it plays a key role in their economic development going forward. We believe that Sukuk can play a major part in raising funds for sustainable infrastructure projects.
BL: What are the concrete solutions for potential issuers concerning global Sukuk market?
Ayman Amin Sejiny: The current market is ideal for potential issuers to raise funds from the international markets, as the cost of borrowing is still relatively low. It is important for issuers to examine the local laws and regulations of the country to identify if it is “Sukuk friendly”. Some countries have Sukuk laws in place, but others do not. There is a need for certain tax exemptions in some countries. Working with ICD will help issuers in multiple jurisdictions to issue Sukuk and provide the issuers with an experienced advisor to overcome such hurdles. ICD developed its internal Sukuk advisory capabilities due of the increasing demand from member countries that are planning to fund their infrastructure through debt capital markets.
I join Ikbal Daredia, the Director of Global Markets and Fixed Income and Treasury Departments who mentioned that the ICD Sukuk Platform is a facilitator to develop Islamic capital and debt money markets by (i) Assisting in the issuance of Sukuk from the international Islamic capital markets and (ii) Assisting the supplement of conventional T-bills with short-term Sukuk to allow Islamic banks access to liquidity instruments whilst allowing the Central Bank to mop up excess liquidity typically found in newly established Islamic Banks and Islamic Banking Windows.
It is worth mentioning that Ikbal Daredia has 35 Years of Experience in Banking, Sukuk and Islamic Finance in HSBC, ABN Amro and UBS.
BL: Why is it important to promote PPP projects?
Ayman Amin Sejiny: Public Private Partnerships (PPP) provide governments with opportunities to involved the private sector and deploy their know-how / resources for strategic projects.
The ICD has been proactive in supporting these partnerships in infrastructure projects and witnessed direct positive impacts on the real economy. The ICD’s financing activities give priority to schemes that are developmental in nature and produce added value to economies of member countries. The ICD recognizes the role of the public infrastructure sectors (power, renewables, education, healthcare, transportation) in unleashing the member countries’ potential. At the same, the ICD is mindful of the challenges that successful projects face.
The achievement of the SDGs is at the center of ICD’s action. Infrastructure PPP financings support Goal 6: Clean Water & Sanitation, Goal 7: Affordable & Clean Energy, Goal 8 – Decent Work and Economic Growth, Goal 9 – Industry, Innovation and Infrastructure, and Goal 11 – Sustainable Cities and Development. In addition, substantial investment is required in social infrastructures such as hospitals and educational institutions to meet Goal 3: Goal Health and Well-being and Goal 4: Quality Education. To deliver on the SDGs agenda, ICD targets sponsors and project developers demonstrating strong track record not only from the commercial angle but also in the management of environmental, health and safety aspects.
Since 2015, ICD started extending financing support to medium-scale infrastructure projects, mainly within the power and renewable energy sectors. To date, ICD has co-financed a number of transactions in collaboration with various international development financial institutions, as well as local financial institutions in different ICD member countries. Approved projects include utility scale solar, wind and thermal power plants in countries such as Mali, Egypt, Jordan, Pakistan and Bangladesh. In addition, ICD has supported healthcare PPP projects in Turkey.
The ICD investment and risk guidelines target projects with bankable risk structuring, a perquisite for successful project implementation. The optimal risk allocation among the various project parties is achieved when risks are distributed to parties well placed to manage them. The contractual structure achieving risk allocation is key to the financing process. In some situations, a PPP enables the transfer of some risks to the public sector and thus, enhances the bankability attributes of the projects.
BL: How does ICD establish business relations and partnerships with other leading representatives and counterparts from the business community?
Ayman Amin Sejiny: ICD partners with Multilateral Development Banks (MDBs), Development Finance Institutions (DFIs), Financial Institutions (FIs), other multilateral organizations, as well as leading representatives and counterparts from the business community by establishing strategic, impactful, and win-win relationships. Our partnerships help incubate new ideas and allow co-financing and pipeline sharing, whilst facilitating knowledge transfer and creating deal opportunities to support private sector development across our member countries.
Since its inception in 1999, ICD has established a strong and diversified partnerships network with leading MDBs, DFIs and FIs operating in Africa, Asia, Central Asia and the Middle East North Africa regions. Upon initiating a partnership, ICD’s team works to ensure that the scope of cooperation serves the mutual benefit of ICD and its partners, in line with our developmental mandate, for the ultimate benefit of the member countries. A dedicated partnerships unit was recently established within ICD and has been heavily involved in IsDB’s Working Group on Partnerships with MDBs and DFIs, the Arab Coordination Group meetings, the DFI roundtable chaired by the IFC, the Africa Investment Forum Partners’ meetings, the IDFC Steering Committee meetings, and other forums in coordination with IsDB and other Group entities.
Kindly note that the Relationship Management and Partnership Division is headed byBasem Ali Tantush who has more than 25 Years of Experience in Banking Investment and Retail, Insurance and Reinsurance, Airlines in Leadership, Relationship Management and Partnerships Development. Basem has an MBA in Management and Finance from Western International University in USA and BSc degree in Accounting and Management from Tripoli University.
BL: Why does ICD connect business communities in member countries by arranging parallel B2B and B2G scheduled meetings?
Ayman Amin Sejiny: Strengthening and Standardizing Partnerships with Clients is one of the six key initiatives which assists ICD to effectively source larger deals, and thus generate higher volume. ICD’s Regional Offices are managing relationships with ICD’s existing network of 119+ FIs in coordination with the business units to move toward a more centralized relationship management model, featuring ICD’s Regional Offices as the primary client interface. Connection with business communities through B2B and B2G meetings is expected to generate the following outcomes:
- Increase ICD’s visibility in the member countries and attract large size bankable deals;
- Develop co-financing platform with other major DFIs in common member countries;
- Help ICD to achieve its targets and contribute to SDGs;
- Allow ICD to understand market needs and develop products in line with client expectations; and
- Anticipate on potential opportunities / threats and provide appropriate response with the goal to better serve the private sector and protect ICD’s investments.
BL: How can ICD promote the private sector and outreach the beneficiaries and segments in its member countries?
Ayman Amin Sejiny: ICD can play an important role on promoting the private sector, boosting COVID-19 recovery, driving green economic growth and building inclusive human capital development
Moreover, ICD can help in enabling superior client centric approach and cross-selling IsDB Group products and services. In addition, we promote the IsDB Group synergy efforts and activities in the member countries.
ICD will continue applying a Multi-Level Marketing and Communication activities (global, regional, and national) focusing on 4 main regions (CIS, Sub Sahara Africa, SE Asia and MENA).
During 2021, ICD was present in more than 130 events. ICD was branded as Multilateral Strategic Partner in many conferences and webinars locally, regionally and worldly. ICD organized many webinars with different partners in the member countries covering mainly the Sukuk and infrastructure sectors. We participated actively in high ranked sessions in reputable and international forums (i.e Finance in common, G20, Global Business Forum...).
On the other hand, as administrator of IsDB Group Business Forum “THIQAH”, I would like to highlight the fact that THIQAH successfully organized, co-organized and promoted more than 200 business-related conferences in 50+ Member and Non-Member countries (local, regional & international) with the participation of 160+ Countries. Furthermore, THIQAH has successfully launched 3 online initiatives in MCs (Digital Country Presentations, “Made in … Series”, Startups Virtual Pitch Competition) which were implemented in 30+ MCs. These initiatives aim to provide innovative solutions, allowing for a sustained foreign direct investment (FDI) flow into and between MCs, ultimately contributing to achieving the SDGs. Moreover, THIQAH also provided technical, promotional and logistical support for IsDB Group during the G20 and Head of MDBs Meetings as well as supporting and promoting several IsDB Group programs and initiatives. THIQAH is well connected and positioned to act as enabler and play a catalytic role in attracting the private sector and market resources into IsDB Group and MCs projects and programs by promoting and maximizing cross-border investment and trade among MCs to be supported by IsDB Group’s financial products and services.
It is worth mentioning that Nabil El Alami is the head of the PR and Communication Division in ICD and the Acting Director of THIQAH. Nabil has more than 22 years of Experience in Marketing, Communication, Business Development and Business consultancy. He worked in national and international corporations. Nabil has an MBA From Sherbrook University in Canada and BSc degree from Haute Etude de Management Institute, in Morocco.
