After listening to proposals presented by government officials last week, executives of the Islamic Development Bank (IDB) said it was too early to determine what projects they would be financing.
In an interview with Stabroek News during the two-day meeting at the Arthur Chung Conference Centre at Liliendaal, East Coast Demerara, IDB Vice-President Syed Aqa said that the visiting delegation was only “now exploring….”
Aqa, who was part of the four-member delegation that journeyed from Jeddah, Saudi Arabia, said that the mission here was to “understand the development and priority needs” and how they are aligned with the national development plan.
The next step would be to use their own resources and have technical discussions with regard to the needs, following which the team would return in January for more detailed discussions.
During that visit, he said, they would be able to determine “which projects would be in the first phase and in the next phase.”
He noted that the discussions have been very positive and that they now have a “general understanding” of the priorities.
“So far we believe that our priorities are in line with what we were expecting,” he said, while noting that the presenters were focusing on health, education, infrastructure and agriculture. He added that the delegation is now expected to engage in more technical discussions.
Aqa said the IDB offers loans and some components of grants and has technical expertise on linking countries. At the same time, he stressed that its aim is to “have a system that can sustain itself and not just depend on external support.”
No such thing as free money
Aqa added that while the bank does not charge interest, there is small cost attached. He explained that the “Islamic finance is based on profit and loss sharing. It is not a profit-making institution but we have to make money for the sustainability of our institution.”
In spite of no interest being charged, the Vice-President said that its financing would not be “cost free” and noted that they would engage in a partnership scheme, in the case of a business, where they can benefit from the proceeds.
“There is no such thing as free money,” he joked.
Asked whether they can look at the idea of establishing an IDB in Guyana, Aqa said that they can, based on a “request of the government or the private sector.”
The team is currently working in Suriname to transform a local bank to an IDB through the private sector and it is expected to be launched soon.
Aqa emphasised that if the Guyana government or the private sector is interested, they can help to put the right regulations in place “if there is a need or there is a market.”
Their main mandate, he added, is to promote ethical, social banking and financing in other Islamic banks.
Meanwhile, Aqa’s Special Advisor, Muhammad Alsaati, told Stabroek News that the intention is not to make a profit and that the IDB is a “development institution” that offers social equity with the member country.
He said they have shareholders who are giving them money to invest in other countries. But for the private Islamic banking, they would not charge interest but would be partnering with them and share the risk and profit of the business.
In the case of giving loans for homes, they issue a lease at the market value. The borrower would have to pay 20 percent and upon completion of the payment, can own the property.
Guyana became the 57th member of the IDB in March this year and it was seen as a signal for development. There have been attempts to join the bank ever since Guyana became a member of the Organisation of Islamic Conference (OIC) in 1998, which is a requirement.