MICROCAPITAL.ORG STORY: Islamic Solidarity Fund For Development Approves $5m Loan For Kyrgyz Republic And $10m Loan For Tajikistan To Fund Micro-enterprises And Boost Microfinance Sector

In a recent report by the Saudi Press Agency [1], it was reported that the Islamic Solidarity Fund for Development (ISFD) [2] has approved two microfinance projects, one in the Kyrgyz Republic and the other in Tajikistan, worth USD 15 million in total. The ISFD is a subsidiary organ of the Organisation of Islamic Conference (OIC) [3] and was established under a resolution of the Second Islamic Summit Conference in Lahore. The aims of the ISFD are, among others, to provide emergency relief to communities in Islamic states and to help Muslim minorities and communities in OIC member countries combat poverty.

As previously reported by Microcapital [4], the ISFD recently released its first annual report. The annual report stated that the original target of the fund was USD 10 billion with contributions to be made by the Islamic Development Bank (IDB) [5] and IDB member countries. As at the end of 2008, USD 2.61 billion had been pledged: USD 1.61 billion from IDB member countries and USD 1 billion from the IDB. The ISFD is an affiliate of the IDB. It is currently located at the General Secretariat of the OIC in Jeddah, Kingdom of Saudi Arabia. The IDB is a multilateral development financing institution that was established in 1975. The IDB has its headquarters in Jeddah, Kingdom of Saudi Arabia. The IDB currently has 56 member countries and accepts deposits and mobilizes financial resources in accordance with Shari’ah-compliant methodologies. Total assets of the IDB as at the end of 2007 were reported to be Islamic Dinar (ID) 6,107.4 million.   

The report on goes on to state that a concessional loan for USD 5 million will be allocated to the project in Kyrgyz Republic to finance micro-enterprises through local partners in rural areas. The duration of the loan is 10 years including a grace period of three years. A technical assistance grant of USD 300,000 will be provided for the project. Tajikistan is expected to receive a USD 10 million loan to finance micro-enterprises in the country under a 10 year facility which includes a grace period of 3 years. A technical assistance grant of USD 330,00 from the IDB will be provided for the project in Tajikstan.

Apart from these microfinance projects, the ISFD has also approved a USD 20 million facility to finance the Kaliab-Kalaykhum Road Project in Tajikistan. As reported by the Saudi Press Agency [1] and on the Microfinance Focus news portal [6], the loan is stated to be for a period of 25 years including a grace period of 7 years. According to that same report, the board of the ISFD has also approved a concessional loan for USD 10.2 million in favour of Afghanistan to finance the Doshi-Pol-Khumri Road Project. The term of the loan is 25 years including a grace period of 7 years. The same project was given USD 10 million by the IDB previously.  

By Chinq Yee Chong, Research Assistant  

Bibliography:  

[1] Saudi Press Agency report on ‘ISFD approves $45m new projects’ on Zawya.com: http://www.zawya.com/printstory.cfm?storyid=ZAWYA20090723072606&l=072600090722  

[2] Islamic Solidarity Fund: http://www.oicun.org/6/34/  

[3] Organisation of Islamic Conference (OIC): www.oic-oci.org/  

[4] MICROCAPITAL STORY: $10b Islamic Solidarity Fund for Development (ISFD) Releases First Annual Report Including Details of its Microfinance Support Program (MFSP) Worth $500m   

[5] Islamic Development Bank: http://www.isdb.org/irj/portal/anonymous  

[6] Microfinance Focus report on ‘ISFD approves $15m for microfinance projects in Tajikistan, Kyrgyz Republic‘: http://www.microfinancefocus.com/news/?p=322   

[7] MICROCAPITAL STORY: $10b Islamic Solidarity Fund for Development Programs Approved with Goals to Reduce Illiteracy and Poverty throughout the Muslim World Focused on Microfinance

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