Nigeria and the Islamic Development Bank

By Oche Egwa --- Nigeria became the 56th member of the Islamic Development Bank (IDB) on June 15, 2005, thus making her the 27th African nation to join the institution. The bank was founded in 1973 at the first conference of Finance Ministers of the Organisation of Islamic Conference (OIC).

Having a largely Islamic background with headquarters in Jeddah, Saudi Arabia, the bank operates as a multi-lateral institution. The IDB was inaugurated officially on October 20, 1975 with Saudi Arabia, Kuwait, Libya and Turkey as its main shareholders.

Other shareholders include the United Arab Emirate (UAE), Iran, Egypt, Indonesia and Pakistan. Among its key functions is granting of loans for productive projects and enterprises to member countries. The bank also provides financial assistance to its members for economic and social development. Meanwhile, it has set a target to check poverty cycles in all its member countries by 2020. To become a member of the bank in 2005, Nigeria paid a subscription fees of more than 1.5 million dollars. The terms of payment required Nigeria to make five equal instalments.

Said 298, 861 dollars, being the first instalment, to enable her control 0.03 per cent holding in the bank. Nigeria joined the OIC in 1986, a criterion that qualified her membership of the IDB. Although the bank may carry the brand of a religious outfit, its operational philosophy has remained the pursuit of development and reduction of poverty. With such goal, analysts say that Nigeria should be its natural ally since the nation is also preoccupied with fighting poverty.

The bank recently held its 33rd annual general meeting in Jeddah, with focus on the rising global food prices. The 56 ''Governors'' from member countries of the IDB, including Nigeria, offered suggestions on how to tame the food crisis with many of them seeking financial interventions from the bank. The IDB governors are mostly the Ministers of Finance and Planning of its member countries.

In his submission, Nigeria's Minister of Finance, Dr Shamsudeen Usman, suggested a long-term strategy to deal with the food crisis. He said this could be achieved through prioritising modern agricultural methods of research and farming. The food crisis, he said, is partly caused by some countries that had diverted resources and land meant for food crop production, for the cultivation of crops for bio-fuel.

''I will like to propose that in the medium to long term, the bank should increase its intervention in the agricultural sector to assist member countries to modernise their practices and increase food production. Even before the crisis, some member countries, especially in Sub-Saharan Africa, were already facing developmental challenges and could hardly feed their people, '' he pointed out.
Usman, who was represented by Mrs Amma Pepple, former Permanent Secretary, Ministry of Finance, said the food crisis was fuelled by lack of funds and adverse climatic conditions in some countries.

''Our countries should turn the challenges posed by the food crisis into opportunities by taking measures to develop agricultural infrastructure to enhance productivity and the income of farmers. The development of agricultural infrastructure will not only help mitigate rural-urban migration and depopulation, but will also lead to the socio-economic development of our countries,'' he added.
Apart from the rising cost of food and energy which had worsened the poverty line, Usman said there was a need to include poor infrastructure, including transport and power as areas requiring intervention in Africa.

''The problem of power, the main source of industrial development which could lead to creation of additional jobs and poverty reduction, is a source of great concern which needs urgent attention,'' he said.

Usman commended the 2020 vision of the IDB, which aims to get all member countries out of the poverty cycle, noting that the target would help the bank to play a more strategic developmental role in the economies of its member countries.

Available records show that Nigeria obtained a 60 million dollars (about N70 billion) concessionary loan from the IDB in 2006. The records also showed that half of the money was utilised for the National Food Security Project in the Ministry of Agriculture.

Pepple, who confirmed this, said that the other half is still being processed as the country has yet to decide where to sink it into.The concessionary loan attracts less than three per cent interest.

With the economic gains already trickling in from the IDB, Pepple said that more will be gained if Nigeria increased her share capital to 8.5 per cent.
''The 8.5 per cent will give Nigeria an executive seat on the board of the IDB,'' she said, adding that it would enable her make input into major decisions. We could even have a regional office,'' she added.

Alhaji Garba Aminchi, Nigeria's Ambassador to the Kingdom of Saudi Arabia, who was also at the session, said that the nation had gained ''tremendously'' from its membership of the body. ''There were reservations in some quarters over our membership; but it is clear that the advantages outweigh any other consideration,'' he said.

According to him, the IDB has already included Nigeria among its Cotton Forum project which is designed to promote research, cultivation and utilisation of cotton in some member countries.

''The Cotton Forum picked Nigeria as a centre of excellence amongst countries like Egypt and Saudi Arabia. In fact, the research institute for the project is in Nigeria. The Ahmadu Bello University (ABU) Directorate of Research will be the first to be recognised by the Cotton Forum of the IDB,'' he added. According to the ambassador, some countries will get 20 million dollars from the project for the development of cotton.

''The cotton project will also go a long way to resuscitate our textile industries that had packed up as soon as our power becomes regular,'' he said.
Other benefits of the IDB is the engagement of many Nigerians in its employ, with eight of its nationals holding senior positions at its head office in Jeddah.
One of the officers, Dr Abdullateef Bello, a Divisional Chief, said....Read more