MUSCAT: Oman’s recent endorsement of the establishment of the Islamic Corporation for the Development of the Private Sector (ICD) potentially open the way for a new source of Islamic finance for private sector projects and entrepreneurial startups in the Sultanate of Oman.
Royal Decree 88/2023, issued on December 27, 2023, effectives ratifies the agreement setting up the Jeddah-based Islamic Corporation as an organ of the Islamic Development Bank (IsDB) Group. Founded in November 1999, the ICD has been conceived as a multilateral development financial institution that supports the economic development of its member countries.
With the ratification of the underlying agreement establishing the ICD, Oman becomes the 56th member country of the Islamic Corporation. Other shareholders of the Corporation, which was set up with an authorized capital of $4 billion, include the Islamic Development Bank and five public financial institutions.
The timing of its membership of the multilateral development financial institution is significant particularly as Oman rolls out a new Sustainable Finance Framework – the first of its kind in the Gulf region.
Unveiled by the Ministry of Finance last week, the framework seeks to unlock funding assistance for projects and initiatives designed to help Oman deliver on its commitments towards, among other targets, Net Zero, Climate Mitigation and UN SDGs. It centres on the issuance of various instruments, such as Green Bonds, Social and Sustainability Bonds, Loans and sukuk, aimed to raise funding for such activities.
Ahead of the Royal Decree ratifying the agreement establishing the ICD, a delegation from the Ministry of Finance visited the Islamic Corporation’s headquarters in Jeddah last July. During the visit, the Omani team was acquainted with the diverse range of services, business processes, and activities undertaken by the IsDB Group. In addition, the Islamic Corporation showcased its operations, activities, and prevailing policies and procedures to the visitors, and also outlined the opportunities for collaboration between the Ministry and ICD.
The ICD says its mandate is to “provide financing for private sector projects in member countries, promote competition and entrepreneurship, and encourage cross border investments”.
“ICD also brings additional resources to projects, encouraging the development of Islamic finance, attracting co-financiers and enhancing the role of the market economy. ICD focuses on financing projects that contribute to economic development, including job creation, the development of Islamic finance, and export growth. Additionally, ICD works to foster sustainable economic growth by mobilizing capital in the international financial markets. ICD operates to complement the activities of the IsDB in member countries and also that of national financial institutions,” it added.
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