fbpx 49120-001: Islamic Finance for Inclusive Growth | Asian Development Bank

Regional: Islamic Finance for Inclusive Growth

Sovereign (Public) Project | 49120-001 Status: Active

The KSTA will enable responsible growth of the Islamic finance model as an additional vehicle for savings, partnered lending, bonds, leasing, and other financial services in the region. The TA will (i) provide resources for gap analysis and legal drafting support to enable improvements in the legal and regulatory environment; (ii) develop Islamic finance regulatory and financial institution capacity in the central banks, securities and exchange commissions and other institutions in the target DMCs to facilitate responsible implementation of Islamic financial products; and (iii) disseminate information on Islamic finance through seminars, conferences and outreach activities to enable both sophisticated investors (including institutions) and lower income individuals to benefit from Islamic finance products.

Project Details

Project Officer
Syed Ali-Mumtaz H. Shah Central and West Asia Department Request for information
Country
  • Regional
Modality
  • Technical Assistance
Sector
  • Finance
 
Project Name Islamic Finance for Inclusive Growth
Project Number 49120-001
Country Regional
Afghanistan
Kazakhstan
Kyrgyz Republic
Pakistan
Tajikistan
Project Status Active
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 9453-REG: Islamic Finance for Inclusive Growth
Investment Climate Facilitation Fund under the Regional Cooperation and Integration Financing Partnership Facility US$ 2.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Partnerships
Private sector development
Sector / Subsector

Finance / Finance sector development

Gender Equity and Mainstreaming No gender elements
Description The KSTA will enable responsible growth of the Islamic finance model as an additional vehicle for savings, partnered lending, bonds, leasing, and other financial services in the region. The TA will (i) provide resources for gap analysis and legal drafting support to enable improvements in the legal and regulatory environment; (ii) develop Islamic finance regulatory and financial institution capacity in the central banks, securities and exchange commissions and other institutions in the target DMCs to facilitate responsible implementation of Islamic financial products; and (iii) disseminate information on Islamic finance through seminars, conferences and outreach activities to enable both sophisticated investors (including institutions) and lower income individuals to benefit from Islamic finance products.
Project Rationale and Linkage to Country/Regional Strategy

Despite its exponential growth over the last few years, Islamic finance is facing several challenges which could slow the current growth trajectory unless these challenges are managed at a country level. These challenges are particularly evident in the emerging Islamic finance markets. They include:

(a) Legal and regulatory constraints. Conventional legal frameworks and institutional arrangements put into place for financing are generally not suitable for Islamic finance operations. In order to properly implement an Islamic finance system, countries must develop a holistic institutional setup that will enable Islamic banks to operate side by side with conventional banks. A harmonious interface between Islamic finance principles and the existing legal and regulatory framework is feasible, and is necessary. A number of Islamic financial products require multiple transactions (more than their conventional counterparts) to achieve functional equivalence. These transactions are subject to additional tax burdens under most existing legal and taxation systems. Thus countries that wish to develop indigenous Islamic financial markets need to consider tax and regulatory changes.

(b) Talent development and capacity constraints will continue to be a significant issue in Islamic finance for some time to come. Outside of the traditional Islamic finance markets, there are insufficient numbers of qualified Islamic finance professionals who are proficient in both finance and Islamic financial principles. Employees and management of central banks, regulators and Islamic financial institutions in emerging markets need training in modern Islamic finance principles, liquidity management in Islamic financial institutions, and risk management.

(c) Apart from traditional Islamic finance markets and sophisticated institutional investors, there is still a lack of public understanding and appreciation of Islamic finance. Many investors see Islamic finance as a type of financing for Muslims alone. Sophisticated investors can benefit from knowledge about the risk diversification benefits of Islamic financing. The poorer segments of society who have shunned conventional banking for religious considerations need to be educated about the availability of Islamic finance and the various financial products available to improve their financial future and well-being. The public generally can benefit from understanding of Islamic finance as a viable and useful method of accessing financial services, and a source of financing across a wide range of products that does have a religious basis but can be accessed and benefit clients and the country regardless of the religious beliefs of the user.

Impact An effective and well-functioning Islamic finance sector operating in the target DMCs developed.
Project Outcome
Description of Outcome Islamic finance in the target DMCs expanded
Progress Toward Outcome To be assessed.
Implementation Progress
Description of Project Outputs

Legal and regulatory reforms in Islamic financed commenced.

Regulatory, and private sector capacity to deliver Islamic financial services strengthened

Public understanding of Islamic products in target DMCs improved

Status of Implementation Progress (Outputs, Activities, and Issues) Two international regulatory and legal experts have been engaged. Other consulting services have been advertised and some are under the engagement process.
Geographical Location Afghanistan - Nation-wide; Kazakhstan - Nation-wide; Kyrgyz Republic - Nation-wide; Pakistan - Nation-wide; Tajikistan - Nation-wide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Consultations were undertaken with the central banks of all five countries. Requests to continue ongoing assistance (see previous ADB TA's focsued on Islamic finance) have been provided by Afghanistan, the Kyrgyz Republic, and Pakistan. The central banks of Azerbaijan and Tajikistan requested further support during missions undertaken by the Director CWPF in January and February 2015. Further government, financial market, and selected focus group consultations took place during TA fact-finding.
During Project Implementation To ensure success of the KSTA, the project team will continue working with those institutions in the target DMCs who have regulatory responsibilities with the finance sector. Though to increase awareness and understanding of Islamic finance products, the project team will work with a range of NGOs, national banking institutions, education institutions and other stakeholders who can assist in maximising coverage and effectiveness of the projects activities.
Business Opportunities
Consulting Services A team of individual international and national consultants will be engaged to provide services to deliver results under the R-CDTA. The implementation structure is based on a 3-tier consulting team consisting of (i) international Islamic finance regulatory and legal experts to provide technical expertise and guidance on specific subjects; (ii) national experts to work closely with the governments, facilitate coordination and management, and support activities under R-CDTA; and (iii) resource persons to provide capacity building support through technical inputs in workshops, training programs, provide guidance in developing programs and reports, monitoring, and undertake specific project-based tasks. The positions have been advertised.
Responsible ADB Officer Syed Ali-Mumtaz H. Shah
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, CWRD
Executing Agencies
Asian Development Bank
6 ADB Avenue,
Mandaluyong City 1550, Philippines
Timetable
Concept Clearance 22 Sep 2015
Fact Finding -
MRM -
Approval 07 Dec 2017
Last Review Mission -
Last PDS Update 28 Sep 2018

TA 9453-REG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
07 Dec 2017 - 07 Dec 2017 31 Dec 2019 31 Dec 2020 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 2,000,000.00 0.00 0.00 0.00 0.00 2,000,000.00 07 Dec 2017 121,421.93

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Title Document Type Document Date
Islamic Finance for Inclusive Growth: Technical Assistance Report Technical Assistance Reports Dec 2017

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
Capacity Building Firm Firm - Consulting Closed 30 Mar 2019 14 Apr 2019
Financial education firm Firm - Consulting Closed 25 Dec 2018 23 Jan 2019
International Regulatory Expert 3 Individual - Consulting Closed 21 Dec 2018 11 Jan 2019
National Regulatory and Legal Expert (TAJ) Individual - Consulting Closed 21 Sep 2018 27 Sep 2018
International Capacity Building Expert Individual - Consulting Closed 11 Sep 2018 20 Sep 2018
National Regulatory and Legal Expert (PAK) Individual - Consulting Closed 02 Aug 2018 12 Aug 2018
International Regulatory Expert 2 Individual - Consulting Closed 22 May 2018 27 May 2018
National Regulatory and Legal Expert (AFG) Individual - Consulting Closed 17 Mar 2018 21 Mar 2018
Legal Expert Individual - Consulting Closed 17 Mar 2018 21 Mar 2018
National Project Logistics and Reporting Coordinator Individual - Consulting Closed 17 Mar 2018 21 Mar 2018
National Capacity Building Expert (KAZ) Individual - Consulting Closed 17 Mar 2018 21 Mar 2018
National Regulatory and Legal Expert (KAZ) Individual - Consulting Closed 17 Mar 2018 21 Mar 2018
National Capacity Building Expert (TAJ) Individual - Consulting Closed 17 Mar 2018 21 Mar 2018
National Capacity Building Expert (AFG) Individual - Consulting Closed 17 Mar 2018 21 Mar 2018
International Regulatory Expert 1 Individual - Consulting Closed 17 Mar 2018 21 Mar 2018
National Capacity Building Expert (KGZ) Individual - Consulting Closed 17 Mar 2018 21 Mar 2018
National Regulatory and Legal Expert (KGZ) Individual - Consulting Closed 17 Mar 2018 21 Mar 2018
National Capacity Building Expert (PAK) Individual - Consulting Closed 17 Mar 2018 21 Mar 2018

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.