Islamic Development Bank: Role in Member Countries

The issue of poverty alleviation has always received a special attention of the Islamic Development Bank (IDB). This is so because of the fact that 21 of its 50 members belong to the category of least developed countries as classified by the United Nations. Of the total population of 972.6 million for all IDB members, the population of these counties stood at 285 million (29.3 percent) by mid-1993. Although poverty estimates are not available for all of these countries, the available information indicates the existence of widespread poverty, specially in rural areas. Judged by any standard, the quality of life in these countries in general, and of the poor segments of population in particular is very low. Out of 173 countries ranked by the UNDP according to Human Development Index (HDI), eleven countries at the bottom of the list are all Islamic countries which are members of the IDB.

The IDB is a unique institution in the sense that is provides development financing to its member countries on interest-free basis in accordance with the shari'ah. Since its inception in 1975, the bank has developed its own modes of financing in consultation with Islamic scholars and, as a pioneer in this field, has successfully used them over a period of two decades. Alleviation of poverty from an Islamic point of view is thus of special interest to the bank.

From the point of view of a financial institution, it is quite obvious that the resources required to effectively deal with the problem of poverty are huge and it is beyond the capacity of any single institution to meet all such financing needs. With limited resources at its disposal and enormous developmental needs of its member countries, the IDB has tried to deal with the issue of poverty through financing of education and health sector projects that primarily benefit the poor, provision of scholarships to the needy and promising students, and through various other activities under its special assistance programme. The special focus of the bank on poverty alleviation is evident from its medium term strategic agenda, and the special account for the least developed member countries. The broad policies and efforts of the bank towards poverty alleviation in its member countries are briefly described below.

Dr. Aftab Ahmad Cheema

Source: Poverty Alleviation in Pakistan: Present Scenario and Future Strategy, Mohibul Haq Sahibzada. Republished with permission.