1 ISLAMIC DEVELOPMENT BANK QUESTIONS AND ANSWERS 2 1430H 2009 15 QUESTION AND ANSWERS GENERAL BACKGROUND 1.

What is Islamic Development Bank (IDB)? How was it established? When did it start functioning? The Islamic Development Bank (IDB) was established by the first conference of Finance Ministers of member countries of the Organization of the Islamic Conference (OIC), convened on 24 Dhul Qa'da 1393H (18 December 1973). Its purpose is to foster economic development and social progress in member countries and Muslim communities worldwide based on the principles of shari'ah (i.e. Islamic jurisprudence). The Bank commenced its activities officially on 15 Shawwal 1395H (20 October 1975). 2. What are its main objectives? In line with its overall objectives of fostering economic development and social progress, the Bank finances productive projects and programs in both public and private sectors in member countries. It invests in economic and social infrastructure projects, provides technical assistance to member countries and assists in the promotion of foreign trade, especially capital goods. The Bank also assists Muslim communities in non-member countries and undertakes shariah-based research studies in Islamic economics and banking through special funds established for this purpose. IDB finances development projects in member countries through a number of shariah-compatible modes such as Loan, Leasing, Instalment Sale, Istisna'a, Equity Participation, Lines of Financing, etc. Besides, its trade financing schemes, such as Import Trade Financing Operations (ITFO), Export Financing Scheme (EFS), and Islamic Banks Portfolio (IBP), Unit 16 Investment Fund (UIF), etc., promote trade among member countries. 3. Which countries are entitled to become members of IDB? How many have joined the Bank? All member countries of the Organization of the Islamic Conference (OIC) are entitled to become members of IDB. The present membership of the Bank stands at fifty-six spreads over four continents, viz., Africa, Asia, Europe and Latin America. 4. What is the authorized capital of the Bank? What is its subscribed capital? As of Jumad Awwal 1427H (May 2006), the authorized capital of the Bank was raised to Islamic Dinar (ID)30 billion and the subscribed capital to ID 15 billion.

5. What must a country subscribe to the Banks share capital upon joining? Upon joining the Bank, a country should subscribe a minimum of 250 shares having a par value of 10,000 Islamic Dinars each. 6. Which are the main shareholders of the Bank? At present, on the basis of paid-up capital, the following seven countries are the main shareholders of the Bank: Saudi Arabia, Kuwait, Libya, Turkey, UAE, Iran, Egypt and Qatar. * The Islamic Dinar, which is the unit of account of the Bank, is equal to one SDR (Special Drawing Right) of the International Monetary Fund. The value of the SDR is based on a basket of currencies, which, in August 1999, comprised: US Dollar (45%), Euro (29%), Japanese Yen (18%), French Franc (15%) and Sterling Pound (11%). 17 7. Does the Bank interfere in the affairs of member countries? The Bank is a developmental institution. It does not take any political stand nor does it interfere in the political affairs of member countries. 8. What is the Banks relationship with the Organization of the Islamic Conference (OIC) and its various committees and affiliated organizations? The IDB is one of the specialized organs of the OIC. Specialized organs usually have their own governing Boards independent of the OIC governing machinery. The Bank is a permanent observer in all meetings and committees of the OIC. It cooperates closely with other subsidiary, specialized, and affiliated organs. However, being an economic organization, the Bank has a special relationship with the Standing Committee for Economic and Commercial Cooperation (COMSEC). ORGANIZATION AND FUNCTIONS 9. How is the Board of Governors constituted? What is its role? Each member country is represented on the Board of the Bank by a Governor and an Alternate Governor. Each member has five hundred basic votes plus one vote for every share subscribed. Generally, decisions are taken by the Board of Governors based on a majority of the voting power represented at the meeting. The Board of Governors meets once every year to review the activities of the Bank for the previous year and to decide future policies. In its annual meeting, the Board designates a Chairman, who holds office until the election of another Chairman at the next Board meeting. The Board of Governors is the highest policy-making body. It can delegate powers to the Board of Executive Directors for the general operation of the Bank. However, only the Board of Governors 18 can deal with issues relating to membership, increase or decrease in the Banks authorized capital, authorize cooperation agreements with international and regional organizations, election of the President and Executive Directors, and their remuneration.

10. How is the Board of Executive Directors constituted? What is its role? At present, the Board of Executive Directors is composed of fifteen members, eight of whom are appointed and seven elected. The eight member countries with the largest shareholding appoint one Executive Director each. The other member country Governors elect the remaining seven Executive Directors. The President is the Chairman of the Board of Executive Directors. The Directors hold office for a period of three years and may be re-elected. Each member of the Board is entitled to cast the number of votes that counted towards his election and these need not be cast as one unit. Generally, decisions are taken by majority vote based on the voting power present at the Board meeting. The Board of Executive Directors is responsible for the general operation of the Bank and, in particular, to: - prepare the work of the Board of Governors - take decisions concerning the Banks business and its operations in conformity with the general directions of the Board of Governors - submit the annual accounts for approval of the Board of Governors - approve the Banks budget. 19 11. What is the organizational structure of IDB? The Board of Governors is the highest policy making body, which elects the Board of Executive Directors and the President. The Board of Executive Directors ensures that the Bank operates in accordance with the policies laid out by the Board of Governors. The President, as the Chief Executive, is responsible for the day to day operation of the Bank. The Banks organizational structure is dynamic and subject to change like any other organization. At present, there are four Vice Presidents reporting directly to the President. A chief economist has been recently appointed, he reports to the President. In addition, some departments/offices also report to the President directly. The organization chart of the Bank is shown in the annexure. 12. What are the major channels of communication with member countries? According to the Articles of Agreement of the Bank, each member country is required to appoint its own channels of communication for effective and timely exchange of information. The Governors/Alternate Governors are at the highest level in the channels of communication. The Bank has also established focal points at various levels for implementation of its special programmes, such as Technical Cooperation Programme (TCP), Export Financing Scheme (EFS), etc., and for coordination with National Development Financing Institutions (NDFIs) and Islamic Banks. 13. Does IDB have regional offices? What are their main functions? 20 Yes, the Bank has four regional offices in Rabat, Morocco, Kuala Lumpur, Malaysia, Almaty, Kazakhstan and Dakar, Senegal. It has a Biosaline Agriculture Center in Dubai, UAE. The main functions of the regional offices are to:

- act as the Banks liaison office for the member countries in that region - assist in project identification and follow-up - market the Banks financing modes and explain its policies and procedures - assist in recruitment of staff - assist in private sector development activities - assist in mission preparation and organization - prepare short-list of consultants - liaise with other regional and international organizations located in its region and represent the Bank in regional conferences and seminars. 14. What are the official and working languages of the Bank? Arabic is the official language of the Bank. In addition, both English and French are used as working languages. STAFFING 15. How does the Bank recruit its staff? The Bank recruit staff in accordance with the established manpower needs by filling vacant positions with the most suitable candidates. In the selection of such candidates, the Bank will be guided by the requirements of the job and the candidates qualifications, taking into account certain factors such as education, training, work experience, skill and other 21 characteristics as determined by the Bank. The Bank advertises for its HR needs in major international publications and a limited number of publications in member countries. Also the bank advertises through the Bank website www.isdbcareers.com or electronic advertisement in international recruitment websites. The candidate can apply online in response to these advertisements. The Bank also has a scheme for recruiting Young Professionals. 16. Is there a quota system for recruitment of staff? The Bank selects its staff on the basis of qualifications and experience. There is no quota system for staff recruitment. However, like other multi-national development banks, IDB gives due regard to the recruitment of personnel on as wide a geographical basis as possible, while maintaining institutional harmony, standards of efficiency, and staff morale. 17. What is the current staff strength of the Bank? What categories of experts and specialists does the Bank employ? The figures of staff in IDB as of 30-121429H as follows: the total staff 1040, comprising 551 professionals, 129 special category, 293 general category, and 67 manual workers. The Bank employs various types of specialists such as economists, financial analysts, engineers, agronomists, development banking specialists etc., for its operational activities. The Bank also hires experts as short-term consultants for specific projects, whenever necessary. SHARIAH AND ISLAMIC MODES OF FINANCING

18. What is shariah? Which are the principles of shariah that apply to Islamic Banking ? 22 Shariah is the set of rules derived from both the Holy Quran and the authentic traditions (Sunnah) of the Prophet (peace be upon him) and the scholarly opinions (Ijtehad) based on Quran and Sunnah. The principles of shariah that govern Islamic banking and finance include: - Prohibition of interest (riba) in all financial transactions, such as: riba in debts; riba in sales, particularly in the forward currency exchange. - Prohibition of gharar (extreme uncertainty) is the sale of probable items whose existence or characteristics are not certain, due to the risky nature which makes the trade similar to gambling. In contemporary financial transactions, the two areas where gharar most profoundly affects common practice are insurance and financial derivatives. The other set of relevant contracts which are rendered invalid because of gharar are forwards, futures, options, and other derivative securities. Forwards and futures involve gharar since the object of the sale may not exist at the time the trade is to be executed. - Entitlement to return is due to liability of loss and vice versa. - Obligations of trust (amanah), covenants (uqud), interdiction against unlawful (haram) earnings and expenditures, fraud of giving less than due in measure and weight (tatfif), and unjust enrichment (akl mal al-ghair bi al-batil). 19. How does the Bank ensure that its operations conform to shariah? 23 In order to ensure the compliance of its operations to Islamic Shari'ah, the Bank has established a Shari'ah Committee comprised of eminent Shari'ah scholars who ensure the operations conformity to Shari'ah and provide opinion on various Shari'ah related matters. To assist it in performing its functions, the Bank has set up a Shari'ah Rapporteur and a Shari'ah Internal Supervisor to liaise with the Shari'ah Committee. Furthermore, the Bank's financing agreements with governments of member States and the private sector are governed by and construed in accordance with Islamic Shari'ah as set out in Shari'ah Standards published by the Accounting and Auditing Organization of Islamic Financial Institutions (AAOIFI) and as interpreted by the Islamic Fiqh Academy of the Organization of Islamic Conference or Islamic Development Bank Shari'ah Committee. 20. What are the different modes of financing currently followed by the Bank? The Bank finances projects from its ordinary capital resources through loan, leasing, instalment sale, technical assistance, equity participation, profit sharing, istisnaa, and lines of financing extended to NDFIs. A brief explanation of each is given below: LOAN: This mode of financing is used for projects expected to have

a significant socio-economic impact, having a long implementation period, and which may not be revenue generating. Loans are given to governments or public institutions mainly in Least Developed Member Countries (LDMCs) for the implementation of infrastructure and industrial projects. Murabaha: 24 Murabaha (Cost-plus sales) is a purchase and resale contract in which a tangible asset is purchased by a bank at the request of its customer from a supplier, with the resale price determined based on cost plus profit markup. It is mostly used in trade transactions. The Bank provides this financing to its clients who need to acquire goods from abroad. The customer approaches the Bank for assistance in importing certain goods and provides the Bank with the specifications of the goods in terms of description, quantity, price etc. The Bank then imports the goods on its own account in order to sell to the client at a price which covers the cost and an agreed profit margin. LEASING (Ijara): This is a medium term mode of financing for rental of capital equipment and other fixed assets such as plant, machinery, and equipment for industrial, agro-industrial, infrastructure, transport, etc., both for the public and private sectors. Lease financing is also provided for acquiring ships, oil tankers, fishing trawlers, etc. After the end of the rental period the Bank transfers the ownership of equipment to the lessee as a gift. INSTALMENT SALE: Instalment Sale is similar to Leasing. The major difference is that in Instalment Sale the ownership of the asset is transferred to the beneficiary on delivery. Under this mode of financing the Bank purchases equipment and machinery, and sells to the beneficiary at a higher price. EQUITY PARTICIPATION: Under this mode of financing, the Bank participates in the equity capital of existing or new companies in the public and private sectors. The Bank's participation is limited to one-third of the equity capital of the company. 25 PROFIT SHARING: It is a form of partnership in which two or more parties pool funds to finance a venture. The partners share the profit (or loss) in proportion to their contribution to the capital. LINE OF FINANCING TO NDFIs: Under this category the Bank extends financing through equity, leasing, and instalment sale to the NDFIs in member countries to promote the growth of small and medium scale industries, mainly in the private sector. ISTISNA'A: Istisna'a (agreement of manufacture/construct) is a mode of financing used by the Bank to finance mainly infrastructure projects. It could also be used to finance manufacturing of machines and equipment. Istisna'a is a sale agreement between the seller and the buyer for the sale of an asset (such as the construction of a road) described in the sale contract and transacted before it comes into existence, to be constructed based on the specifications outlined by the buyer at an agreed predetermined selling price and to be delivered on a specific future date. To fulfill its obligation, the buyer

selects, with the approval of the seller, a contractor who will construct/manufacture the project and deliver it to the buyer on the date described in the sale contract. In addition to the above, the Bank provides Technical Assistance in the form of grant and/or loan for project-related tasks such as feasibility study and design, supervision of implementation, and for tasks of an advisory nature such as definition of policies, sectoral plans, institution-building, 26 research, etc. Technical Assistance is mainly extended to LDMCs. 21. What is service fee? How does it defer from interest charges? The Bank charges service fee on Loan financing to cover actual administrative expenses related to the project. It differs from interest in that the service fee is the actual expense incurred by the Bank, while interest is payment for the use of the funds. 22. Are there upper limits to the amount of service fee charged on loans? Service fee is charged lump sum. It is payable in six-monthly instalments. It is based on the actual amount disbursed and the implementation period starting from the date of first disbursement until the final repayment. The upper limit to the amount of service fees charged in any one year is 2.5% of the loan amount. 23. What is mark-up? How is it different from interest? The mark-up is the margin added as a profit in addition to the real cost of the commodity sold. In IDB, the practice of mark-up is applied to murabaha and instalment sale. The mark-up in the case of murabaha, is the profit, which is agreed upon between the concerned parties. As for instalment sale, the mark-up is the amount to be included in the repayment instalments to be paid by the beneficiary. The mark-up rate is used to calculate the lease rental in the case of lease financing. Mark-up is different from interest in that it is related to machinery, equipment, etc., in case of instalment sale or a commodity in case of murabaha, whereas interest is related to money. 27 PROJECT FINANCING AND OTHER OPERATIONAL ACTIVITIES 24. What are the main operational activities of the Bank? The main operational activities of the IDB Group are geared towards spurring comprehensive socioeconomic development through poverty alleviation efforts; infrastructure development; capacity building; promotion of cooperation among member countries (mainly through trade and joint ventures); development of the private sector; and the promotion of the Islamic banking and financial industry. During the period of 1396-1429H (1976-2008), the Bank Groups total approvals, net of cancellations1, amounted to ID 40.9 billion (US$56.9 billion) for 6103 operations. In 1429H (2008), the Bank approved ID 3.50 billion (US$5.70 billion) for 399 operations covering project financing, technical assistance, trade financing operations, and special assistance projects for both member countries and nonmember countries. Project financing and technical assistance operations are

normally extended to a broad range of sectors comprising agriculture, agroindustry, industries and mining, transport and communication, public utilities, health and education. Various modes of financing are applied in project financing such as Leasing, Installment Sale, Istisna'a, Interest-free loan, Equity Financing, etc. For trade operations, the Bank extends Murabaha financing. In addition, the Bank also administers special funds such as the IDB Infrastructure Fund, Awqaf Properties Investment Fund (APIF), the World Waqf Foundation (WWF), Al Quds Fund and 1 Cumulative gross approvals amounted to ID 45.7 billion (US$63.4 billion) for 6,735 operations 28 the Al Aqsa Fund (for the support of Palestine). These funds have their own governing structure and operational procedures different from the traditional IDB modes. Further, the Bank forges south-south cooperation through its Technical Cooperation Programme, wherein it facilitates the exchange of experts between countries, technology transfer, tailor-made seminars and workshops, familiarization visits etc. The Bank also extends support to Muslim communities in non-member countries under its Special Assistance Programme, mainly in the areas of health and education. The Banks three scholarship programmes offer undergraduate studies to students from non-member countries, post-graduate studies in high technology for member countries; and science and technology studies at the M.Sc. level for students from the least developed member countries. In summary, the IDB Groups wide range of operational activities includes the following: - Project financing (both private and public), including the development of small and medium-scale enterprises (SMEs). - Technical assistance (for institutional capacity building, feasibility studies, project preparation and design, and other purposes). - Trade financing (import and export financing). - Special Assistance (which mainly targets Muslim communities in non-member countries, but also provides emergency relief to both member and non-member countries). Export and investment insurance. - Technical cooperation among member countries. - Research and training in Islamic economics and banking. 29 - Scholarships for member countries and Muslim communities. 25. Does IDB get involved in co-financing? Certainly, forging strong partnerships with multilateral development banks (MDBs), bilateral aid agencies and the international development community at large is one of the Banks key strategic objectives. Cofinancing increases the IDBs catalytic role, in addition to mobilizing adequate resources to meet client countries financing needs. Thus, IDB co-finances projects in member countries with international, multinational and regional development financing institutions and through the Coordination Group. This Group

comprises the IDB along with the Arab Fund for Economic and Social Development, Saudi Fund for Development, Kuwait Fund for Arab Economic Development, OPEC Fund for International Development, Abu Dhabi Fund for Development, Arab Bank for Economic Development in Africa and Arab Gulf Programme for United Nations Development Organizations - AGFUND). The IDB collaborates actively with sister multilateral development banks (MDBs) such as the World Bank; the African Development Bank; the Asian Development Bank and the European Bank for Reconstruction and Development. IDB also undertakes joint activities with other financing institutions, bilateral agencies and the UN system. 26. In addition to project financing, what financing is offered to the private sector? The IDB Group currently offers a number of options and schemes to the private sector in member countries. These include trade financing, lines of financing for micro, small and medium enterprises, equity financing for Islamic banks, and services provided by the Islamic Financial Services Industry Department (IFS), Islamic Corporation for the Development of the Private Sector (ICD) and the IDB Infrastructure Fund. Some of these 30 financing options and schemes are also open to the public sector. Informational materials are available on the terms and conditions offered through these various windows and schemes. More recently, the Bank has initiated a resource mobilization drive through Sukuk from the international Islamic financial market. These resources are utilized to fund financially-viable operations in both the private and public sectors. 27. Does IDB cooperate with Non-Governmental Organizations (NGOs)? The IDB has over 12 years of experience in cooperating with non-governmental organizations (NGOs) and women organizations in member countries. Through the NGOs, Women and Development Unit, IDB concentrates on activities geared for poverty alleviation as well as raising the economic and social standard of living of poor segments in society. It provides small grant funding for projects designed and implemented by NGOs in order to address the basic needs of disadvantaged groups and to empower the grassroots communities in its member countries. It also finances capacity building programs (training, etc) to improve the NGOs efficiency and to allow them better serve their target population. 28. Some member countries are able to get a higher level of IDB financing as compared to others. Why? Like other development banks, the level of IDB financing in a member country depends on the Bank's available resources, the willingness of member countries to utilize IDB's financing facilities, the availability of viable projects, the speed of implementation of the projects already approved, the absorptive capacity of the country, as well as population and income per capita of the country. Major

constraints in obtaining Banks financing are overdue, which may delay disbursements for existing projects and approval of new ones. Countries initially committed to implementation of Structural Adjustment 31 Programmes also had difficulties in accessing non-concessional financing from external sources, including IDB. 29. What are the Least Developed Member Countries (LDMCs) and what assistance does the Bank provide to them? In general, all member countries benefit from the IDB's financing. For instance, the Bank provides technical assistance for capacity building for which all member countries are eligible. However, the least developed member countries (LDMCs) receive utmost priority in the allocation of concessional (or loan2) financing. On a yearly basis, the IDB earmarks 80 percent of its concessional resources in the Annual Operations Plan in favor of the LDMCs. There are 25 member countries classified by the Bank as LDMCs3. The non-LDMCs, on the other hand, benefit mostly from ordinary financing4. 30. How does the Bank carry out postevaluation (or assessment) of its projects? How does it learn from past experiences? In 1411H (1990/91), the Bank established the Operations Evaluation Office (OEO) to assess the performance of completed projects. Each year, the OEO devises a work program that contains projects, sectors and countries to be evaluated / assessed. The thrust of operations evaluation is three-fold: (a) 2 Loan financing, from the IDBs perspectives, has a different connotation from other financiers, and is necessarily concessional. 3 The least developed member countries (LDMCs) of the IDB are: Afghanistan, Bangladesh, Benin, Burkina Faso, Chad, Comoros, Djibouti, Gambia, Guinea, Guinea-Bissau, Maldives, Mali, Mauritania, Mozambique, Niger, Senegal, Sierra Leone, Somalia, Sudan, Togo, Uganda, and Yemen. In addition, Kyrgyzstan and Tajikistan categorized as landlocked developing countries by the UN are classified as least developed by the IDB. Moreover, Palestine is also classified as such by IDB as a special case,) 4 Ordinary financing, in IDBs nomenclature, is equivalent to non-concessional financing in other circles 32 account for the utilization of resources against planned targets, processes and procedures; (b) assess appropriateness (effectiveness) of project designs; and (c) ascertain the impact of a project to the intended beneficiaries. Where quantitative analysis is not possible, the degree of fulfillment of the initial project objectives (i.e. at the time of appraisal) is taken as the main yardstick. The outcome of evaluation serves two principal purposes. The first is to derive lessons for future operations, that is, influencing the design of the Banks future projects/programs. These may be termed as operational lessons. Evaluation also gives

recommendations intended to sustain project benefits (that is, developmental lessons). The OEO has built up a reference database and disseminates its evaluation results yearly to improve future financing activities and ensure the quality of projects at entry. The majority of evaluation exercises conducted by the OEO have highlighted the need for effective project monitoring and improving the quality and impact of the Banks operations. OPERATIONAL POLICIES AND PROCEDURES 31. Who can apply for project financing? What are the procedures to be followed? Any potential beneficiary / client from a member country, either from the public or private sector, can apply for project financing. In the case of a public-sector project, the request for financing should be channeled through the office of the respective IDB Governor for the member country, usually the Central Government departments (or Ministries) of Economic Planning, Finance, Economic Affairs, or the Central Banks. The official request should be accompanied by a project feasibility study or other bankable project document, which provides the salient features of the project with respect to its technical, financial, social, economic and environmental aspects. After careful in-house study, IDB sends its technical staff to member countries to appraise the project and assess its 33 developmental outcomes and potential impact. Technical, economic, financial, management and sustainability issues are painstakingly studied. If a project passes the appraisal stage, it is submitted to the Board of Executive Directors for approval. If approved, a financing agreement is signed between the Bank and the client. With regard to financing requests from private sector entities, the Bank requires only a no-objection memorandum from the IDB Governor, in cases where such financing is sought from the IDB proper. Otherwise, requests for financing from the Banks specialized private-sector entities follow slightly different procedures, and do not require the vetting by the offices of the Governors. Goods and services financed by the Bank are normally procured through international competitive bidding. Consultancy services are obtained through a short-listing process. Preference is given to firms from member countries. Depending on the complexity and scope of the project, the Bank may limit procurement to only contractors/consultants from member countries. Disbursements are based on actual project execution. The borrower is expected to periodically inform the Bank of the progress of the project implementation. The Bank may send special follow-up missions to assess and monitor the implementation of projects. 32. What are the Banks criteria for selection of projects for financing? IDB selects those projects for financing, which:

- Have a high priority in the development agenda of the concerned member country such as those included in the poverty reduction strategy papers (PSRPs), public investment programs (PIPs), medium-term development plans, etc.; 34 - Meet the priorities established in the Bank's 1440H Vision; - Are technically sound, socially desirable, environmentally safe and economically and/or financially viable; and - Have a high developmental impact. Regional projects, which promote cooperation among member countries, are given special consideration. To prepare a medium-term operational plan, the Bank, in consultation with the concerned member country, may prepare a Country Partnership Strategy (CPS) or undertake Policy Dialogue and Programming missions to establish priority areas and projects for financing over a period of three years. 33. Does the Bank finance cost overrun on IDB-financed projects? Generally, the Bank does not finance cost overruns and there is a condition in all its financing agreements that the beneficiary is responsible for covering such overruns. However, in very exceptional and well justified cases, particularly in the case of leasing, istisna'a and installment sale financing, the Bank may consider covering such overruns within certain limits. 34. How does the Bank assist in the development of the private sector? The Bank assists the private sector through various modes of financing, such as leasing, installment sale, Istisnaa and equity participation in companies where the majority of the operations are made in Shari'ah-compatible modes. In addition, there are various trade promotion schemes. The Bank has established dedicated entities with the view to meet the diverse and expanding needs of the private sector. These include the Islamic Corporation for the Development of the Private Sector (ICD) and the IDB Infrastructure Fund. The 35 Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) also provides the private sector with credit insurance and investment guarantee. The Bank also provides direct technical assistance financing in the form of loan and/or grant for capacity-building programmes and for conducting feasibility studies. IDB makes use of National Development Financing Institutions (NDFIs) to extend lines of financing to sub-projects promoted by the private sector businesses, as well as lines of technical assistance to help small and medium scale enterprises conduct feasibility studies for their projects. 35. Does the Bank finance feasibility studies for private sector projects? Yes. The Bank provides direct financing to the private sector (through technical assistance and lines of financing) to undertake feasibility studies and capacity-building activities. This is part of the Banks much wider Technical Assistance (TA) and capacity building

programme in its member countries. 36. What support is extended to small and medium scale enterprises by the Bank through national development financing institutions (NDFIs)? IDB finances small and medium scale enterprises through lines of financing extended to NDFIs or other approved institutions in member countries. The NDFIs or approved institutions are responsible for project identification, evaluation, and monitoring. They are authorized to approve financing within certain limits. The lines are extended for financing by way of Leasing, Installment Sale, Istisna'a, and a combination of these modes of 36 financing, if required. Leasing and Installment Sale are used to finance procurement of machinery, equipment, and other capital goods for new projects or expansion of existing projects. Istisna'a mode is for construction and similar civil works. The cycle is as follows: - IDB provides Line of Financing to NDFI. - The NDFI identifies / appraises / approves SME projects. - IDB concludes Agreement (Installment Sale / Leasing / Istisnaa) with SMEs. - SME, on behalf of IDB, procures assets from supplier/ - NDFI extends guarantee to IDB on behalf of SME. 37. What criteria does the Bank apply while approving a line of financing to an NDFI (national development financing institution) or other approved institutions? In approving a line of financing to an NDFI or approved institutions, the Bank evaluates its managerial expertise, financial soundness, technical capabilities and past performances to ascertain that the NDFI or approved institution will be capable of administering the IDB line of financing. With regard to suitability of an NDFI for line of financing, IDB ensures that the institution has at least three years experience in its field of operation. The Bank also looks into an NDFIs pipeline of projects for its future prospects. 38. Are financing procedures and policies different for private and public sectors? The main difference lies in the way the security packages are evaluated and accepted. Generally, for public sector projects, the Bank demands a sovereign guarantee. For private sector projects, IDB accepts other forms of guarantee (subject to suitability) in addition to the bank guarantee. In addition, the terms and conditions of financing extended from the windows which are private sector oriented are closer to the market 37 conditions than those of the IDB financing. Such windows include the Islamic Corporation for the Development of the Private Sector (ICD). 39. Does the Bank consider environmental factors in its decision to finance a project?

Environmental assessment is one dimension of project sustainability. The Bank recognizes that preservation of the environment is essential for sustainable development. In evaluating new projects, the Bank gives preference to environment-friendly projects and reviews the project design in order to ensure that adequate mitigation measures against any major environmental hazards are incorporated. In case of large-scale projects where the IDB only co-finances a small segment / share, the Bank relies on other donors assessment as a prerequisite for its financing. 40. What is the role of the Bank in alleviating poverty? Poverty alleviation is IDBs overarching goal. The Bank makes all efforts to finance projects having a direct impact on poverty alleviation, particularly in the LDMCs. This aspect is strongly emphasized in the 1440H Vision of the Bank. The Bank selects projects in areas such as primary health care, vocational training, agricultural development, micro-finance, water supply, rural electrification, small-scale irrigation, integrated rural development programmes etc., which improve the living conditions of the poor, in addition to creating employment opportunities. Cognizant of the fact that tackling poverty starts at the project formulation and design stages; the IDB strives to ensure that its projects and programmes are guided by the countries poverty indicators; benefit a large segment of the population classified as poor (as per the concerned country's poverty threshold); target basic investments for the poor; encourage the 38 active participation by the local communities; and improve the status of women (e.g. dedicated micro-financing schemes, rural water supply, forest woodlots etc. 41. Does the Bank take into consideration the special needs of women in development? Like any development institution in the world, the IDB fully realizes the crucial role that women play in economic and social development. This is evident in the Banks development objectives and strategic Vision 1440H. A strategy for the integration of women activities in the regular operations of the IDB has been articulated, adopted and mainstreamed. All programs and projects in the Bank now integrate women's development needs, with the view to combat poverty and raise the economic and social well-being. In addition, the strategy aims at lending support to member countries development plans, by concentrating on the importance of women in the development process. In this context, the IDB devoted a special prize titled "IDB Prize for Women's Contribution to Development". The Prize is awarded annually at the rate of US$ 50,000 for a woman or a group of women and US$100,000 for women organizations or a number of winning women organizations. 42. What is the extent of IDBs involvement in case of natural disasters or calamities? The Bank provides relief and emergency assistance (services and commodities) to both member countries and Muslim

communities if they are afflicted by natural disasters and calamities such as earthquakes, floods, drought and others. This relief is financed from the Banks Waqf Fund. PROJECT IMPLEMENTATION 43. What type of guarantees is acceptable to IDB? 39 Government and/or a guarantee from a first class bank acceptable to IDB. The Bank also accepts other alternatives like corporate guarantee, assignment of receivables, promissory notes and stand-by letters of credit. For projects financed under a Public-Private Partnership, such as Build-Operate-Transfer (BOT), or Build-Own-Operate-Transfer (BOOT) projects, the Bank accepts various forms of securities emanating from the project itself, i.e. non- or limited-recourse financing. 44. Does IDB maintain a list of approved guarantor banks? How does IDB evaluate a new guarantor bank? Yes, the Bank maintains a list of approved guarantor banks. Whenever a non-listed bank is proposed as a guarantor, IDB evaluates that bank from the managerial, financial, and technical points of view. It investigates thoroughly the previous performance of the guarantor bank in these areas to ensure that it would meet the IDBs requirements and all repayment obligations. 45. Does the Bank give preference to procurement of goods and services from member countries? The IDB has six bidding types: (i) open international competitive bidding (ICB); (ii) limited international competitive bidding - LIB (by direct invitation); (iii) national competitive bidding - NCB (limited to domestic firms only); (iv) international/national shopping (for readily available of-the-shelf-goods); (v) direct contracting (specific manufacturer, spares, emergency situations etc.); and (vi) force account (for scattered or small works and emergencies). While the general policy of the Bank is to procure goods and services through international competitive bidding, in many cases it confines procurement of goods and services to member countries. Based on specific criteria, such preference can be up to 15% of the amount of the bid price in favor of member country firms, suppliers and 40 contractors5. However, when the procurement is limited to IDB member country firms, local firms may have up to 10% margin of preference. This preference is subject to two conditions: it must be agreed by the beneficiary country beforehand, and it must also be mentioned in the tender invitations. With regard to ICB, there are two options that the Bank follows depending on the category of projects to be implemented. Normally, the implementation of category A projects - such as schools, hospitals, roads, irrigation canals etc. - is restricted to member countries. Category B projects are larger and complex (e.g. oil refineries, dams etc.), and these are subject to open ICB. 46. How are prospective suppliers of goods and services being kept informed of IDB financed projects?

After each meeting of the Board of Executive Directors, the Bank posts summary information about approved projects on its website (www.isdb.org) and issues a press release concerning the approved projects/operations, which is published in widely circulated newspapers. It is also distributed to the Chambers of Commerce in member countries and their diplomatic missions in Saudi Arabia. In addition, the Bank publishes an Operation Bulletin every four months, giving the list of projects approved during the period, the status of implementation, and the address of the beneficiary. The bulletin is distributed to the IDB Governors, Chambers of Commerce, diplomatic missions of member countries, Islamic Federation of Contractors, Islamic Federation of Consultants, and others vested parties. 5 A member country firm, supplier or contractor is defined as: (a) being registered in a member country, (b) having a principal place of business in member country, (c) having more than 50% of the shareholding capacity in the hands of firm(s) or citizen(s) in member country, and (d) having at least 80% of project personnel from member country 41 47. Does the Bank give preference to member country experts and consulting firms? The Bank, in consultation with the beneficiary, follows the short-listing approach in selecting experts and consulting firms. A 10-percent preference margin is given to member country experts and firms when the shortlist includes nonmember country firms. In some cases, depending on the availability of the required services in the member countries, the Bank limits the choice to experts and consulting firms from member countries, as per the highlights provided under Question 45. 48. Who is responsible for evaluating the bids and approving contracts? The beneficiary is responsible for the evaluation of bids of contractors and suppliers. However, in order to ensure compliance with the Banks policies and procedures, the beneficiary is required to obtain the Banks clearance before floating tenders (invitation to bids, bidding and contract documents) and before contract signature (bid evaluation reports and draft contracts). 49. Under what circumstances can the beneficiary award a contract to a higher-cost bidder? Normally, the highest technical standard and the lowest cost offers are selected while evaluating bids. However, in certain cases, higher cost offers may be selected if the lowest offer is not technically acceptable or declined for any other reason. In general terms, cost is not a decisive factor in consulting services. The opposite is true in contracting. TECHNICAL COOPERATION PROGRAM 42 50. What is the IDB Technical Cooperation Program? The Technical Cooperation Program (TCP) is a program of the Bank devoted to promotion of human resources development in IDB member countries and institutions through the following vehicles:

- Exchange of expertise among member countries and institutions. - Enhancing the skills of member country technical and professional staff in the mid-level management through providing training programs and study visits aimed at enhancing their functional performance. - Facilitation of exchange of knowledge and ideas on technical issues related to socio-economic development through seminars and workshops. 51. Why was the IDB Technical Cooperation Office established? The Makkah Declaration observed the inadequate exploitation of abundant resources in the Islamic Ummah due to an absence of well established cooperative instruments capable of enhancing exchange of expertise, skills and knowledge, and adoption of appropriate technologies suited to the resources endowment of member countries and institutions. To fulfill this requirement, the IDB initiated and launched in 1403H (1983) a program for technical cooperation entitled: "Technical Cooperation Program among IDB Member Countries and Institutions (TCP). Initially, the TCP was established as a unit in the Country Operations complex. However, an increasing awareness of the usefulness of TCO programs in member countries and institutions led to an ever higher number of requests received per year and consequently the Unit was upgraded to an independent office in 1416H (1986). 43 52. What is the role of the IDB in the Technical Cooperation Program? IDB is a multilateral development financing institution which aims to foster the socioeconomic development of its stakeholders, which are its member countries and institutions. Some member countries and institutions cannot effectively utilize the project financing, available both through the IDB and other donors, because of human resources and institutional constraints which restrict their economic growth potential. Through the above human resources promotion vehicles, the IDB can play the role of a catalyst and co-financier to match the capacity needs of one member country with those available in another country. 53. Who are the Technical Cooperation Program Focal Points and Technical Providers? The focal point is an entity designated by the member country to act as the member country's counterpart to the IDB. The focal point may be a unit, a department, an agency or a specific ministry within the government. The technical providers are such IDB member countries which possess capacities and willingness to share expertise and experience with other member countries in need. 54. What is the Tripartite Cooperation? It is a concept of cooperation between the IDB and its member countries and institutions, where the IDB acts as a catalyst and facilitates cooperation in exchanging skills and technical know-how, between a beneficiary country or institution and a technical provider. The technical provider may be an IDB member country or institution and as such the tripartite cooperation may be a bilateral or a multilateral basis.

44 55. What are the new priorities for Technical Cooperation Office? In order to streamline IDB's poverty alleviation efforts, the TCP has been focused on specific developments needs of IDB's stakeholders to achieve an immediate impact. The TCO therefore assigns priority to the following areas: a. Human development i.e. education (enhancing education and vocational training systems), and health care, b. Agricultural development and food security c. Infrastructure development, d. Intra-trade among member countries, e. Islamic banking and finance and microfinance 56. What is the difference between Technical Assistance (TA) and Technical Cooperation programs of the Bank? Technical Assistance (TA), as defined by the Bank, is the provision of technical expertise, means and knowhow to assist in preparation or implementation of a policy or project, or to help develop the capacity of institutions and human resources in charge of carrying out such policies and projects. While technical assistance is broader in scope, technical cooperation program is limited in the following levels: - TCP involves only member countries and institutions as beneficiaries and technical providers of expertise, - TCP is based on "tripartite cooperation" concept whereby all three concerned parties (the beneficiary, the technical provider and the IDB) contribute, TCP operations are typically smaller in size and more informal than TA i.e. no agreement is signed between the IDB and the beneficiary. 45 COOPERATION OFFICE 57. What is main objective and purpose of the Cooperation Office? The Cooperation Office was established on 15-8-1420H (23.11.1999). Its main objective is to coordinate and follow-up on the activities of the Bank related to the promotion of cooperation among Member Countries, and the cooperation of the Bank with International Institutions. In addition, it serves the role of reinforcing and expanding the Banks existing ties and collaboration that exists with Member Countries and International Institutions. The Cooperation Office comprises 4 units, namely: OIC Coordination Unit, WTO Unit, Promotion of Cooperation among Member Countries Unit, and International Institutions Unit. Currently three Units are active, OIC Coordination Unit, WTO Unit and International Institutions Unit. 58. What are the roles and functions of the OIC Unit? The principal role and functions of the OIC Unit can be described as follows: a. Collaborate with OIC, its organs and affiliated institutions on behalf of the Bank on matters related to cooperation and coordination between Member Countries; b. Undertake and prepare background documents, reports and papers in relation to conferences and meetings organized by OIC and its affiliated Institutions, such as the Islamic Summit, Islamic Conference of Foreign Ministers, COMCEC, Commission on Social and Cultural Affairs, Commission on Science and Technology, and so on;

46 c. Undertake necessary follow-up action from the above meetings that are relevant and within the competent of the Bank. d. Represent the Bank in conferences and meetings related to the responsibility of the Unit. e. Monitor the development of cooperation among Member Countries with a view to explore effective mechanism for enhancing and strengthening the cooperative activities beneficial to the Member Countries. f. Prepare brief reports and short papers on issues relating to economic, trade and financial cooperation among Member Countries. 59. What are the roles and functions of the WTO Unit? The principal role and functions of the WTO Unit can be described as follows: a. Serve as the focal point within the Bank for all WTO related matters. b. Maintain contact with the WTO Secretariat, monitor development in the current round of multilateral trade negotiations (Doha Work Programme) and periodically keep the Management informed of any major developments in the multilateral trading system that may be of interest to the Bank. c. Cooperate with regional and International Organizations and Institutions active in the provision of WTO-related technical assistance such as UNCTAD, WIPO, UNDP, ECA, ESCWA, ITC, etc. 47 d. Plan, prepare and implement the IDB's Technical Assistance and Capacity Building Programme on WTO-related matters. e. Assist member countries, not yet members of the WTO, through the provision of accession-related technical support and advice. f. Organize consultative meetings for member countries especially on the accession of the Ministerial Sessions of the WTO at expert, senior official and Ministerial levels to exchange views and consult on issues on the on-going Doha Work Programme or those arising out of the implementation of Uruguay Round Agreements. g. Provide, on request, technical and financial support to national institutions in charge of WTO matters. h. Represent the Bank in the WTO meetings and other relevant international, national, and/or regional conferences, seminars, workshops, etc. 60. What are the roles and functions of the International Institutions Unit? The principal role and functions of the International Institutions Unit could be described as follows: a. Establish (and maintain) contacts with International and regional Institutions on matters related to trade, economics, development and WTO. b. Promote and enhance cooperation in the areas beneficial to Member Countries, with the aim to achieve the developmental objectives. c. Coordinate, explore possibilities of the utilization of the technical skills and experience (and lessons learned) of the 48 International Institutions for the benefit of the member Countries. d. Initiate, prepare, formalize and follow up the relationship and cooperation under the

framework of Memorandum of Understanding (MoU), Cooperation Agreements, and so on. e. Reinforce the existing ties of collaboration between the IDB and the International Institutions, integrated organizations, regional and national organizations and NGOs in areas related to promoting cooperation and development among OIC member countries. f. Create a forum for multilateral consultations, discussions and exchange of views and information, dissemination of studies and research related to trade and development, as well as issues particular to WTO. SCIENCE & TECHNOLGOY OFFICE 61. Why a Science & Technology Office at IDB? The IDB being a development financing institution, it has a deliberate, conscious drive to evolve and strengthen the most appropriate tools for contributing to the substantial social and economic progress of its member countries. Science & Technology has proven to be the single most important contributor to increase in productivity and wealth generation worldwide. Therefore, the IDB has established a dedicated office to formulate policies and to implement programs in the area of science & Technology. 62. What is the mission of the STO? 49 The overall mission of the STO is to provide support to the Bank's activities in promoting science and technology as a basic instrument for the development of the member countries. 63. How does STO operate? The mechanisms of STO intervention are combinations of the following means: - IDB's Advisory Panel on Science & Technology composed of selected eminent scientists from member countries and dedicated to advising the Management on priority S&T policy issues; - the general and specialized financing windows of the Bank available for S&T projects financing, promotion of S&T in member countries, and S&T capacity building; and; - the strategic S&T partners of the Bank, foremost the OIC sister institutions involved in S&T and the major regional/international S&T-related organizations. The role of the STO is to utilize the above means in order to devise or improve policies, formulate or optimize strategies, implement specific S&T programmes and assist other IDB departments and strategic partners in their S&T activities; while doing so, the STO ensures an appropriate monitoring of the desired impact of IDBs S&T activities for the benefit of its clients. 64. Who are STO's strategic partners? Strategic partners are identified, tested and selected through actual cooperation in implementing joint activities or parts of IDBs S&T agenda. 50 At OIC level, these are the Ministerial Standing Committee for Scientific & Technological Cooperation (COMSTECH) and its specialized S&T InterIslamic Networks, the ISESCO, the Islamic Academy of Sciences (IAS) and the Islamic University of Technology (IUT). International and regional partners include the

UNESCO, the African Foundation for Science & Technology (AFRISTECH), the International Islamic Forum for Science, Technology and Human Resources Development (IIFTIHAR), the Pathfinder Foundation for Education & Development (PATHFINDER), the African Regional Center for Technology (CRAT) among others. A number of national S&T institutions and R&D centers of excellence also play a major role in IDBs strategic S&T partnership. 65. What are the main programs and activities of STO? There are a number of initiatives taken by STO in collaboration with its partners to support the development of science and technology resources. The major programs are the following: 1Capacity Building Operations: IDB finances activities such as short-term exchange of experts, on-the-job training, and conferences aiming at developing the capacity of human resources in science and technology; 2- Centres of Excellence Cooperation Scheme: The IDB facilitates cooperation between various centres of excellence across Member Countries by encouraging the formulation of joint projects between the centres; 3- IDB Prizes for Science & Technology: As part of the Bank's efforts to promote excellence in scientific research 51 and education, three IDB Prizes for Science & Technology (US$ 100,000 each) are awarded annually to distinguished S&T institutions; 4- Self Reliance in Vaccine Production (SRVP) Program: IDB is supporting through capacity building operations the production of affordable, good quality and effective vaccines for the Muslim World. INTERNATIONAL ISLAMIC TRADE FINANCE CORPORATION (ITFC) 66. How the Bank will develop Trade among its member countries? - The International Islamic Trade Finance Corporation (ITFC) will continue to build on the successes of the Bank over a period of more than 30 years. The Bank supported and promoted intra-trade and trade cooperation among its member countries through its various programmes and activities of financing imports and exports in these countries as well as the trade activities of the private and public sectors. - The total amount approved for trade operations since the inception of the Bank exceeded US$ 27 billion, and intra-trade operations accounted for about 77% of this total. The ITFC will continue to build on this impressive record to raise the current level of intra-trade, estimated at 13%, to the level called for by the Organization of Islamic Conference in its meeting in Makkah Al Mukarrama in 2005, i.e. 20%. - The ITFC is one of few multilateral financial institutions which focus on increasing the volume of trade among its member countries with a view to support economic development in these countries.

52 - The ITFC will endeavour to develop new financing products to fulfill the needs of exporters and importers in member countries through mechanisms which align trade opportunities and transactions among exporters and importers in member countries, and encourage them through attractive financing terms to trade among themselves instead of seeking help from non member countries. - In order to meet the growing demand of member countries for intra-trade operations, the ITFC will seek to develop and enhance its mechanisms for mobilizing additional resources from international and regional financial markets for financing intra-trade operations. - The ITFC will also work through the Trade Cooperation and Promotion Programme in order to contribute to promoting trade among its member countries. The programme's activities include capacity building and trade facilitation through specialized trading courses, on the job training, workshops, support of market studies and organizing businessmen meetings and conferences, as will as trade fairs to promote member countries' products, and all other activities that indirectly facilitate trade and streamline its procedures and regulations. - The ITFC will endeavour to increase its technical assistance activities and training programmes for local personnel in public institutions engaged in supporting member countries exports, in addition to participating in promotion and marketing activities for the benefit of member countries at international and regional trade forums. - Consistent with its belief in the vital role played by the private sector in the development of member countries' economies, the ITFC will also focus on providing financial resources to the private sector corporations through 53 attractive and flexible mechanisms and procedures that will accelerate decision taking to respond to the various changes and developments which take place in local and international markets. FINANCIAL MANAGEMENT 67. What are the Ordinary Capital Resources of the Bank? The Ordinary Capital Resources of the Bank comprise the paid-up capital reserves, retained earnings and funds placed by others for utilization in the Banks ordinary operations. 68. Islamic shariah prohibits interest on loans. How does the Bank earn income? The Bank does not charge interest in its financing operations. Most of its income is derived from leasing, instalment sale and foreign trade financing on which a mark-up rate is applied in accordance with shariah principles. Further, it recovers the administrative costs of loan and technical assistance financing by charging a service fee based on the actual cost incurred by the Bank.

69. How does the Bank mobilize resources beyond its share capital? The Bank mobilizes resources through financial instruments such as Sukuks, reverse Murabaha, Syndication, etc. which conform to shariah principles, either directly or through its other financing windows, such as Unit Investment Fund. 70. What currencies does the Bank use for disbursement of funds and for accepting repayment? How does it determine the exchange rates? 54 The Bank disburses funds in all major convertible currencies as well as in local currencies of member countries depending on the supply contracts and the provision of the IDB financing agreement. The Bank accepts repayment in most major convertible currencies. All disbursements and repayments are converted into Islamic Dinars for accounting purposes. The exchange rate for the Islamic Dinar vis--vis the currency of disbursement/repayment is based on the IMF rate for the SDR on the date preceding the value date of the payment. 71. How does the Bank utilize funds that are not needed for immediate disbursement? All funds that are not immediately needed for disbursement are placed in shariah-compatible short-term investments, mainly in commodity trading. 72. What are the measures taken by the Bank to control overdues? In its effort to control overdues, the Bank has devised a set of policies and procedures, which deal with follow-up, control, and collection of overdue instalments. In case an instalment becomes overdue, the Bank resorts to invoking of the guarantee provided. In serious cases of default, the Bank suspends disbursement of on-going projects and stops approval of new projects in the country concerned. SPECIAL ASSISTANCE PROGRAMME 73. What are the objectives of the Special Assistance Programme of the Bank? The main objective of the Special Assistance Programme is to provide financial assistance to Muslim communities in non55 member countries to improve their socio-economic conditions and to provide relief in the form of appropriate goods and services to member countries and Muslim communities in non-member countries afflicted by natural disasters and calamities. Special Assistance provided by the Bank is classified into five categories: a) Educational, health and social projects for Muslim communities in non-member countries; b) Assistance to refugees from member countries or Muslim communities to neighboring member countries; c) Assistance to member countries afflicted by natural disasters; d) Support to centers of research in teaching Islamic culture or the Arabic language; e) Support to the Muslim scientific heritage. 74. Does IDB offer scholarships, and what are they? There are three scholarship programmes funded and implemented by the IDB as a part of its overall effort in

the development of human resources of its member countries and those of the Muslim communities in non-member countries, i.e., Scholarship Programme for Muslim Communities, M.Sc. Scholarship Programme and Merit Scholarship Programme. 75. What is the Scholarship Programme for Muslim Communities? The Scholarship Programme for Muslim Communities was launched in 1404H (1983). The objective of the Programme is to assist Muslim communities in nonmember countries of IDB to enable Muslim students to undertake undergraduate studies in 56 medicine, engineering, agriculture and other related fields in their own countries or in the IDB member countries. The Programme is implemented jointly with the Counterpart Organizations through which interested candidates may submit their applications if they meet the necessary requirements (e.g., graduated from senior high school at age 24 years or less with good grades in basic sciences and English or French language, etc.). The Programme covers tuition fees, stipend, books/clothing allowance, etc. all as interest-free loan to the students payable to a local Trust after graduation and gainful employment. 76. What is M.Sc Scholarship Programme? The M.Sc. Scholarship Programme was launched in 1419H (1998) with the objective to assist the IDB Least Developed Member Countries (LDMCs) in the development of their human capital specially in science and technology that are both relevant and necessary for their development. The Programme offers scholarships in science, engineering, technology and medical sciences, statistics and related fields, such as applied statistics, demography, operational research, econometrics, etc., fields of study relevant to the needs and national development programmes of the IDB LDMCs. The Programme is implemented jointly with the IDB Governor Offices in member countries through which interested candidates may submit their applications if they meet the necessary requirements. This scholarship is awarded for M.Sc. degree (in 2 years) in institutions in the IDB member countries. The scholarship covers the tuition fees, living allowance, clothing & books allowances, computer allowance, conference allowance, medical coverage and a return air-ticket. It also covers research fees for those who do their studies by research. 77. What is the Merit Scholarship Programme? The Merit Scholarship Programme was launched in 1411H (1991). The Programme is for advanced studies and/or research (3-year Ph.D. and 6-12 month Post-Doctorate) in 16 applied science 57 and high technology areas deemed necessary for the development of the member countries. The Programme is implemented jointly with the IDB Governor Offices

in member countries through which interested candidates may submit their applications if they meet the necessary requirements. The Programme covers monthly stipend, books/clothing allowance, tuition fees, thesis/scientific papers preparation, medical insurance, air-ticket, etc. Scholars below the age of 35 for Ph.D. study and below the age of 40 years for Post-Doctoral research are eligible for the Programme, if they have a good M.Sc. degree, "very good" grades (for Ph.D. study) and Ph.D. (for Post-Doctoral research), 2-5 years of experience, some publications and can meet other requirements. 78. How to obtain the application forms and whom to be submitted? For the Scholarship Programme for Muslim Communities from the Counterpart Organizations in non-member countries and for the M.Sc. Scholarship Programme and Merit Scholarship Programme from the Offices of the IDB Governors of the member countries and/or designated contact points. The application forms can also be downloaded from the IDB website www.isdb.org or can be requested by e-mail (scholar@isdb.org). The application forms for Scholarship Programme for Muslim Communities are to be submitted to the Counterpart Organizations in non-member countries, whereas, for M.Sc. Scholarship Programme and Merit Scholarship Programme are to be submitted to the Offices of the IDB Governors in member countries and/or designated contact points. ISLAMIC RESEARCH AND TRAINING INSTITUTE 79. What are the objectives of the Islamic Research and Training Institute (IRTI)? 58 IRTI was established in 1401H (1981) with the main objective of conducting basic and applied research in the fields of economics, finance and banking in conformity with the principles of shariah and to provide training and development of professional personnel in the field of Islamic economics to meet the needs of research in shariah-observing agencies. The Institute is also charged with the responsibility of training personnel engaged in development activities in member countries and establishing an information center to collect, systematize and disseminate information in fields related to its activities. IRTI publishes its selected research work and seminar proceedings in the three working languages of the Bank. It also publishes a bi-annual journal on Islamic Economic Studies in English and Arabic. A French version of the Islamic Economic Studies is also in the offing. 80. How are participants in IRTIs training programs selected? IRTI has an annual training program which is open to development personnel in member countries. The participation in these programmes is sought through the offices of IDB Governors in the respective member countries. Information on these programs can be obtained by writing directly to the Institute. Those interested in participating in the training programs are however required to send their nomination through the

office of the respective IDB Governor. 81. What type of research is conducted by IRTI? How does IRTI assist Islamic scholars? IRTI conducts basic and applied research aimed at developing models and methods for the application of shariah in the field of economics, finance and banking. The Institute studies ways and means of enhancing cooperation among member countries. It also conducts research in crucial economic issues 59 facing member countries, particularly, in the field of economic development. Any researcher in the areas of Islamic economics, banking and finance may contact IRTI for assistance. The Institute may help by providing copies of its publications or with necessary references and bibliography. In some cases it may also consider limited financial grant to complete the research. If a research work is directly related to its research program and conforms to its academic standards, IRTI can publish the work and give the author a suitable honorarium. If the topic is not directly related to its current research priorities, but meets acceptable academic standards, it may provide modest financial help to enable the author to publish the research work at his own, subject to evaluation and approval by the IRTI Academic Committee. IRTI may also consider publishing it in its journal Islamic Economic Studies, which is a refereed journal and published twice in a year. 82. What is the Visiting Scholars Scheme? Under this scheme, the Institute invites scholars of international repute to visit IRTI for a short duration ranging from 3 months to a year to work on some specific research project related to IRTI research priorities. The scholars familiar with IRTIs research interests may write to the Director, IRTI, with a specific research project and their C.V. to indicate their intention to benefit from this scheme. 83. What is the IDB Prize? What are the criteria for nomination? The Islamic Development Bank awards an international Prize every year alternating between Islamic Economics and Islamic Banking. The Prize currently includes a citation and a cash award of Islamic Dinars 30,000 (US$ 43,000 60 approximately). The objective of the Prize is to recognize, reward and encourage creative efforts of outstanding merit in the fields of Islamic Economics and Banking. Nominations are sought every year through announcements made in the international press and distributed directly through universities, research institutions and government ministries in the IDB member countries. Individuals or organizations may be nominated for the Prize, though self and posthumous nominations are not acceptable. The nomination procedure is given in the advertisement as well as in the brochures, which are published and distributed every year. Copy of it can be obtained from the Director of IRTI. A nominee for the IDB Prize should have conducted research work to his credit or rendered

services of outstanding merit, such as: a) Research work of outstanding merit in the fields of Islamic economics/Islamic banking as the case may be for the Prize for that year. b) Mobilization of intellectual capabilities and/or creative efforts for the promotion of Islamic economics/Islamic banking. c) Implementation of Islamic economics/Islamic banking programs designed to achieve the objectives of the Prize. The research works, on the basis of which nomination for the Prize is made, should have been published and received academic recognition. Works which have already won any other international Prize are not considered for the Prize. More information about IRTIs various activities and other programs may be obtained either by writing to the Director, IRTI, or by visiting IRTIs home page at http://www.irti.org. 61 84. What is the IDB Prize for Trade Promotion among OIC Member Countries? What are the criteria for nomination? The Islamic Development Bank awards another international award every year for the Promotion of Trade among OIC Member Countries. The Prize consists of a certificate with the IDB logo and a monetary award of US$20,000. The objective of the Prize is to recognize, appreciate and encourage the activities and efforts contributing to the promotion and increase of trade among member countries and also to celebrate the outstanding success of individuals/institutions in the said activities. Nominations are sought every year through announcements made in the international press and distributed directly through universities, scientific centres, public institutions, commercial and financing agencies in the public and private sector, Islamic associations and bodies and individuals all over the world. Candidates for the Prize may be individuals, a group of individuals, an organization, an institution or a government agency although self and posthumous nominations are not acceptable. The nomination procedure is given in the advertisement as well as in the brochures, which are published and distributed every year. Copy of it can be obtained from the Director of IRTI. The activities and efforts carried out by the candidate for the Prize should be related to the promotion and enhancement of trade among member countries. These activities and efforts must involve the following: a) Contribution to the promotion of intra-OIC trade and the execution of specialized programmes to that end. b) Contribution to the creation of new instruments and institutions to facilitate trade among member countries. 62 c) Establishment of vital alliances to expand trade among member countries. d) Finding innovative solutions to remove or alleviate the obstacles, and overcome the risks of trade among member countries. e) Contribution to applied research that may strengthen trade among member countries. f) Efforts of institutions and bodies that contribute effectively and directly to the development of trade among member

countries (such as ports, ports bodies and other public and private institutions). ISLAMIC FINANCIAL SERVICES INDUSTRY DEPARTMENT (IFS) 85. What is the area of concern of the IFS Department? IFS Department has been established as the focal point for IDB's Group efforts to develop the Islamic Financial Services Industry. 86. What is IFS's mission? The mission of the IFS is to: 1. Assist in the creation of enabling environment for the Islamic Financial Industry. 2. Provide capacity building through Technical Assistance for the support and development of current and new Islamic financial institutions. 3. Strengthen existing Islamic financial institutions and support the establishment of new ones through equity participation. 63 87. What are the IFS Department organization structure? The IFS Department is headed by the Adviser-in-Charge and has three Divisions, which are: 1. Advisory and Support Services Division. 2. Awqaf Investment Division. 3. Equity Investment Division. 88. What are the major functions of IFS Department? The following are the major functions, which are mandated to IFS Department: Advisory and Support Services Division: Provide, in coordination with relevant other entities of the IDB Group and stakeholders, advisory, technical assistance and capacity building services for creating an enabling environment for the IFS thereby facilitating its integration with the Islamic financial sector. - Awqaf Investment Division: Manage and develop the current portfolio of Awqaf Properties Investment Fund (APIF) and ensure that its operations within its regulations and policies, and carry out Awqaf investments through Shari'ah compatible modes of financing. - Equity Investment Division: Manage and monitor performance of current IDB portfolio of equity investments in IFIs and other sectors, and carry out equity investments in new IFIs and any other equity investments. RISK MANAGEMENT DEPARTMENT 89. What is the Risk Management Governance in IDB? 64 The risk management and governance framework in the IDB is structured as follows: - The Board of Governors (BOG) - The Board Executive Directors (BED) - The Audit Committee of the BED - The IDB Group Risk Management Committee - The IDB Group Risk Management Department - The IDB Group General Counsel - The Assets Management Committee - The Operations Committee - The Trade and Investment Committee 90. What is the Risk Management Strategy of the IDB? The Risk Management Strategy of the IDB is to embed risk management within the daily operations from strategy formulation through to business planning and processes. Through understanding risks, decision-makers will be better able to evaluate the impact of a particular decision

or action on the achievement of the Banks objectives. Risk management strategy does not focus upon risk avoidance but on the identification and management of an acceptable level of risk and is based on five pillars: - Risk Identification & Assessment - Risk Management Policies and Guidelines - Risk Management Information System - Risk Management Monitoring & Reporting - Risk Management Culture 91. What are the major risks faced by the IDB? 65 The major risks faced by the IDB: (a) credit risks (country risks constitute the major risks faced by the IDB, (b) liquidity risks, (c) market risks, and (d) operational risks (compliance with Shari'ah principles is among the most important operational risks). AL-QUDS INTIFADA FUND AND AL-AQSA FUND 92. What are Al-Quds Intifada Fund and Al-Aqsa Fund? Al-Quds Intifada Fund and Al-Aqsa Fund are 2 funds that were established by the Arab leaders in the Summit held in Cairo, Egypt in October 2000 to assert the comprehensive Arab support for the Palestinian people in face of continuous Israeli aggression. 93. What are the objectives of the Al-Quds Intifada Fund and Al-Aqsa Fund and what is the capital of each Fund? Al-Quds Intifada aims at providing assistance to the families of victims and wounded persons and to provide health care and education services to their children. The objective of Al-Aqsa Fund is to finance projects aimed at preserving the Arab and Islamic identity of the City of Jerusalem and to enable the Palestinian economy build its capacity, stands on its own against the Israeli onslaught and gradually disengage from Israeli economy. The capitals of Al-Quds Intifada Fund and Al-Aqsa Fund are US$ 200 million and US$ 800 million respectively. 94. How the two Funds will be managed? The Arab finance ministers in their meeting held in Cairo on 23 November 2000 entrusted the Islamic Development Bank (IDB) to manage the two Funds because of the IDB's involvement in the human development of Palestine over the past 25 years. The ministers decided that management of the 2 Funds through the Supreme Council and the Administrative 66 Commission. The Supreme Council consists of finance ministers of participating countries and the Secretary General of the Arab League as permanent members, and the Islamic Development Bank as an observer. The Administrative Commission is composed of representatives of the countries that pledged 3% of the declared capital of the two funds, a representative of countries pledged less than 3%, in addition to representatives of the Palestinian Authority and the Arab League. ISLAMIC CORPORATION FOR THE INSURANCE OF INVESTMENT & EXPORT CREDIT (ICIEC) 95. What is the purpose of the Islamic

Corporation for the Insurance of Investment and Export Credit (ICIEC)? The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) is a member of the Islamic Development Bank Group, rated "AAA" and having its headquarters as an international organization in Jeddah, Kingdom of Saudi Arabia. ICIEC was established on 1st August 1994 as an autonomous international institution with a full legal capacity. So far, the number of shareholders in the capital stock of ICIEC stands at 38. They include the Islamic Development Bank and 37 countries that are members of the Organization of the Islamic Conference (OIC). ICIEC was established to expand the scope of business transactions among member countries of the OIC, by providing export credit insurance to promote increasing the volume of exports from these member countries, as well as insurance on foreign investment to facilitate the flow of foreign direct investment into these countries. ICIEC also provides re-insurance facilities to export credit agencies in member countries, by providing reinsurance and technical support. 67 ICIEC has a capital of USD 250 million, 67% of which is subscribed by the Islamic Development Bank and the remainder by the member countries. ICIEC was assigned a rating of Aa3 by Moody's rating agency. Contact address: Sales Division Tel. (+966 2) 6467597 Fax: (+966 2) 6443447 E-mail: iciec@isdb.org Website: www.iciec.com 96. How can ICIEC help exporters in member countries expand their exports? By giving export credit insurance against the risk of non-payment by buyers in foreign countries, ICIEC enables exporters to do business with risky partners and markets. In addition, they can extend credit facilities to foreign buyers and obtain financing for their export from banks and other financial institutions. ISLAMIC CORPORATION FOR THE DEVELOPMENT OF THE PRIVATE SECTOR (ICD) 97. What is the Islamic Corporation for the Development of the Private Sector (ICD)? How was it established? When did it start its operations? The Islamic Corporation for the Development of the Private Sector (ICD) is an affiliate of the Islamic Development Bank (IsDB). It is an international multilateral financial institution created for the development of its member countries through the provision of financial services and technical support to the private sector. The ICD was established as per the resolution of the IsDB Board of Governors during its 24th meeting held on 24-25 Rajab 68 1420H (2-3 November 1999) in Jeddah, Kingdom of Saudi Arabia. The ICD started its operations on the same day its Inaugural General Assembly Meeting was held, i.e. 6 Rabi II 1421H (8 July 2000). 98. What is the mission of the ICD? The mission of the ICD is to complement the role played by the Islamic

Development Bank through the development and promotion of the private sector as a vehicle for economic growth and prosperity. 99. What is the vision of the ICD? The vision of the ICD is to become a premier Islamic multilateral financial institution for the development of the private sector. 100. What are the main objectives of the ICD? The ICD focuses on the following objectives: - Identifying opportunities in the private sector that could function as engines of growth. - Providing a wide range of Sharia compatible financial products and services (equity participation, leasing, installment sale, etc). - Expanding access to Islamic capital markets by private companies in IDB member countries. In achieving these objectives, ICD seeks to play a role in: - Mobilizing funds for private sector investment; 69 - Acting as a catalyst in privatization programs and restructuring of companies in member countries by providing advisory services to both public and private sectors; - Encouraging the development of Islamic capital markets. 101. Which countries are entitled to become members of the ICD? How many have joined the ICD? All member countries of IDB are entitled to become members of the ICD. As of 05 Safar 1430H (31 January 2009) fifty four (54) countries had signed the Articles of Agreement of the ICD; out of these 54 countries, 45 had ratified the said Agreement and become member countries of ICD. 102. Are public and private companies entitled to become shareholders of the ICD? For the time being, only public financial institutions whose membership consists of one or more IDB member countries which possess most of its shares or dominate the management can apply for membership in ICD. As of 05 Safar 1430H (31 January 2009), five (5) public financial institutions are members of the ICD. However, as stipulated in the Articles of Agreement of the ICD, the General Assembly may open membership of the ICD to private sector institutions on such terms and conditions as it may determine. 103. What is the capital structure of the ICD? The authorized capital of the ICD is US$ 1.0 billion of which US$ 500 million is available for subscription. The structure of the subscribed capital is as follows: IDB 50% Member Countries 30% 70 Financial Institutions of member countries 20% 104. How many shares must a country subscribe to the ICDs share capital upon joining the Corporation? Upon joining the ICD, a country agrees to subscribe the number of shares that was allocated to it as per the resolution of IDB Board of Governors during its 24th meeting held on 24-25 Rajab 1420H (2-3 November 1999) in

Jeddah, Kingdom of Saudi Arabia. Moreover, the Articles of Agreement of ICD explains the following about subscription: 1. The Bank and the founding member countries shall initially subscribe the number of shares specified according to the agreement. 2. Each other founding member shall subscribe at least one hundred shares. 3. Shares initially subscribed by the founding members shall be issued at par. 4. The conditions governing the subscription of shares to be issued after the initial share subscription by the founding members which shall not have been subscribed under related item defined in the Articles of Agreement, as well as the dates of payment thereof shall be determined by the General Assembly of the ICD. 105. What is the organizational structure of ICD? The ICD has a General Assembly representing its shareholders (countries and institutions), a Board of Directors, and an Executive Committee that consists of a selected number of Board members and acts as a fast track decision making body. 71 The President of the IDB is the ex-officio Chairman of the ICD Board of Directors. In October 2001, the Board of Directors appointed the first full-time CEO and General Manager who conducts business under the general supervision of the Chairman of the Board of Directors. The ICD has also a Shari'a Committee that advises on the Shari'a compliance of ICD products and services and an Advisory Board that comprises renowned personalities well versed with the ICD's field of activities. 106. Does the ICD have the same Board of Directors as the IDB? No. Despite the fact that the IDB has 50% shareholding in the capital of the ICD, the two institutions have different Board of Directors. 107. What are the products and services of the ICD? The ICD provides a wide variety of financial products from which its clients can choose. This enables the ICD to offer a mix of financing that is tailored to meet the needs of each project. The main products and services are: Direct financing ICD's direct financing is implemented through the subscription and purchase of shares or the provision of term financing in productive and viable projects or companies operating in member countries. The fundamental rule is that of prohibitions of acquiring shares of and transactions (investment and trading) in the shares of corporation that sometimes undertake transactions in Riba and other prohibited things. As a policy, the ICD shall not be the single largest shareholder in any project nor shall it acquire a majority or controlling interest in the 72 share capital of a project or enterprises except when it is necessary to protect its interest. Corporate finance

ICD' extends short-term corporate finance to cover working capital or raw material requirements of private sector entities through Murabaha, Mudaraba or purchase and lease-back for a tenor to or less than 24 months. Lines of Financing ICD' extends lines of financing to commercial banks and national development financing institutions. These lines represent a means to contribute in a costeffective manner in the financing of small and medium enterprises (SMEs). The mode of financing used within the framework of the lines is usually Murabaha. Asset Management The ICD acts as a Mudarib and/or investment agent or arranger for funds created by other institutional investors. It can create venture capital or sector funds for financing of projects or companies. Structured Finance The ICD structures, participates and manages syndications, underwrites and manages share and securities issues, makes private placements and also carries out securitizations for its clients. ICD also structures Sukuk arrangements and working as bookkeeper. 73 Advisory Services The ICD provides advisory services to governments, public and private companies and Banks on economic, financial, institutional, and Shari'ah aspects relating to inter alia, creating a suitable environment for private sector development, project financing, establishment of Islamic windows and branches, restructuring and rehabilitation of companies, privatization, securitization, Islamic finance and development of Islamic capital markets. 108. What are the operating principles of ICD? The ICD operates along the following principles: - Provide financing on terms and conditions which take into account the requirements of the project/company to be financed, risks of the project and the market terms and conditions of similar financing. - Seek representation on the Board of the companies it invests in but without assuming responsibility for managing any of these companies. - Maintain reasonable diversification of its investments. 109. What are the modes of financing of the ICD? The ICD utilizes Shari'a compatible modes of financing/financial products, in particular: - Equity: participating in the share capital Diminishing Musharaka, profit sharing with declining participation, or trustee profit sharing (Mudaraba) or (Fixed Musharaka). - Term Financing: leasing (Ijara), installment sale (Bai Ajel), istisna'a (financing of a construction and manufacturer order) and murabaha to purchase order (for certain projects).

74 - Co-financing and/or participating in financing as leader of Islamic finance trench. 110. What are the types of projects eligible for financing by the ICD? The projects eligible for financing by the ICD are mainly: Greenfield projects This refers to investment/financing of new companies/projects, which will have developmental impact on the economy as a whole, and fulfill the criteria of technical soundness and financial proficiency. Expansion projects This refers to financing/investment in plant expansion or capacity enhancement. Existing projects under restructuring/rehabilitation As most countries are restructuring their industries to reduce dependence on a particular sector, the ICD will have the opportunity to finance companies that are being restructured or rehabilitated. Privatization operations The ICD will finance state-owned enterprises, which are being privatized as long as the remaining investment by the government in the company does not exceed 49% of voting stock. Moreover, it will structure and finance projects implemented through concession agreements (BOT, BOOT, BOO, etc.) and also finance the modernization of privatized companies to enhance their productivity and competitiveness. 111. What are the criteria of eligibility for ICD financing? 75 All productive or service activities that are legal, Shari'a compliant, financially profitable, economically viable and contribute to the development of the member countries are eligible for ICD financing as long as the public ownership of the project does not exceed 49% of the voting stock. Further, all sectors are eligible with the exception of recreation and defense. 112. What types of collateral does ICD require? When financing a project, ICD may resort to a variety of securities such as pledges, mortgages, bank guarantees, personal guarantees, corporate guarantees, promissory notes and assignment of receivables. The value of the total securities for any project is to be determined on case by case basis. 113. What is the Unit of account and operation? The ICD currency of account is the US dollar. However, ICD can also extend financing in the major convertible currencies. 114. What is the project information required for ICD financing? When undertaking a preliminary evaluation of the possibility of investment or financing of a project, the ICD requires information on the project such as the project sector, project objective, details on company and sponsor, ownership structure and management profile, project cost and financing requirements. Following a first expression of interest in the request, the basic information on the project has to be complemented by a market study or a feasibility study and other elements of information that may be deemed necessary to enable the ICD make the final decision. 115. Does the ICD contribute in the financing of microenterprises, small and medium scale enterprises?

76 The ICD does not contribute in the financing of micro-enterprises as this activity is being carried out by the Islamic Development Bank which extends also lines of financing to National Development Financing Institutions (NDFIs) to finance SMEs. The ICD can, however, provide financing to SMEs through special funds established on a regional or country basis in promising sectors such as telecommunications, technologies, etc, or through lines of finance. 116. Can the ICD co-finance projects with non-Islamic financing institutions? The ICD can co-finance projects with non-Islamic financing institutions including conventional banks provided that the financing to be extended by the ICD itself is Shari'ah compliant. Thus, two cases may arise in this respect, one possibility is that the ICD and the non-Islamic financing institutions undertake parallel co-financing where the component financed by the ICD is separate from those financed by the other institutions even though they relate to the same project. Another possibility is that the other institutions are willing to apply the same Sharia compliant mode of financing as the ICD, in this case a joint co-financing may be envisaged and even a financing syndication. 117. What are the contact details of the ICD? Islamic Corporation for the Development of the Private Sector (ICD) P.O. Box 54069 Jeddah 21514 Kingdom of Saudi Arabia Tel: (966-2) 6441644/6467973 Fax: (9662) 644 4427 Email: icd@isdb.org.sa Internet: www.icd-idb.org 77 ISLAMIC INTERNATIONAL RATING AGENCY (IIRA) 118. What is the Islamic International Rating Agency? The IIRA is a Bahrain Joint Stock Company established to carry on the business of research analysis, rating, evaluation and appraisal of the obligations, dues, commitments and the like including shares, stock and other securities issued by or on behalf of any governmental authority, or any corporation whether incorporated within or outside the Kingdom of Bahrain for use by any person or body including investors, issuers, underwriters, government agencies, banking and financial institutions, international agencies, researchers, etc. 119. What is the vision and mission of IIRA? Vision: To become the ultimate reference point for credit ratings in accordance with Shariah principles. Mission: The mission of the International Rating Agency is to foster development of the financial markets in which it operates through provision of : Ratings for Sovereigns; Traditional bond/Sukuk Ratings and Rating framework to permit rational pricing; Shariah Quality Ratings to reflect institutional compliance; Investment quality and/or Issuer Ratings; Specialist, focused Corporate Governance Ratings;

A periodic summary bulletin of market activity and ratings; 78 Economic commentary from a credit and investment quality perspective; Detailed rating reports to enhance the investment decision process; Sector reports clarifying company status within industry groupings; A record of actual and prospective money and capital market activity; Analysis of financial institution counterparty risk for treasurers; Seminars on the analytical principles employed by rating agencies. Rating agencies, because of the need for information on which to base ratings, encourage greater disclosure and transparency by organizations seeking capital in the markets. 120. What services are provided by IIRA? IIRA offers the following: Sovereign Ratings Issuer/Issue Credit Ratings Shariah Quality Ratings Corporate Governance Ratings Issuers Financial Strength Ratings Sovereign Ratings and Credit Ratings assess the likelihood that an entity will repay its financial obligations in timely manner. Shariah Quality Ratings assess the level of compliance with principles of Shariah. Corporate Governance Ratings look at the practices of an entity to assess the demarcation of rights and responsibilities of 79 different stakeholders and compliance with prevailing rules and procedures for making decisions. Issuers Financial Strength Ratings objective is to provide a reliable third party opinion regarding an insurers financial strength and the insurers ability to meet contractual obligations. 121. Who are the main sponsors of the IIRA? IIRA enjoys the support of the Islamic Development Bank Group as well as a large number of Islamic banks, rating agencies from many Islamic countries. 122. Is IIRA recognized by regulators? IIRA is recognized by the Central Bank of Bahrain (CBB) as an External Credit Assessment Institution (ECAI) under Basel II framework. IIRA is also on the list of approved rating agencies of IDB. The Central Bank of Sudan has given consent to IIRA to conduct ratings in Sudan. Many other Central Banks have been approached by IIRA for official recognition. 123. What are the contact details of the IIRA? IIRAs contact details are as: Mr. Jamal Abbas Zaidi Chief Executive Officer Al-Zamil Tower, 7th Floor, Government Avenue, Manama 305, P. O. Box 20582, Kingdom of Bahrain Tel: +973 17 211606 Fax:+973 17 211605 Email: iira@iirating.com

jamal.zaidi@iirating.com 80 INTERNATIONAL CENTER FOR BIOSALINE AGRICULTURE (ICBA) 124. What is the International Center for Biosaline Agriculture? The International Center for Biosaline Agriculture (ICBA) is an applied research and development institution established in 1999 in Dubai, United Arab Emirates with financial support from the Islamic Development Bank in cooperation with the Ministry of Environment and Water and with additional support from the International Fund for Agricultural Development, the Arab Fund for Economic and Social Development and the OPEC Fund for International Development. 125. What are the objectives of the International Center for Biosaline Agriculture? ICBA's mandate is to help water-scarce countries improve the productivity, social equity and environmental sustainability of water use through an integrated water resource systems approach, with special emphasis on the effective use of marginal quality water. To achieve this mandate, ICBA has been providing research, development, partnership-building, networking, capacity-strengthening, knowledge sharing and advisory services, with particular focus in two areas: Integrated water resource system. Marginal quality resources. The third program is the Capacity building and knowledge-sharing Program demonstrating ICBA's significant emphasis on this critical aspect of scientific research. 126. What are the benefits of the International Center for Biosaline Agriculture? 81 The ICBA will determine the suitability of the conventional crop species for propagation under different irrigation water qualities in arid environments within the context of integrated water resources management. Alternative crop production and management systems will be evaluated with objectives of maximizing production from salt-tolerant species. WORLD WAQF FOUNDATION (WWF) 127. What is the World Waqf Foundation? The World Waqf Foundation (WWF) is an independent entity within the IDB Group, concerned with Awqaf. The IDB established this Foundation in accordance with its Articles of Agreement establishing the Bank. 128. What are the purposes of the World Waqf Foundation? The purposes of the Foundation as stipulated in Article 3 of WWF Regulations are as follows: (1) to support the establishment of a network of Waqf institutions that would perform Shari'ah compatible charity activities; (2) to sponsor and support Waqf institutions, coordinate their activities and provide them with expertise; (3) to extend assistance to students and provide scholarships in disciplines which can fulfill the needs of the Ummah; (4) to establish and support educational, health and social institutions and programmes; (5) to contribute to the

alleviation of poverty so as to enable the people of the world overcome hardship and build their capabilities; (6) to provide relief aid in the form of goods and services; 82 (7) to help IDB member countries to enact uniform Waqf legislations. 129. What are the regions where the World Waqf Foundation operates in? As an international institution, it operates in the IDB member countries and among Muslim communities in non-member countries, in accordance with rules and regulations of the country concerned. The activities of the Foundation and those of sister institutions and funds shall be coordinated in conformity with rules and regulations enacted by the Board of Trustees. 130. Who are the personalities and institutions that are likely to deal with the World Waqf Foundation? The persons and institutions that are likely to deal with the WWF can be classified as follows: (1) personalities and institutions who are members in the Council of Waqifs by virtue of contributing an amount of US$1 million or more; (2) personalities and institutions which, place their Waqf under the trusteeship or supervision of the Foundation without being a member in the Council of the Waqifs; (3) personalities and institutions operating or supervising their own Waqf but desiring to entrust the distribution of revenues of such properties or part thereof to the Foundation in areas compatible with its purposes; (4) personalities and institutions operating or supervising their own Waqf and desiring coordination with the WWF. 131. In what ways is the WWF considered an addition to the existing institutions operating in field of Waqf? 83 There are numerous Awqaf Organizations in the IDB member countries and Muslim communities in non-member countries, especially as Waqf managers. Nevertheless, there is a real need for WWF as an international Foundation for Waqf under the umbrella of the IDB for the following reasons: (1) Being part of the IDB Group provides WWF with moral as well as financial support. In addition, putting the vast experience of the Bank and other members of the Group at the disposal of the Foundation will encourage philanthropic individuals and institutions to work with. Moreover, being under the umbrella of IDB will facilitate comprehensive control over the Foundations funds and activities; (2) It is expected that the Foundation will receive a deal of support from governments of various countries which will encourage local individuals and institutions to participate in it, as well as facilitate the implementation of the Foundations projects and programmes in these countries; (3) The Foundations resources will enjoy immunity from expropriation by any country, in accordance with the IDBs Articles of Agreement; (4) The Foundation is able to fulfill the requirements of the philanthropic individuals and institutions. It can greatly help them maintain,

manage, invest and develop their Waqf assets. It can also help such individuals and institutions in the distribution of Waqf revenues under its management, either through full or limited authorization; (5) The right of charitable individuals and institutions to notarize their participants in the Foundations capital and reserve their legal right to withdraw from it is distinctive feature of the Foundation; 84 (6) The Foundation is capable of accumulating vast resources, making it possible to formulate ambitious development plans to meet the demands of the Ummah. It will also have the technical wherewithal to implement such plans; (7) Through its work mechanism, the Foundation provides a healthy partnership among philanthropic individuals and institutions, non-governmental organizations (the third sector) and governments to cooperate in the various development fields. MISCELLANEOUS 132. What is the Saudi Arabian Project for Utilization of Hajj Meat? The Saudi Arabian Project for Utilization of Hajj Meat was established on 17/05/1403H, and its management was entrusted to the Islamic Development Bank. The Project operations are supervised by the Adahi Committee which consists of several Saudi Arabian governmental Authorities, the mission of the project is to assist pilgrims by performing the ritual sacrifice on behalf of them. Also carry out the ritual of Odhiya and Sadaqa on behalf of Muslims and distribution to eligible poor. 133. What are the project objectives? (1) Utilization of meat of sacrificial animals by distributing it among the poor in Makkah and exporting excess quantities to the poor Muslims around the world. (2) Ensuring fulfillment of religious and health requirements in the animals slaughtered. (3) Contribution to environmental protection by not wasting the meat of slaughtered animals and secure full utilization of such meat. (4) Gradual utilization of offal and their distribution among the poor in Makkah. 85 134. Where does the operation of slaughtering take place? - Moaisem (1) Model Slaughterhouse. Capacity: (250.000 sheep). - Moaisem (2) Modern Slaughterhouse. Capacity: (100.000 sheep). - Moaisem (3) Modern Slaughterhouse. Capacity: (100.000 sheep). - Camels and Cows Slaughterhouse (4). Capacity: (15.000 animals). - Modern Slaughterhouse Units (B, D, E, F): Capacity: (400.000 sheep). 135. How many countries benefited from the distribution of meat? The Saudi project for Utilization of hajj meat distributes the meat among the poor in Makkah and other welfare charities inside the Kingdom, and exporting excess quantities to eligible beneficiaries in (27) countries by land, sea, and air transportations. 136. How many people join in operating the project? About 37.000 people work in the Saudi project for utilization of hajj meat, they fall into two categories: (Permanent Seasonal Employees).

Description of workers: - Supervisors from the Islamic Development bank. Supervisors from outside the Islamic Development bank. - Islamic Shari'ah Students. - Veterinarians. - Butchers, support labor, technicians and cleaners. Sheep suppliers' staff. 86 137. Where to buy the Coupons of the Sheep? - Saudi Post. - Al Rajhi Bank. Al Amoudi Exchange Office. - Haji and Mu'tamer Gift Charity. - The Project Website (www.adahi.org). 138. What is the Gelatin project that adopted by Islamic Development Bank? For the complete utilization of skin and offal of these sacrificial animals, The United Company for Gelatin and Organic Materials Processing in Makkah was established to extract Halal gelatin and process medicinal capsules from gelatin extracted from the hides and bones of Adahi animals. A contract has been concluded to establish an annual 300 ton gelatin processing factory as well as an annual one-billion natural capsule producing factory. 139. How can one obtain the publications of the Bank, IRTI, ICIEC, ICD or ITFC? The publications of the IDB Group are available on request free of charge from Bank Headquarters except for some of the Islamic Research & Training Institute. Correspondence in this respect should be addressed either to the Bank Secretariat Department or to the Publications Unit of IRTI, ICIEC, ICD or ITFC respectively. 87 IDB MEMBER COUNTRIES AND DATE OF MEMBERSHIP # Country Official Name Membership Date Hijra Gregorian 1 Afghanistan Afghanistan 26.10.1396H (20.10.1976) 2 Albania Republic of Albania 04.03.1414H (21.08.1994) 3

Algeria Democratic and Popular Republic of Algeria 24.07.1394H (12.08.1974) 4 Azerbaijan Azerbaijan Republic 04.01.1413H (04.07.1992) 5 Bahrain Kingdom of Bahrain 06.10.1394H (21.10.1974) 6 Bangladesh People's Republic of Bangladesh 24.07.1394H (12.08.1974) 7 Benin Republic of Benin 01.06.1404H (03.03.1984) 8 Brunei Negara Brunei Darussalam 24.07.1406H (03.04.1986) 9 Burkina Faso Burkina Faso 06.04.1398H (15.03.1978) 10 Cameroon Republic of Cameroon 09.04.1397H (28.03.1977) 11

Chad Republic of Chad 06.04.1397H (26.03.1977) 12 Comoros Union of Comoros 24.04.1400H (11.03.1980) 13 Cte d'Ivoire Cte d'Ivoire 21.04.1423H (02.07.2002) 14 Djibouti Republic of Djibouti 24.04.1400H (11.03.1980) 15 Egypt Arab Republic of Egypt 27.07.1394H (12.08.1974) 16 Gabon Republic of Gabon 27.04.1401H (03.03.1981) 17 Gambia Republic of the Gambia 24.04.1400H (11.03.1980) 18 Guinea Republic of Guinea 24.07.1394H (12.08.1974) 19

Guinea Bissau Republic of Guinea Bissau 16.12.1398H (16.11.1978) 20 Indonesia Republic of Indonesia 24.07.1394H (12.08.1974) 21 Iran Islamic Republic of Iran 16.07.1409H (22.02.1989) 22 Iraq Republic of Iraq 19.10.1398H (23.09.1978) 23 Jordan Hashemite Kingdom of Jordan 24.07.1394H (12.08.1974) 24 Kazakhstan Republic of Kazakhstan 08.07.1416H (30.11.1995) 25 Kuwait State of Kuwait 24.07.1394H (12.08.1974) 26 Kyrgyz Kyrgyz Republic 19.05.1414H (03.11.1993) 27

Lebanon Republic of Lebanon 09.04.1397H (28.03.1977) 28 Libya Great Socialist People's Libyan Arab Jamahiriyah 06.08.1394H (24.08.1974) 29 Malaysia Malaysia 24.07.1394H (12.08.1974) 30 Maldives Republic of Maldives 24.04.1400H (11.03.1980) 31 Mali Republic of Mali 06.04.1398H (15.03.1978) 32 Mauritania Islamic Republic of Mauritania 24.07.1394H (12.08.1974) 33 Morocco Kingdom of Morocco 24.07.1394H (12.08.1974) 34 Mozambique Republic of Mozambique 08.07.1416H (30.11.1995) 35

Niger Republic of Niger 24.07.1394H (12.08.1974) 36 Nigeria Federal Republic of Nigeria 08.05.1426H (15.06.2005) 37 Oman Sultanate of Oman 24.07.1394H (12.08.1974) 38 Pakistan Islamic Republic of Pakistan 24.07.1394H (12.08.1974) 39 Palestine State of Palestine 07.07.1397H (23.06.1977) 40 Qatar State of Qatar 24.07.1394H (12.08.1974) 41 Saudi Arabia Kingdom of Saudi Arabia 24.07.1394H (12.08.1974) 42 Senegal Republic of Senegal 28.11.1396H (20.11.1976) 43

Sierra Leone Republic of Sierra Leone 01.08.1402H (24.05.1982) 44 Somalia Republic of Somalia 24.07.1394H (12.08.1974) 45 Sudan Republic of Sudan 24.07.1394H (12.08.1974) 46 Suriname Republic of Suriname 02.01.1418H (08.05.1997) 47 Syria Syrian Arab Republic 04.09.1395H (09.09.1975) 48 Tajikistan Republic of Tajikistan 16.07.1417H (27.11.1996) 49 Togo Republic of Togo 29.07.1419H (18.11.1998) 50 Tunisia Republic of Tunisia 24.07.1394H (12.08.1974) 51

Turkey Republic of Turkey 24.07.1394H (12.08.1974) 52 Turkmenistan Republic of Turkmenistan 12.06.1415H (15.11.1994) 53 Uganda Republic of Uganda 09.04.1397H (28.03.1977) 54 U.A.E. United Arab Emirates 24.07.1394H (12.08.1974) 55 Uzbekistan Republic of Uzbekistan 05.07.1424H (02.09.2003) 56 Yemen Republic of Yemen 19.07.1395H (28.07.1975) 88 Islamic Development Bank King Khalid Street P. O. Box 5925, Jeddah-21432 Kingdom of Saudi Arabia Telephone: (966-2) 6361400 Fax: (966-2) 6366871 Telex: 601137 ISDB SJ Cable: BANKISLAMI - JEDDAH Home Page : http://www.isdb.org e-mail Address : idbarchives@isdb.org.sa Regional Offices MOROCCO IDB Regional Office KM 6.4 Ave Imam Malik Routedes Zaers B.P. 5003, 10105 Rabat, Morocco Telephone: (212-3) 775-7191 / 765-9751 Fax: (2123) 775-7260 Telex: 36027 Email: isdb.rro@iam.net.ma MALAYSIA IDB Regional Office Level 13, Suite, Bangunan Bank Industri Bandar Wawasan No. 1016 Jalan Sultan Ismail P.O.Box 13671 508250 Kuala Lumpur - Malaysia Telephone: (603) 26946627, 26946628,

26946629 Fax: (603) 26946626 Email: idbkul@po.jaring.my KAZAKHSTAN IDB Regional Office 65/9 Naurizbay-batir str. 480000 Almaty, Kazakhstan Tel: (7-3272) 623555 / 623620 Fax: (7-3272) 501303 E-mail:Nzabidin@idb.netel.kz 89 SENEGAL IDB Regional Office 18 Boulevard de la Re'publique B.P 6253 Dakar e'toile Tel: (22133) 8891144 Fax: (22133) 8233621 E-mail: RODK@isdb.org 90