Role of Islamic Finance for Development of the Low Income IDB Member Countries in the CIS Region

Transcription

1 Role of Islamic Finance for Development of the Low Income IDB Member Countries in the CIS Region Role of Islamic Finance in Development of the CIS Region Opportunities & Challenges Dr. Adalet Djabiev

2 More than two decades is over. That is a time which has past since breakdown of Soviet Union and an emergence of CIS countries. An emergence, that was, for approx.300,0 mln. inhabitants,fraught with a mixture of fears, uncertainty and,at the same time, hopes for the better life, prosperity, development, political, soico-economic sovereignty. Nowadays, while looking back a significant majority out of 300,0 mln, in their judgment of two decades,adhered to the verdict: that was a period of survival, rather than development... In 2013 CIS countries with a vast mineral resources, sizeable human resourses experiencing the same problems as early 90th's;i.e. very high degree of dependency on prices of oil, gas, other minerals, non-sovereign, weak financial, banking system, un uncertainty in identifying a model for soico-economic development. Around 60.0 mln, people in CIS countries are living below poverty line, The total GDP in CIS is approx.$ 2600,0 billion, comparable to GDP of Brazil alone,with the population appox.200,0 mln. or France alone, with the population 65.0mln.The financial, banking system is not serving, with a few exception, a needs of economies, being detached from productive sectors.

3 Therefore, the imperative call for the development, moreover, for the sustainable development is the essence of the CIS nation's strategic agenda; Yesterday was late, soon will be to late...the chess clock arrows are falling... Is the Islamic model of socio-economic, financial, banking management a solution for CIS countries, in particular for IDB members, to to cut the vicious cycle and designate the right path for the development, building fare financial system, attaining social justice. The answer is : Yes! WHY AND HOW TO JUSTIFY? We need to address the issue and will be addressing, while identifying, clarifying, elaborating the opportunities and challenges on the road toward paradigm shift, the new economic, financial landscape in CIS region, particularly, in IDB member countries.

4 KYRGYZSTAN GDP $6.197 billion (2012) GDP per capita $2,400 (2012) Budget expenditures $2.223 billion (2012) Consumer basket/poverty line ~ $90* (2012) Population below poverty line 36.8% (2013) Under extreme poverty line 29.4% (2011) (less than $2 per day) Under extreme poverty line 4.5% (2011) (less than official extreme poverty line) Labor force million (2007) Unemployment rate 7.7% (2012) * Currency rate 1 USD = 48.2 KGS

5 AZERBAIJAN GDP $71.04 billion (2012) GDP per capita $10,700 (2012) Budget expenditures $25.55 billion (2012) Consumer basket $250 (Dec 2012) Poverty line $148 (2013) Population below poverty line 6% (2012) Under extreme poverty line 7.75% (2011) (less than $2 per day) Labor force million (2012) Unemployment rate 6% (2012)

6 RUSSIA GDP $2.053 trillion (2012) GDP per capita $17,700 (2012) Budget expenditures $423.8 billion (2012) Consumer basket price ~ $86* (March 2013) Poverty line ~ $220* (2013) Population below poverty line 13 % (2012) Under extreme poverty line <2 (2011) (less than $2 per day) Labor force 75.6 million (2012) Unemployment rate 5.7% (2012) * Currency rate 1 USD = 31.4 RUR

7 * Currency rate 1 USD = KZT KAZAKHSTAN GDP $210.9 Bln(2012) GDP per capita $13,900 (2012) Budget expenditures $48.04 billion (2012) Consumer basket/poverty line ~ $113* (March 2013) Population below poverty line 5.3% (2011) Under extreme poverty line <2 (2011) (less than $2 per day) Labor force 8.54 million (2012) Unemployment rate 5.2% (2012)

8 UZBEKISTAN GDP $48.3 billion (2012) GDP per capita $3,500 (2012) Budget expenditures $16.51 billion (2012) Consumer basket $43 (2013) Poverty line $109 (March 2012) Population below poverty line 17% (2011) Under extreme poverty line 76.68% (2011) (less than $2 per day) Labor force 16.8 million (2012) Unemployment rate 4.8% (2012)

9 TAJIKISTAN GDP $7.59 billion (2012) GDP per capita $2,200 (2012) Budget expenditures $2.066 billion (2012) Consumer basket $25/$53 (Oct. 2011) Poverty line $157 (Dec. 2010) Population below poverty line 39.6% (Dec. 2012) Under extreme poverty line 50.88% (2011) (less than $2 per day) Labor force 2.1 million (2012) Unemployment rate 2.5% (2012)

10 TURKMENISTAN GDP $33.47 billion (2012) GDP per capita $8,500 (2012) Budget expenditures $26.9 billion (2012) Consumer basket n/a Poverty line n/a Population below poverty line 30% (2004) Under extreme poverty line 49.60% (2011) (less than $2 per day) Labor force 2.3 million (2008) Unemployment rate 60% (2004)

11 SOLUTIONS Islamic micro finance, institutionalization of Wakf. Wakf organizations as well as Islamic Cooperatives are the Islamic quasi Investment Funds that finance small medium size enterprises which creates new employment opportunities and facilitating decrease of poverty. In that connection the necessary amendments to legislation are required which will permit to provide the Islamic financial services such as Islamic banking, investment, insurance, leasing (Ijara) and micro finance. The amendments should embrace area of setting up and activity of Wakf organizations.

12 SOLUTIONS Overcome of a corruption Maintenance of the transparency on the budget spending Mobilization of the resources for the education Mitigating the digital divide via Islamic financial services Establishment of the Transregional Islamic SME s/microfinance Bank or Fund

13 LAWS & RULES AT THE SERVICE OF SOCIETY From methodological point of view optimal approach is to introduce the comprehensive Law on Islamic finance which will regulate all aspects and type of Islamic financial activity. Just to highlight the current situation in CIS countries in term of the enabling legislation: Kazakhstan partly introduced and is under further development; Kyrgyzstan has started and at the stage of further development as well; The draft of the law is expected very soon in Tajikistan and accelerated development is expected.

14 LAWS & RULES AT THE SERVICE OF SOCIETY In Azerbaijan, Russia, Turkmenistan and Uzbekistan the Law still not considered yet by the Government and availability of some of Islamic financial services based upon private local initiative and enthusiasm of a few individuals and institutions being more often as an experimental endeavor. The existence of relevant legislation and its further development, better understanding of Islamic financial model, Islamic politeconomy, moreover imperative political will and the responsible elite would allow to maintain not only sector of Islamic financial services but could manifest the reality of applying Islamic economical principles for the management of

15 LAWS & RULES AT THE SERVICE OF SOCIETY whole economy and administring the financial and monetary system, forming and structuring the country's budget policy, it's revenue and expenditure, state external and internal debts, distribution and utilization of material and other resources, sovereign welfare fund's management, and finally as a result achieving the ultimate goal of the sovereign fare and predictable economy serving the performance of the mission of human being, mankind on the earth.

16 CHOICE OF THE RIGHT PASS There is an eternal question is there a choice? `The eternal question has the sacred answer the Almighty always leaves the Choice. How not to make a fatal mistake? To avoid the fatal mistake today should be done the obvious choice which is available yet. Namely, if Islamic world countries OIC members and the world in whole do not choose the Islamic model of economic behavior then they will follow the destiny of those narrated in Holy Quran as generations ruined, eliminated existence of which couldn't be traced, the rustle can not be heard. Allah knows the best!

17 THANK YOU FOR ATTENTION Badr Finance & Investment Ltd.