Islamic finance can drive Suriname’s private sector
PARAMARIBO, Suriname -- Suriname which is seeking to be the Caribbean Community (CARICOM) leader in Islamic finance, took a major step in making this goal a reality on Friday, when visiting CEO of the Islamic Development Corporation of the Private Sector (ICD), Khaled Al Aboodi, and the CEO of the Trust Bank, Maureen Badjoeri, signed a cooperation agreement, the first of its kind between the private sector of Suriname and ICD, a branch of the Islamic Development Bank (IsDB) in Jeddah, Saudi Arabia.
In her speech, Badjoeri said that this sort of cooperation is precisely what Suriname needs as a stimulus to its economy, which is in recession. The Trust Bank is a private entity in Suriname.
Suriname’s minister of finance and governor at the Islamic Bank, Gillmore Hoefdraad, echoed a similar note when he spoke at the signing ceremony. Hoefdraad said that his government seeks further investment capital from the Islamic Bank for a variety of projects. He told the audience that Islamic finance has become common globally.
Hoefdraad was clear that Suriname, a member of the IsDB since 1997, has made insufficient use of the many funding opportunities offered by the bank.
According to a diplomat familiar with the agreement signed on Friday, the Trust Bank partnership with the ICD will better serve small and medium enterprises (SMEs). The bank will promote small entrepreneurs from the agriculture and resource based industries. Before, SMEs could only borrow between US$5-10 million, but now, through the "chain of channel financing,” they can borrow far less through this partnership between Trust Bank and the ICD.
SMEs have lacked access to conventional banking. Conventional banks do not have the ability and resources to support SMEs in Suriname. The imminent opening of Suriname’s first Islamic institution, Trust Bank, will change the lives of many entrepreneurs and farmers who are enthusiastic about this development.
One major advantage of Islamic finance is the fact that there is "shared risk" between the borrower and the lender. Both parties share the profit and the risk, the diplomat explained. For this reason, he said, SMEs are happy that the ICD and the Trust Bank will soon open its doors to support the private sector of Suriname.
From the ICD, the government of Suriname and private sector organisations can receive advice on the establishment, expansion and modernization of the private sector and the development of capital markets and best management practices. Employees from Trust Bank are being trained by ICD in Islamic banking products.
One Surinamese official said that Guyanese farmers will also have access to Islamic finance through the services of the Trust Bank of Suriname. Suriname is willing to offer Guyana advice on Islamic banking and finance and hopes that Guyana will soon join the Islamic Bank. In the future, the Trust Bank may open offices in Guyana and Trinidad and Tobago, as Suriname takes the lead in this lucrative product of Islamic finance, which has already taken root in non-Islamic countries such as China, France and the United Kingdom.
The ICD is an organ of the Islamic Bank, whose main goal is to help develop the private sector of member countries. It has recently doubled its capital from $2 to 4 billion.
In Suriname, more and more people in government and the private sector are in talks with officials from the OIC and its organs, the ISDB/ICD. Consultation has increased. Within two weeks there will be again a delegation of the IsDB visiting Suriname to follow up on various projects.
Khaled Al Aboodi, in an interview with Sky Radio of Suriname, said that there are many opportunities for Suriname as a prominent member of the IsDB to benefit from Islamic financing and there are no ethnic and religious barriers as to who can access the services of the Islamic finance.
According to the United News of Suriname, Nida Raza, director of the ICD, sees Suriname as a 'gateway ' for the Latin America and Caribbean region in Islamic finance.
“The Islamic Bank today has broadened its relationship with the World Bank and the International Monetary Fund, and is keen to expand its partnership with Suriname,” Raza said.
Christine Lagarde, IMF managing director, recently recognised the importance of Islamic finance in maintaining economic stability and development when she said, “We at the IMF are keen to participate, to listen, to collaborate, innovate, and develop the promise of Islamic finance in a sound and sustainable way, by managing risks appropriately and ensuring financial stability."
By Ray Chickrie
Photo: CEO of the Islamic Development Corporation of the Private Sector (ICD), Khaled Al Aboodi (L), and the CEO of the Trust Bank, Maureen Badjoeri