By Ray Chickrie From Caribbean News Now

Guyana has been a member of the Organisation of Islamic Cooperation (OIC) since 1998, but never joined the Islamic Development Bank (IsDB), a branch of the OIC. The previous government of Guyana did not actively participate in OIC forums. However, a change in government in Guyana, one with deep roots in Africa, the only Islamic dominated continent and a history of close ties with the Arab and Islamic world, may usher in a new era of cooperation with the East.

The new president of Guyana, David Granger, a few weeks ago, during a visit to Saudi Arabia, committed his government to stronger economic and political ties with the Arab and Muslim world. While in Saudi Arabia, President Granger met with the secretary general of the OIC, Iyad Madani, and indicated that Guyana will join the IsDB.

Membership in the Islamic Bank, automatically qualifies Guyana to tap funds and economic and financial advice from the Islamic Corporation for the Private Sector (ICD), the private sector arm of the Islamic Bank, whose main goal is to help develop the private sector of member countries. The mandate of ICD is to support the economic development of its member countries through provision of finance and equity investments to private sector projects in accordance with the principles of Islamic finance.

ICD finances and invests in projects that are specifically geared to create employment opportunities and boost exports. The ICD provide both the public and private sector organisations advice on the establishment, expansion and modernization of the private sector and the development of capital markets and best management practices. The ICD has recently doubled its capital from 2 to 4 billion dollars.

Khaled Al Aboodi, CEO of the ICD advocates a financial paradigm shift. “One that is built on the principles of justice, risk sharing and direct linkages with real economy and avoidance of excessive speculation,” as he put it. Al Aboodi, last week, in Istanbul, said, “The ICD has a mandate to encourage and develop the private sector and we are working to achieve this mandate with collaboration and support from major supranational organisations, central banks, authorities and private sector participants. ICD and its partners aim to support the emerging markets in order to reach their full potential and contribute to the local economies in a meaningful manner.”

The Islamic Bank supports infrastructure and agricultural projects, such as roads, canals, dams, schools, hospitals, housing, and rural development both in the public and private sectors. Besides funding public sector projects, the Islamic Bank can be of great benefit for Guyana’s private sector.

However, skeptics with little knowledge of the OIC and the IsDB, are of the opinion that these are religious organisations, and active membership will lead to extremism and the Islamization of Guyana. Neighbouring Suriname has been a member of the Islamic Bank since 1997. But for now, Guyanese farmers, small businesses and entrepreneurs will also have access to Islamic finance through the services of the Islamic Trust Bank of Suriname, the first Islamic Bank in a CARICOM country, according to officials in Paramaribo, as Suriname seeks to be the leader in Islamic finance in CARICOM.

Surinamese officials affiliated with the IsDB are willing to offer Guyana support on Islamic banking and finance and hope that Guyana will soon join the Islamic Bank. Guyana automatically qualifies it to join the bank since it’s a member of the OIC. 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.

On Friday last week, Suriname took a major step in joining the global community of Islamic banking and finance when Khaled Al Aboodi and the CEO of the Trust Bank, Maureen Badjoeri, signed a cooperation agreement, the first of its kind between a private sector entity in Suriname and the ICD.

Surinamese officials affiliated with the Islamic Bank say that the Trust Bank’s 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 US5-10 million, but now, through the “chain of channel financing,” they can borrow far less through this partnership between Trust Bank and the ICD.

SMEs had lacked access to conventional banking. Conventional banks do not have the ability and resources to always support SMEs. With the imminent opening of Suriname first Islamic institution, Trust Bank will change the lives of many entrepreneurs and farmers in CARICOM countries. There are many opportunities for Guyana and Guyanese, as a member of the IsDB, to benefit from Islamic financing and there are no ethnic and religious barriers as to who can access these services.

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, one diplomat remarked. This risk-sharing features and prohibition of speculation demonstrate that Islamic finance poses less systemic risk than conventional finance. This would be welcomed by farmers, small businesses and entrepreneurs in Guyana.

Christine Lagarde, IMF managing director, recently lauded 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.”

IMAGE: ray-chickrie3.jpg
Born in Guyana, Raymond Chickrie was a teacher in the New York City public school system and has also taught in the Middle East

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