KUALA LUMPUR – The private sector arm of the Islamic Development Bank will market a Malaysian multi-bank Islamic crowdfunding portal to its members around the world to encourage private sector investment in its projects.
The Islamic Corporation for the Development of the Private Sector (ICD) will collaborate with IAP Integrated, the developer of the Investment Account Platform (IAP), to take its fintech solutions to major Islamic markets beyond its traditional strongholds of Malaysia and the Middle East.
“ICD is pleased to be the first organisation that IAP Integrated turns to in an effort to market its crowdfunding fintech solutions to other major Islamic markets such as Central Asia and Africa,” said Ayman Sejiny, the corporation’s chief executive, said on signing the agreement in Kuala Lumpur on October 3.
IAP Integrated launched in 2016, the result of a white paper by Bank Negara Malaysia (BNM), the country’s central bank, that looked at ways to channel Islamic deposits more efficiently through banks. Since then, it has helped raise more than 200 million Malaysian ringgit ($47.8 million) in funds for SMEs and private companies.
The portal does so by bringing ventures to the attention of a group of Malaysian Islamic banks which can then help match the financing they need through Shariah-compliant retail and institutional investors.
“Both the investors and the entrepreneurs can benefit from the risk-sharing concept, with the banks assuming the role of an investment intermediary,” Joann Enriquez, CEO of IAP Integrated, said in a media statement on October 3.
“We believe our experience in Malaysia can be successfully replicated and implemented in other Islamic markets,” she added.
Under the agreement, ICD will market IAP, with a view to exploring further initiatives.
Enriquez told Salaam Gateway in a written response to questions on October 4 that the collaboration may open to future arrangements of commercial agreement between ICD and IAP.
“IAP… has only been operating in Malaysia, and to expand beyond our borders we need a reputable partner that has a good network and experience in countries considered as “new markets” to us,” said Enriquez.
“Our solutions can be part of, or packaged together with, ICD’s overall financing and advisory solutions in these markets. ICD will be able to help us market our solutions better and more effectively,” she added.
As a member of the Islamic Development Bank Group, ICD is charged with supporting economic development by providing financing for private sector projects, promoting competition and entrepreneurship and offering advisory services in 54 Muslim-majority countries.
The corporation will share IAP’s model to countries currently beyond the Malaysian platform’s reach, especially nations in Central Asia and Africa, where Islamic finance is emerging.
Kazakahstan appears to be Central Asia’s frontrunner in Islamic finance, attracting the attention of the international banking industry after the Astana International Financial Centre opened last July.
Tajikistan opened its first Islamic bank in September and Kyrgyzstan’s central bank aims to open a new full-fledged Islamic bank in the country.
Uzbekistan also took its first steps into institutional Islamic finance last year, when the government tasked its central bank to develop a legal and regulatory framework for Islamic banking and finance with the support of the IDB.
In Africa, growth in Islamic banking has always been led by Northern African states but Sub-Saharan African nations, especially South Africa and Nigeria have established Islamic banking footprints.
IAP’s most recent fundraising campaign of 20 million ringgit ($4.8 million) closed at the end of September. The fifth Ar Rahn project, an investment in a share of the aggregate capital contribution of Muamalat Venture, a wholly-owned subsidiary of Bank Muamalat was over-subscribed by a factor of 1.6 by the end of the first day of its campaign period.
The previous 13 deals listed on the platform have helped raise 204 million ringgit ($48.7 million) of funds from 301 individual investors and 18 corporate investors.
Elsewhere, Enriquez revealed that IAP Integrated, which is owned by a consortium of six Malaysian Islamic banks and answers to the Malaysian central bank, has “reached out” to the Malaysian Securities Commission and hopes to offer advice on best practices as the government agency navigates peer-to-peer regulation.
“[The SC has] gone a long way and developed a successful framework around P2P and Equity crowdfunding. Our aim to create a pathway for the efficient mobilisation of funds is a shared vision,” she said in an email response to questions.