By: Abdel Aziz DimapunongChancellor, Islamic Banking Research InstituteFounding Chairman, Amanah Islamic Bank----------------------------------------------------
Dr. Ahmad Muhammad Ali
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There is no doubt, Dr. Ahmad Muhammad Ali (photo above), president of the Islamic Development Bank, is one of the founders of international Islamic banking. He certainly is a banker par excellence. Last year, Dr. Ahmad Ali was a recipient of an award by the King Faisal Foundation. This award was the International Prize for Service to Islam. The award was announced by Prince Khalid Al Faisal, director of the King Faisal Foundation in a ceremony held at the Al-Khozama Center last January 25, 2005. As winner of the award he received a cash endowment of SR750, 000 (about $200,000), a certificate outlining his work and a 22-carat gold medallion to commemorate the occasion. Dr. Ahmad Muhammad Ali was awarded the prize in recognition for his achievements in the field of Islamic banking. As president of the Islamic Development Bank since its inception in 1995, he has synchronized the conformity of banking transactions with Islamic laws and jurisprudence. As one of the founders of Islamic banking, he has set an example of success in Islamic banking and finance on an international level.
The Islamic Banking Research Institute of the Philippines has recognized three founding fathers of international Islamic banking, namely: His Highness, Prince Muhammad Faisal Al-Saud of the Faisal Islamic banking group, His Excellency, Saleh Abdullah Kamel of the Al Baraka banking group, and His Excellency Ahmad Muhammad Ali of the Islamic Development Bank of the Organization of Islamic Conference. In the early 1970s, these three founding fathers of Islamic banking and finance begun conceptualizing, scheming, and constructing what is now popularly known as Islamic banking, investment and finance. Considering their highly educational background and religious commitment to Islam, they may have thought of Islamic banking and finance even in their school days in the 1960s. The Islamic Banking Research Institute has no doubt these three founding fathers of Islamic banking are bankers par excellence.
This issue is focused on Ahmad Muhammad Ali, president of the Islamic Development Bank. The IDB operates on Islamic banking principles. One of the pioneering Islamic banking institutions, this bank was conceptualized in 1973 and actually founded in October 1975 upon the recommendation of the Organization of Islamic Conference and its members which were then 43 member states. Its initial capital was furnished by the governments of Saudi Arabia, Kuwait, Bahrain, Pakistan., Bangladesh, Turkey, and Indonesia. The Bank has financed 387 operations totaling $3.917 billion in 39 member states, and made a profit of $26 million in 1982-83. Since then, IDB and Muhammad Ali have been making steady progress.
Dr. Ahmad Muhammad Ali was born in 1934 at Madina Al Munawara, one of the two holy cities of Islam located in the Kingdom of Saudi Arabia. He obtained his B.A. Commerce degree at the Cairo University, Arab Republic of Egypt in 1957. He obtained his M.A. degree at the University of Michigan, USA. He also earned his degree in Public Administration in the United States in 1962. Thereafter, he earned his Ph.D. degree in Albany, also in USA. He pursued more education and obtained also his degree in Public Administration in the United States in 1967.
Upon completion of studies, Dr Ali was appointed Deputy Rector of the King Abdulaziz University in the Kingdom of Saudi Arabia. He served in this capacity from January 1, 1967 to January 1, 1972. Then he was elevated to the position of Deputy Minister of Education in the Royal Government of the Kingdom, a position he held from January 1, 1972 to January 1, 1975.
Dr. Ali started his first stint as President of the Islamic Development Bank on January 1, 1975 up to January 1, 1993, a period of eighteen years.
He was Secretary General of the Muslim World League based in the Kingdom of Saudi Arabia from January 1, 1993 to January 1, 1995.
Then he made his second stint as President again of the Islamic Development Bank from January 1, 1995 up until the present, a period of twelve years. He, therefore, has served the Islamic Development Bank and performed Islamic banking in a period of thirty years.
Dr. Ahmed Mohamed Ali wrote many articles and working papers on Islamic economics, banking and education. He has an IDB Prize Winners' Lecture Series publication titled “Role of Islamic Banks in Development."
His memberships to prestigious organizations include the King Saud University Council. He was a member in 1980. He was also member of the King Abdulaziz University Council where he was a Rector in 1972. These were in addition to being a member of the Council of the King Fahd University of Petroleum and Minerals. He was also member of the Imam Mohammed Ben Saud University in 1990.
The Islamic Development Bank is a pioneer in the field of Islamic banking. Dr. Ahmad Muhammad Ali is also a pioneer president of the Islamic Development Bank. That makes him among the pioneers in the field of Islamic banking.
The IDB was organized as a multi-lateral financial institution. It is a political organization having been established in pursuance of the Declaration of Intent issued by the Conference of Finance Ministers of Muslim Countries that was historically held in Jeddah on December 1973. The Inaugural Meeting of the Board of Governors took place in July 1975, and the Bank was formally opened on October 1975.
Up to the end of June 1992, the authorized capital of the Bank was two billion Islamic Dinars. Since July 1992, in accordance with a Resolution of the Board of Governors, it became six billion Islamic Dinars, divided into 600,000 shares having a par value of 10,000 Islamic Dinars each. Its subscribed capital also became four billion Islamic Dinars. The board of governors at its annual meeting held in Algeria decided to increase the authorized capital of the Bank form ID six billion to ID fifteen billion and the subscribed capital from ID 4.1 billion to ID 8.1 billion.
The Bank's principal office is a landmark in Jeddah, Kingdom of Saudi Arabia. Two regional offices were opened in 1994; one in Rabat, Morocco, and the other in Kuala Lumpur, Malaysia. In July 1996, the board of Executive Directors also approved the establishment of an IDB Representative Office at Almaty, Kazakhstan. This regional office serves the IDB member countries in Central Asia. The office became operational in July 1997. The Bank also has field representatives in eleven member countries, namely: Indonesia, Iran, Kazakhstan, Libya, Pakistan, Senegal, Sudan, Gambia, Guinea Bissau, Mauritania and Algeria.
The Islamic Development Bank is authorized to accept deposits. It mobilizes these deposits into Shari’a compatible transactions. It is also charged with the responsibility of assisting in the promotion of foreign trade, especially in capital goods, among member countries. Furthermore, it provides technical assistance to member countries by way of extending training facilities for personnel engaged in development activities in Muslim countries to conform to the requirements of Shari’a laws and jurisprudence.
The avowed purpose of the Bank is to foster the economic development and social progress of member countries and Muslim communities in non-member countries in accordance with Shari’a laws and jurisprudence
The official functions of the Islamic Development Bank include participation in equity and venture capital. It also provides loans for productive projects and enterprises. It provides financial assistance to member countries in other forms for economic and social development. The Bank is also required to establish and operate special funds for specific purposes including a fund for assistance to Muslim communities in non-member countries.
As president of a multi-lateral banking institution, Ahmad Muhammad Ali is well abreast of developments in other nations, especially in those countries that are seeking for membership in the bank. Along this pursuit, Ahmad Muhammad Ali led the so-called Tashkent Conference in the Republic of Uzbekistan on September 2003. The Conference was held following the Independence of this new Republic. Dr. Ali noted and stressed in that Conference that for the years of Independence of Uzbekistan, it has achieved acceptable successes in all branches of economy. “We are glad to see the success of Uzbekistan in the sphere of industrial development”, he said “Any development of a country serves the improvement of people’s welfare in the end”, - he added.
Addressing a group of journalist in the Tashkent Conference, Ahmad said “Our bank is working mainly for the realization of concrete projects. When together with Uzbekistan’s partners we determine these or those sphere of cooperation, the Islamic Development Bank will allot the necessary sum for the projects realization. Priority direction of our cooperation will be such spheres as transport communications, the small and medium size business. We are going to take an active part in the construction of the railway, connecting Uzbekistan with Iranian ports”.
On that year, the Republic of Uzbekistan became the 55th member of the Islamic Development Bank. The present membership of the Bank consists of 56 countries. It is required that the prospective member country should be a member of the Organization of the Islamic Conference. Every member is also required to pay its contribution to the capital of the Bank and be willing to accept such terms and conditions as may be decided upon by the bank.
Ahmad Ali and the Islamic Development Bank respond to disasters and natural calamities. Last October 8, 2005, the world has witnessed a devastating earthquake in Pakistan. On October 24, 2005, Ahmad Ali was in Karachi, Pakistan, a member country. While in Pakistan, the IDB president, along with the Organization of Islamic Conference Secretary General Ekmeleddin Ihsanoglu, met President Pervez Musharraf where the Pakistani president called for setting up a permanent disaster relief fund at the OIC level to deal with natural disasters such as the October 8 earthquake. As president of the Islamic Development Bank Ahmad Muhammad Ali has responded by saying that the bank will give $256 million for the rehabilitation of the earthquake-hit areas of Pakistan. The IDB president said part of the money would be a loan and part of the money would be a grant.
On the next visit of Ahmad Muhammad Ali in Pakistan early this year, the grant and the loan for the rehabilitation of damages caused by the earthquake were raised to $ 500 million as requested by the government of Pakistan. During the visit of Ahmad Ali, the Prime Minister thanked the IDB President for the support and assistance provided by the Islamic Development Bank for the reconstruction and rehabilitation of earthquake affected areas.
Pakistan has been the primary mover and promoter of a genuine and complete banking and insurance system. This is perhaps the reason why the IDB president appreciated the reforms agenda of the government and said that “Pakistan has a special place in the Muslim world and it is playing an important role in strengthening the Muslim Ummah (world community of Muslims).
This year the Prime Minister of Pakistan Shaukat Aziz asks IDB to take part in consortium formed to finance the construction of water reservoirs in Pakistan. The Minister and Ahmad Ali met last May, 11, 2006 during a ceremony of Pakistan Development Forum 2006, at the Convention Center.
Talking to the President of IDB, Dr. Ahmad Muhammad Ali, the Prime Minister appreciated support provided by IDB to Pakistan in its development process saying that IDB has consistently played a vital role in Pakistan’s economic development which is deeply appreciated all across the country. "IDB is our development partner and Pakistan values and welcomes the advice given by the bank", said the Prime Minister.
The Prime Minister also acknowledged the role played by the Islamic Development Bank in the development of Muslim countries. He said the Ummah can take justifiable pride that the IDB has evolved into an internationally recognized and reputable institution under the inspiring and highly competent leadership of Dr. Ahmad Muhammad Ali.
Dr. Ahmad Muhammad Ali assured the Prime Minister of the Bank’s support in the construction of water reservoirs. Furthermore, “the IDB, he said, “is also considering financing projects in railways and energy sector in Pakistan.”
The able leadership of Dr. Ahmad Muhammad Ali as president of the Islamic Development Bank has been very reassuring not only to member countries but to the entire Muslim communities around the Muslim world. Presently, Dr. Ahmad Muhammad Ali, a banker par excellence, is still president of the Islamic Development Bank.
“Ahmad Muhammad Ali, banker par excellence”, by Abdel Aziz Dimapunong is part of a larger book entitled “The world of Islamic banking” by this same author. Mr. Dimapunong is chancellor of the Islamic Banking Research Institute. He is also founding chairman of the Amanah Islamic Bank of the Philippines. The site, www.dimapunong.blogspot.com includes research papers that Abdel Aziz Dimapunong has written in the field of Islamic banking, finance, and investments during his career. Dimapunong is currently working as an independent Consultant/Trainer on Islamic banking, finance, Zakah, Awqaf, Islamic Inheritance,, and other aspects of Islamic transactions. Dimapunong may be contacted by email at abdeldimapunong@yahoo.com.ph. October, 2006. All rights reserved.
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