Islamic Development Bank : A Multilateral Financing Organization

At least half of all stillbirths occurred in the intrapartum period. Among the 133 million babies born alive each year, 2.8 million die in the first week of life. The patterns of these deaths are similar to the patterns for maternal deaths; the majority occurring in developing countries. Quality skilled care during pregnancy and childbirth are key for the health of the baby and the mother. In the regions with the highest neonatal mortality rates, access to postnatal care is abysmally low. In the majority of countries with data in sub-Saharan African and South Asia, fewer than half of mothers and babies receive a postnatal health check.

Abortion, for the vast majority of people is not a subject that is easy to talk about. According to the World Health Organization, out of the 211 million pregnancies, 46 million end up in abortion and 18 million of those abortions are done in what WHO considers unsafe conditions (World Health Report, 2007). Unsafe conditions are defined by WHO as, “ abortions performed by people lacking the necessary skills or in an environment lacking the minimal medical standards, or both” (World Health Report, 2007). The maternal death rate for women who have unsafe abortions is 350 out of 100,000, and there are other complications that are not fatal but can lead to disease or disability (World Health Report, 2007).

According to the World Health Organization, the causes of maternal mortality and morbidity in Sub- Saharan Africa are mainly results of a defective health system when it comes to dealing with complications during and after birth. The complications that contribute greatly to maternal mortality include hemorrhage, infection, high blood pressure, unsafe abortions, and obstructed labor. These complications are the leading causes of death among women aged 15 to 49 in developing countries.

Not only are young expectant mothers not able to access a variety of prenatal health services, but there is also a higher risk of maternal death for adolescent pregnancies, and for newborns their is an increased risk of developing diabetes, heart disease or obesity later in life. [Teen pregnancy statistics, 2016] Simply by improving education surrounding pregnancy and improving the access to healthcare in these countries, pregnancy complications would decrease, as would the number of deaths which result from unsafe births.

One of the most beautiful miracles we experience in this world is the birth of a child, an expecting mother pregnant with her baby is considered to be sacred in many cultures. Most expecting mothers try their best to prevent any harm coming to their unborn child from any diseases or birth defects that could affect their baby. Yet still in this day and age with all the resources, medicines, and treatments we have available to improve maternal health, approximately eight hundred women die each day from preventable causes that is related to childbirth and pregnancy(Maternal). Those are eight hundred deaths a day which totals up to two hundred and ninety two thousand deaths annually that could have been prevented with standard adequate treatments and about ninety nine percent of those deaths happen in developing countries because the expecting mother would catch an infection during her pregnancy or during childbirth. Improving maternal health is one of the eight major focuses for the United Nations Millennium Development Goals.

The first recent testing with Islamic banking can be traced to the organization of the Mit Ghamr funds Bank in Egypt in 1963. Throughout the past four decades Islamic banking has full-grown quickly in terms of size and number of players. Islamic banking is currently practiced in more than 50 countries like In Iran, Pakistan, and Sudan, only Islamic banking is allowed.

The overreliance on the traditional medicine had augmented the disease rates. The failure to seek professional healthcare resulted in an increase in the contagious diseases, maternal and nutrition diseases. Therefore, massive campaigns by the health professionals would help in the increase of awareness in the health sector . The government needed to make the healthcare facilities accessible and affordable by the citizenry. Many Nigerians lived in abject poverty hence could not access quality healthcare. The government, therefore, had a responsibility to guarantee accessible healthcare facilities by providing adequate personnel and drugs. Maternal deaths were very high in the country as research indicated that 59, 000 deaths occurred annually among pregnant women and during childbirth. The deaths were attributed to lack of or inadequacy of maternal health facilities that resulted to most women giving birth at the homes without the proper medical care.

In context of modern economics, Islamic banking is a completely new concept for most of people in this domain. The Islamic bank established in 1963 in the city of Mit Ghamr, Egypt is believed to be the first of its kind, even though it was not publicly characterized to be so due to political persecution. The Egyptian government at that time used to be hostile to any activities that are believed to adopt any Islamic approach and duped them to be unwanted fanaticism. The bank’s first administration board was chaired by Mr. Ahmed Al Najar and remained in business until 1967. This experience was later replicated in 1975 by the first bank to be openly branded Islamic, the Dubai Islamic Bank, which was an integrated bank offering all of its financial and investment services according to Islamic Sharia guidelines. As a result of the success of this new type of banking, 267 Islamic banks were established in 48 countries around the world yielding a volume of business surpassing $250 billion estimated by The General Council for Islamic Banks and Financial Institutions CIBAFI (Arif 1988).

In the Islamic banking system,according to sources and causes of risks, it might be an external risk which due to changes in risk policies and regulations caused by banking supervisory authorities ( regulatory risk ) or macro and external impact of benchmarks such as LIBOR interest rate factors, namely the use of determine the speed mark Islamic Bank ( known as interest rate risk ) ;There are risks to fulfill obligations related to the debtor by Islamic Banking( Credit risk ) , there are a set of risks, operational risks collectively,Islamic banks themselves , the people involved / staff, including errors, negligence and fraud, the system and the use of technology in the Islamic Banking , the proceedings and / or processes and procedures

Many people are sceptical about Islamic banks performances into the niche as newcomers to the market according to Samad, (2004). As previously mentioned, Islamic finance operates in accordance with the Qur’an. Islamic banks are non-conventional financial institutions which completely prohibit the action of ‘Riba’ (Interest) under Islamic Banking. As Islamic finance follows strict ethical practices in its dealing with jurisprudence to the Qur’an, it is only natural that Islamic banks as new competitors face steep challenges in sharing deposit and credit markets

Today, Islamic finance has shown impressive performance with the Islamic finance industry’s assets are estimated to have amounted to $1.8 trillion as at end-2013, recording an over 16% y-o-y growth according to KFH-Research. In a newly released report “Islamic Finance Outlook 2014” by Kuwait Finance House Research Limited (KFHR), the Islamic finance industry is forecasted to continue to chart tremendous double digit growth rates across all sectors, with total industry assets estimated to reach approximately $2.1 trillion as at end-2014.

It is undeniable fact that Islamic banking system has been flourishing for last few decades and now has become the focus of global market forces. Pioneers of Islamic banking proclaim that foundational principles of Islamic banking is allied with Shari’ah guidance and their accounting practices, policies and financial reporting mechanism is based on Sharai’ah values. Consequently, Islamic institutions have the responsibility to follow Islamic rulings in all their practices. The core purpose of this study is to confirm that either current practices are align with Islamic ethical values or just based on shari’ah terminologies. However, author find that current practice of Modarbah are not just contrary to its theoretical foundation of Islamic Banking but also to basic shari’ah guidance to some extent. It has been also identified that whenever an issue arises in Islamic banks they try to make it shari’ah compliant instead of resolving particular issue they are busy in just manipulating or islamizing conventional banking products by using Shari’ah terminologies to capture the attention of Muslims who are thirsty for transparent ideal Islamic system. This behavior of Islamic banks has made the practices of Islamic banks more controversial. Proper implication of current study can make great contribution in the literature of Islamic banking as it will help Islamic banks to review their practices in order to fulfill the basic ethical principles of Islam.

Omani financial regulatory bodies have finalised the amended regulatory framework for Islamic banking in the Sultanate. Alongside the GCC-based Islamic finance favourites, the reformed Islamic financial jurisdictions of MENA are entering into the limelight. Other regional developments in non-GCC countries in MENA include the Iraqi government, which has approved the establishment of the country’s first state-owned Islamic bank, the Two Rivers Islamic Bank, with an initial capital of USD21.5 million. Iraq and Libya are in the midst of designing Islamic banking legislation. Tunisia’s Islamic finance industry is expected to grow further with the efforts undertaken by that country’s government. Meanwhile, the Government of Yemen is structuring a Sukūk programme for 2014.

Millions of poor practicing Muslims around the world need access to Sharia (Islamic law) compliant financial tools. According to CGAP 2013, there are around 255 Islamic microfinance providers in the world (Figure 1 and 2). Studies conducted in Bangladesh, Sudan and Indonesia show that Islamic microfinance is growing at much faster rate than conventional microfinance. TechNavio forecasts the market to grow at a CAGR of 19.7 percent over the period 2013-2018. There is a huge opportunity for the growth of Islamic Microfinance in Pakistan as well. This sector is scattered and there is a need for concerted effort on part of the policymakers and financial institutions to provide diversity in products/providers and sustainable Islamic financing models. The government of Pakistan is keen on expanding the Islamic banking sector and it makes sense to focus on Islamic microfinance sector at the same time.

Many authors agree that Islamic finance industry has a long way to become globally successful industry. To achieve its potential for solid growth, Islamic finance must improve number of areas including: improving regulatory supervision in the industry, adaptation of tax treatment to Islamic banking products, establishing liquidity control, introducing risk management tools, supporting standardization of financial products and others.