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In order to mitigate the disruptive effects on their member countries in a post-Covid scenario, multilateral development banks (MDBs) must either innovate or stagnate. This is especially true for their operations and funding sources. Given the havoc the pandemic has inflicted on its member countries, the 57-member Jeddah-based Islamic Development Bank (IsDB) is excellent at inventing.
The IsDB, the second-largest MDB in terms of capital after the World Bank and unusual in that its activities adhere to Islamic financial principles, is focusing on food security and agriculture, as well as climate-related disruption in its 27 African member countries. Agriculture is the primary industry in IsDB member nations, accounting for $650 billion in yearly GDP.
Dr. Bandar Hajjar, President of the IsDB, announced that the bank is spending $3.5 billion in Africa’s agriculture sector during a recent virtual meeting with 13 African heads of government. The goal is to build commodity value chains for both staple foods and cash crops, as well as to increase technical quality and competitiveness, and to connect local business models to global value chains.
“For our member countries to be ready for future challenges, our new business model concentrates on leveraging global value chains. It analyses the most competitive industries, identifies strategic investment opportunities, and builds resilient value chains to unlock their full potential,” he stated.
This involves improving water use efficiency and productivity through low-cost low-tech innovations, generating climate-resilient high-yield plants with improved nutrition that reduce operating expenses, and improving commercial farming.