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Statement of H.E Mohammad Ismail Rahimi the Deputy Minister of Policy & Technical Affairs, Ministry of Economy Islamic Republic of Afghanistan in the 32nd COMCEC Ministerial Meeting, Istanbul-Turkey in 21-24 November 2016.
H.E. Lutfi ELVAN, Minister of Development of the Republic of Turkey,
Honorable Ministers and Head of Delegations
Distinguished Ladies and Gentlemen!
Allow me to express my utmost delight to participate at the 32 Session of the Standing Committee for Economic and Commercial Cooperation of the organization of the Islamic Cooperation (COMCEC). I also extend my sincere gratitude to his Excellency Recep Tayyip ERDOGAN, President of the Republic of Turkey and Chairman of COMCEC and the government of Republic of Turkey for the consistent support which has always been given in respect of the activities of COMCEC over the years.
With the creation of Organization of Islamic Cooperation (OIC) in September 1969 considerable efforts has been made by the member states to established, promote and consolidate the economic and commercial cooperation among the Islamic Umah. COMCEC as it serves as a central forum to address our common development problems is a successful Economic and commercial platform that produced timely policy recommendation and guidelines to our shared challenges. However, despite significant progress we are still lagging behind in terms of realization of our existence potentials as clearly highlighted in the recent SESRICs annual economic report “transforming the potentials into impact”. There is still exist significant barriers to intra- OIC trade and investment which needs to be addressed. While OIC member countries makes 21.7 percent of the world population yet the total proportion of trade in the global market is only 10.4 percent more concentrated in limited goods and services.
Among the other potential areas to be utilized, developing sustainable Islamic finance offers significant benefits for economic growth, reducing poverty and fostering shared prosperity. Islamic finance which is the main theme of our 32 COMCEC session can significantly contribute to economic development, given its direct link to physical assets and the real economy. The Islamic finance industry has expanded rapidly over the past decade, growing at 10-12% annually.
Although Islamic finance assets grow at double-digit rates during the past decade from USD 200 billion in 2003 to an estimated US 1.8 Trillion at the end of 2013. However, despite its growing, Islamic finance assets are still concentrated in the few number of countries.
According to International monetary fund observation assessing monetary policy effectiveness in the presence of Islamic banking is complex, as it requires examining it through multiple and sometimes conflicting dimensions. These include: the fundamental Islamic principles of ex-ante interest payment prohibition and profit-and-risk sharing; the spillovers from the conventional segment to the Islamic segment of the financial system; and the monetary policy framework and instruments in place. As in conventional systems, monetary policy in the presence of Islamic banking needs to adequately address structural excess liquidity, financial system shallowness, and fiscal dominance issues. Dominant public sectors, direct monetary financing of fiscal deficits, or distorted credit environments also limit the scope of monetary policy transmission through Islamic banks.
Meanwhile based on World Bank studies, Of the 1.6 billion Muslims in the world, only 14% use banks. By expanding the range and reach of financial products, Islamic finance could help improve financial access and foster the inclusion of those deprived of financial services. Islamic finance emphasizes partnership-style financing, which could be useful in improving access to finance for the poor and small businesses.
The banking sectors have played a vital role in Afghanistan’s economic development in the past one-half decade. Though currently there is no full-pledge Islamic bank in Afghanistan, However, all the conventional banks have been providing Islamic Banking services. The Islamic financing practices has been started since 2009 and offer liability products under Mudarabah, Musharakah, Qard Hassan and Wadiah.
Afghanistan has a new banking law approved by the parliament recently, which includes a specific section on the Islamic banking services, this will help to draw hundreds of thousands of people into this sector and will eventually attract more capital and increase access to finance for the public and small businesses.
In Conclusion on behalf of the Government of Islamic Republic of Afghanistan We welcome the resolution of the thirty-second session of the COMCEC and I would like to congratulate the COMCEC coordination office, COMCEC working Groups, SESRIC, ICDT, IDB group, ICCIA, SMIIC, OISA for all their efforts and playing their important role for successful convening of the session.
Thanks for Your Kind Attention