The 12th Islamic Development Bank (IDB) Global Forum on Islamic Finance has outlined the role of Islamic finance in providing venture capital and crowd funding to support youth-led innovation-driven businesses in developing countries.
The forum was organized jointly by the Islamic Research and Training Institute (IRTI) and Enterprise Development Department of the IDB Group, in partnership with King Abdullah University of Science and Technology (KAUST), on the sides of the 42nd IDB Group Annual Meeting in Jeddah, Saudi Arabia.
Under the theme, ‘Empowering Youth Entrepreneurship and Access to Islamic Finance’, the forum was convened to come up with solutions and policy actions on the use of alternative finance to power youth entrepreneurship and innovation, and thereby create job opportunities especially in IDB member countries.
In a welcome note, IDB President Dr. Bandar Hajjar said the IDB Group was committed to supporting youth economic empowerment as part of concerted efforts towards achieving the Sustainable Development Goals (SDGs). IRTI Director General, Prof. Mohamed Azmi Omar, said the forum was organized to identify how innovative financing structures could provide funding for youth entrepreneurs.
Experts in technology-driven businesses, development institutions, and venture capital providers spoke during the forum. They noted that capital is the biggest obstacle to starting businesses, and highlighted the potential of Islamic finance to provide the much-needed support to youth-led business ventures.
The forum identified small-to-medium enterprises (SMEs) as the best avenue of creating jobs for the youth, and explained that countries that have recognized the SMEs potential have gone far in this direction.
In addition, the forum identified financial inclusion as a viable way to mobilize unbanked funds to support youth ventures. With two billion unbanked people in the world, harnessing the funds outside of the formal banking system would rake in billions of dollars to power businesses and in turn create jobs.
The forum recommended creating an ecosystem with better technology to make crowd funding more transparent and user-friendly, noting also that digital investing is a viable opportunity for young people in IDB member countries.
The speakers were Riadh Boukhris, CEO Blue MENA, UAE; Benoist Grossmann, Idinvest, France; Stephan Wilmarth, Principal, The Whitney International Project, USA; Craig D. Moore, CEO, Beehive, UAE; Mohamed Hedi Mejai and Jahanzeb Burana of IDB Enterprise Development Department; and Abdulrahman AlJiffry of KAUST.
In the first panel session, the speakers discussed the critical role of venture and private equity in supporting youth-led businesses, while the second session focused on crowd funding to support youth entrepreneurs.
Wilmarth explained the importance of financial technology particularly in boosting SMEs. “There are two billion unbanked people in the world. New distribution mechanisms targeting those unbanked people are important,” he added.
Moore, who emphasized the need to support SMEs, said, “More countries are starting to realize the importance of SMEs…. Therefore, development banks need to distribute their funds in a fair way and crowd funding has those effective and efficient distribution methods.”
The 12th IDB Global Forum on Islamic Finance also featured the presentation of key findings of a joint IDBG/World Bank report titled ‘Islamic Finance: A Catalyst for Shared Prosperity?’, which highlights the potentials of Islamic finance to help reduce income inequality and enhance shared prosperity worldwide.