The Islamic Development Bank (IsDB) is a multilateral development institution established in 1975 to promote economic development and social progress in its 57 member countries in accordance with Sharia principles. Headquartered in Jeddah, Saudi Arabia, the IsDB Group manages approximately $8 billion in private sector and equity-related investments alongside a substantially larger sovereign operations portfolio.
The IsDB Group comprises several entities, including the Islamic Corporation for the Development of the Private Sector (ICD), the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), the International Islamic Trade Finance Corporation (ITFC), and the Islamic Research and Training Institute (IRTI). Together, these entities provide a comprehensive suite of development finance services to member countries.
Investment Strategy
IsDB’s investment strategy uses exclusively Sharia-compliant financing instruments, distinguishing it from conventional multilateral development banks. Rather than interest-bearing loans, the bank uses profit-sharing structures (musharaka and mudaraba), cost-plus financing (murabaha), lease arrangements (ijara), and forward manufacturing contracts (istisna).
Sovereign operations represent the largest portion of IsDB’s activities, financing government projects in infrastructure, health, education, agriculture, and other sectors across member countries. These operations use Islamic finance structures adapted to sovereign lending contexts.
Private sector operations are conducted primarily through ICD, which provides equity investments, lines of financing, and advisory services to private companies and financial institutions. ICD’s focus sectors include financial services, manufacturing, healthcare, agriculture, and infrastructure.
Trade finance through ITFC supports intra-member country trade and integrates smaller economies into global supply chains. The export credit insurance provided by ICIEC reduces po
Frequently Asked Questions
What is the Islamic Development Bank?
The Islamic Development Bank (IsDB) is a multilateral development institution established in 1975 in Jeddah, Saudi Arabia. The bank has 57 member countries spanning the Middle East, Africa, Asia, Europe, and Latin America. IsDB provides Sharia-compliant financing for development projects across its member countries, using Islamic finance instruments including murabaha, ijara, istisna, and equity participation. The bank manages approximately $8 billion in private sector and equity-related investments alongside a larger sovereign portfolio.
How does IsDB invest in the private sector?
IsDB's private sector operations are conducted through the Islamic Corporation for the Development of the Private Sector (ICD), a member of the IsDB Group. ICD provides equity investments, Sharia-compliant financing, and technical assistance to private enterprises in member countries. ICD has committed capital to private equity and venture capital funds, taken direct equity stakes in companies, and provided structured financing using Islamic finance instruments.
What makes IsDB's financing approach unique?
All IsDB financing is Sharia-compliant, meaning it avoids interest-bearing instruments and investments in prohibited sectors. Instead, the bank uses profit-sharing structures (mudaraba, musharaka), cost-plus financing (murabaha), lease-to-own arrangements (ijara), and manufacturing contracts (istisna). This approach has made IsDB a pioneer in Islamic development finance and a key institution for countries seeking Sharia-compliant development funding.
