The Islamic Development Bank (IDB) has allocated $220m to finance a thermal power plant in Assiut as a part of a nearly $705m initiative to fund projects focusing on infrastructure, human development and education in “Muslim communities”, the bank announced in a statement.
Of the $705m, the bank set aside $630m for the infrastructure sector. In addition to funding Egypt’s power plant, the bank allocated $224.4m to reconstruct a road in Azerbaijan and $87.4m to develop water supply and sanitation programmes in West African Economic and Monetary Union countries.
These actions were approved during an IDB board meeting on Sunday in Jeddah, Saudi Arabia, led by the bank’s chairman Ahmed Mohamed Ali.
According to a Tuesday statement from IDB, the bank is also contributing $127,000 to plan a health programme for the Organization of Islamic Cooperation, $200,000 to provide technical assistance to rural development projects in Saudi Arabia, and another $150,000 to develop schools in Mauritania.
IDB recently contributed to a $900m fund earmarked to upgrade power plants in Shabab and West Damietta, along with the European Bank for Reconstruction and Development, the European Investment Bank, the Saudi Fund for Development and the East Delta Electricity Production Company.
The power plant upgrades, which will begin in mid-February, will increase energy production capacity to 2,250 megawatts by switching to a combined cycle system, Minister of Electricity Ahmed Imam said in January.
IDB is a multinational bank located in Saudi Arabia, which owns 26.5% of the bank, making it the largest shareholder, while Egypt owns 9.22% of its shares. Libya, Iran, Turkey, United Arab Emirates, Kuwait, Pakistan, Algeria and Indonesia also own shares in the bank.
A Gallup survey, issued in January, showed that Islamic banking remains unpopular in Egypt, with only 3% of adults using Islamic banking services and only 49% of adults even having heard of the service.
Islamic banking is one of the largest growing financial sectors and accounts for 1% of global financial assets, according to Gallup. It is currently led by Malaysia and Gulf Cooperation Council states.
Islamic banking is different from conventional banking in that it does not use specific interest or fees for loans, or fixed or floating payments. The banks are governed by Sharia law, which many believe bans collecting interest.