How does it operate?

The platform enables operations at all levels: industry sector, local community, individual members, making investments and providing financing.

Sector

The Kazakh State is typically the largest stakeholder an industry sector. In agriculture for example, the State acts as regulator, policymaker, landowner, and the main financier. It is also the owner of a network of state agencies and quasi-commercial enterprises institutions involved in the sector. State and private sector investment to be directed to local communities to enable sector growth.

Community

Whilst Kazakhstan is blessed with abundant natural resources, many rural communities are excluded from this prosperity. The private sector is small-scale, consisting of local cooperatives and individual farmers. Lack of capital investment and access to affordable credit constrains the ability of farmers to modernise, diversify and innovate. Each community is served by an Islamic Investment and Finance Cooperative.

Members

Each community is served by an Islamic Investment and Finance Cooperative (IIFC). Anyone working in the sector, their family, local cooperatives, or small businesses can become a member of the IIFC. Oganisations providing State and private sector investment are also members of the IIFC. This model enables local decision so the funding is put to best use based on local knowledge. There is also clear visibility of where the funding has been directed and how loans are performing

Investments and Financing

Any member can invest in the IIFC. This includes local individuals and businesses as well as strategic State and private sector investors. These investments provide the funding for the IIFC to provide farmers, small and medium enterprises with Islamic compliant finance (ICF) the need to help them develop their business. Profits from the IFCs are shared amongst members as dividends.

How it operates example for the Agriculture Sector

The State is the main source of the investment to enable sector growth. Sector investment opportunities vary by region and local community: Crops and diary production in Kyzylorda; Poultry and soy bean production in Zhambyl; Beef and Diary production in East Kazakhstan.

The IIFC objective is to meet the financing needs of its local community. Membership of the IIFC is open to anyone that is eligible. For the agricultural sector, this may include local farmers and their families, businesses operating in the sector, as well as the state agencies participating in the sector.

This IIFC model enables local decision making. It is a member owned and run organisation. All members are stakeholders in the IIFC as they are all members and there is clear transparency and visibility for all.

When an individual or an organisation becomes a member and joins the IIFC they get a membership share. They can also get savings shares. Grants and other State and private sector funding can also be distributed through the IIFC.

This provides the funding for the IIFC for farmers, small and medium enterprises seeking Islamic compliant finance (ICF). For example a group of farmers who are member of the IIFC may wish to finance the investments needed for machinery for wheat production in Kostanay. In Almaty there may be a need for investments to increase the quality animal feed.

The IIFC makes profits from financing these investments. As it is a member owned cooperative and the profits made are shared amongst the IIFC membership in the form of a dividend.