Ahmad Muhammad Ali, banker par excellence

By Abdel Aziz Dimapunong

Chancellor, Islamic Banking Research Institute
Founding chairman, Amanah Islamic Bank

Dr. Ahmad Muhammad Ali

There is no doubt, Dr. Ahmad Muhammad Ali, president of the Islamic

Development Bank, is one of the founders of Islamic banking. He certainly
is a banker par excellence. Last year, Dr. Ahmad Ali was a recipient of an award by
the King Faisal Foundation. This award was the International Prize for Service to Islam.
The award was announced by Prince Khalid Al Faisal, director of the King Faisal
Foundation at a ceremony held at the Al-Khozama Center last January 25, 2005. As
winner of the award he received a cash endowment of SR750, 000 (about $200,000), a
certificate outlining his work and a 22-carat gold medallion to commemorate the
occasion. Dr. Ahmad Muhammad Ali was awarded the prize in recognition for his
achievements in the field of Islamic banking. As president of the IDB since its inception
30 years ago, he has consolidated the conformity of banking transactions with Islamic
laws and jurisprudence. As one of the founders of Islamic banking, he has set an example
of success in Islamic banking on an international level.

Islamic Development Bank operates on Islamic principles. This bank was founded in
October 1975 upon the recommendation of the Organization of Islamic Conference and
its members which were then 43 member states. Its initial capital was furnished by the
governments of Saudi Arabia, Kuwait, Bahrain, Pakistan., Bangladesh, Turkey, and
Indonesia. The Bank has financed 387 operations totaling $3.917 billion in 39 member
states, and made a profit of $26 million in 1982-83. Since then, IDB has been making
steady progress. It has also been increasing in membership.

Dr. Ahmad Muhammad Ali was born in 1934 at Madina Al Munawara, one of the two
holy cities of Islami located in the Kingdom of Saudi Arabia. He obtained his B.A.
Commerce degree at the Cairo University, Arab Republic of Egypt in 1957. He obtained
his M.A. at the University of Michigan, USA. He also earned his degree in Public
Administration in the United States of America, in 1962. Thereafter, he earned his Ph.D.
degree in Albany, USA. He pursued further education and obtained also his degree in
Public Administration in the United States of America in 1967

Dr Ali was appointed Deputy Rector of the prestigious King Abdulaziz University in the
Kingdom of Saudi Arabia. He served in this capacity from January 1, 1967 to January 1,

Dr Ahmad Muhammad Ali, banker par excellence By: Abdel Aziz Dimapunong
1972. Then he was elevated to the position of Deputy Minister of Education in the Royal
Government of the Kingdom of Saudi Arabia, a position he held from January 1, 1972 to
January 1, 1975.

Dr. Ali started his first stint as President of the Islamic Development Bank on January 1,
1975 up to January 1, 1993. He was Secretary General of the Muslim World League
based in the Kingdom of Saudi Arabia from January 1, 1993 to January 1, 1995.

Then he made his second stint as President again of the Islamic Development Bank from
January 1, 1995 up until the present.

Dr. Ahmed Mohamed Ali wrote many articles and working papers on Islamic economics,
banking and education. He has an IDB Prize Winners' Lecture Series publication titled
“Role of Islamic Banks in Development."

His memberships to prestigious organizations include the King Saud University Council.
He was a member in 1980. He was also member of the King Abdulaziz University
Council where he was a Rector in 1972. These were in addition to being a member pf the
Council of the King Fahd University of Petroleum and Minerals. He was also member of
the Imam Mohammed Ben Saud University in 1990.

The Islamic Development Bank is a pioneer in the field of Islamic banking. It was
organized as an international financial institution. It is a political institution having been
established in pursuance of the Declaration of Intent issued by the Conference of Finance
Ministers of Muslim Countries that was historically held in Jeddah on December 1973.
The Inaugural Meeting of the Board of Governors took place in July 1975, and the Bank
was formally opened on October 1975.

Up to the end of 1412H (June 1992), the authorized capital of the Bank was two billion
Islamic Dinars. Since Muharram 1413H (July 1992), in accordance with a Resolution of
the Board of Governors, it became six billion Islamic Dinars, divided into 600,000 shares
having a par value of 10,000 Islamic Dinars each. Its subscribed capital also became four
billion Islamic Dinars payable according to specific schedules and in freely convertible
currency acceptable to the Bank. In 1422H, the board of governors at its annual meeting
held in Algeria decided to increase the authorized capital of the Bank form ID six billion
to ID fifteen billion and the subscribed capital from ID 4.1 billion to ID 8.1 billion. (The
value of the Islamic Dinar, which is the accounting unit in the Bank, is equivalent to one
SDR -Special Drawing Right- of the International Monetary Fund).
Head Office and Regional Offices

The Bank's principal office is a landmark in Jeddah, Kingdom of Saudi Arabia. Two
regional offices were opened in 1994; one in Rabat, Morocco, and the other in Kuala
Lumpur, Malaysia. In July 1996, the board of Executive Directors also approved the
establishment of an IDB Representative Office at Almaty, Kazakhstan, to serve as a link
between IDB member countries and Central Asian Republics. The office became

Dr Ahmad Muhammad Ali, banker par excellence By: Abdel Aziz Dimapunong
operational in July 1997 and is now a full-fledged Regional Office. The Bank also has
field representatives in eleven member countries. These are: Indonesia, Iran, Kazakhstan,
Libya, Pakistan, Senegal, Sudan, Gambia, Guinea Bissau, Mauritania and Algeria.

The Bank is authorized to accept deposits and to mobilize financial resources through
Shari’a compatible modes. It is also charged with the responsibility of assisting in the
promotion of foreign trade, especially in capital goods, among member countries.
Furthermore, it provides technical assistance to member countries by way of extending
training facilities for personnel engaged in development activities in Muslim countries to
conform to the requirements Shari’a laws and jurisprudence.

The purpose of the Bank is to foster the economic development and social progress of
member countries and Muslim communities individually as well as jointly in accordance
with Shari’a laws and jurisprudence

The official functions of the Islamic Development Bank include participation in equity
capital and the granting of loans for productive projects and enterprises. It provides
financial assistance to member countries in other forms for economic and social
development. The Bank is also required to establish and operate special funds for specific
purposes including a fund for assistance to Muslim communities in non-member
countries, in addition to setting up trust funds.

As president of IDB, Ahmad Muhammad Ali is well abreast of developments in other

nations, especially in those countries that are seeking for membership in the bank. On
September 2003, Dr. Ahmad Muhammad Ali led the so-called Tashkent Conference in
the Republic of Uzbekistan where he noted and stressed that for the years of
Independence of Uzbekistan, this new republic has achieved acceptable successes in all
branches of economy. “We are glad to see the success of Uzbekistan in the sphere of
industrial development”, he said “Any development of a country serves the improvement
of people’s welfare in the end”, - he added.

Addressing a group of journalist in the Tashkent Conference, Ahmad said “Our bank is
working mainly for the realization of concrete projects. When together with Uzbekistan’s
partners we determine these or those sphere of cooperation, IDB will allot the necessary
sum for the projects realization. Priority direction of our cooperation will be such spheres
as transport communications, the small and medium size business. We are going to take
an active part in the construction of the railway, connecting Uzbekistan with Iranian
ports”.

On that year, the Republic of Uzbekistan became the 55th member of the Islamic
Development Bank. The present membership of the Bank consists of 56 countries. It is
required that the prospective member country should be a member of the Organization of
the Islamic Conference. Every member is also required to pay its contribution to the

Dr Ahmad Muhammad Ali, banker par excellence By: Abdel Aziz Dimapunong
capital of the Bank and be willing to accept such terms and conditions as may be decided
upon by the IDB

Ahmad Ali responds to disasters and natural calamities. On October 8, 2005, the world
has witnessed the earthquake in Pakistan. On October 24, 2005, Ahmad Ali was in
Karachi, Pakistan.

While in Pakistan, the IDB president, along with the Organization of Islamic Conference
Secretary General Ekmeleddin Ihsanoglu, met President Pervez Musharraf where The
Pakistani president called for setting up a permanent disaster relief fund at the OIC level
to deal with natural disasters such as the October 8 earthquake. As president of the
Islamic Development Bank Ahmad Muhammad Ali has responded by saying that the
bank will give $256 million for the rehabilitation of the earthquake-hit areas of Pakistan.
The IDB president said part of the money would be a loan and part of the money would
be a grant.

Presently, Dr. Ahmad Muhammad Ali is still president of the Islamic Development Bank.

“Ahmad Muhammad Ali, banker par excellence”, by Abdel Aziz Dimapunong is part
of a larger book entitled “The world of Islamic banking” by this same author. October
2006. All rights reserved.

Dr Ahmad Muhammad Ali, banker par excellence By: Abdel Aziz Dimapunong