The Islamic Organization for Food Security (IOFS) is expecting to launch the IOFS Fund in the fourth quarter of this year with plans to issue local currency agricultural Sukuk, Yerlan Baidaulet, director general of the IOFS, told ISFI.
The organization, which is a specialized institution under the OIC, is also working on the introduction of alternative crops under the Afghanistan Food Security Program (AFSP) as part of the Afghanistan government’s efforts to eradicate the cultivation of poppy crops.
According to Yerlan, the IOFS Fund will mobilize resources for agricultural financing through the issuance of agricultural Sukuk.
“In the future, the IOFS Fund would plan to issue its debut agriculture Sukuk in local and international currencies,” Yerlan told ISFI.
While the timeline for the debut Sukuk is yet to be confirmed, the IOFS has been making efforts toward green and agricultural Sukuk issuances with its recent workshop organized in conjunction with the Ministry of Foreign Affairs of the Republic of Kazakhstan.
Held in late June 2023, the workshop explored Sukuk with fractional ownership of an underlying asset as well as the socioeconomic developmental impact and trend of issuing Sukuk in local currencies.
The Commonwealth of Independent States has notably been making considerable strides in the Islamic capital market space.
On the 15th June this year, the Islamic Corporation for the Development of the Private Sector, which is the IsDB’s private sector arm, printed Kazakhstan’s first-ever Sukuk. The local currency-denominated Sukuk facility was worth KZT2 billion (US$4.48 million).
Kyrgyzstan also saw the issuance of local currency Sukuk with the nation’s first Sukuk facility, which was issued by Intercascade Group in April this year.
The legal advisor for the Intercascade Group Sukuk also confirmed that there are four further Kyrgyz Sukuk facilities in the works.
Advancing the AFSP
In addition to its ongoing efforts to establish the IOFS Fund, the IOFS is looking to expand the AFSP amid the challenging landscape in Afghanistan.
ISFI reported on the 25th July that the IOFS held a meeting with the IsDB for consultations on advancing the AFSP.
According to Yerlan, the lack of recognition of Afghanistan’s de facto government has halted the launch of long-term programs by development institutions including the IsDB and the Asian Development Bank.
Due to the inhibitions on launching long-term programs, the IOFS will focus on piloting food emergency delivery projects and ensuring agricultural sustainability by supplying small machinery and seeds to farmers.
With the Afghan government’s tough crackdown on the illegal cultivation of poppy crops as part of its campaign against illicit drugs, the IOFS is working on promoting the cultivation of economically valuable alternative crops.
“By supporting the adoption of these alternative crops, the IOFS aims to not only address food security concerns but also facilitate economic diversification and sustainable agricultural practices,” Yerlan explained.
The alternative crops include palm dates and saffron, the cultivation of which is being facilitated through targeted initiatives and technical assistance.
The IOFS is also planning a collaborative effort with the Agriculture Research Institute of Afghanistan to develop new drought-tolerant breeds of wheat and barley.