Islamic social financing to aid efforts to rebuild post-pandemic

The United Nations (UN) and the Islamic Development Bank yesterday launched an initiative to assist in financial efforts to recover better in view of the global health and economic crisis that have pushed millions of people into extreme poverty.

The International Dialogue on the role of Islamic social financing in achieving the Sustainable Development Goals will support unlocking the potential of Islamic social financing to provide urgently needed support for poverty alleviation, economic recovery, pandemic response, and sustainable development.

“Standing in solidarity with those in need means exploring how Islamic social financing can support the pandemic response through the ACT-Accelerator and its Covax Facility, as well as other initiatives to ensure equitable access to vaccines, diagnostics and therapeutics,” said Deputy Secretary-General of the United Nations Amina Mohamed in her opening statement at the event.

“As the world comes to terms with the evident fragility of our socio-economic systems, especially during the current pandemic, the tools of Islamic social financing provide an opportunity to usher in much needed resilience,” said President of the Islamic Development Bank Group Bandar Hajjar, highlighting the significance of the International Dialogue on the role of Islamic social financing.

“I am confident that Zakat, Sadaqa, Waqf and Islamic microfinance can help bring a grassroots, inclusive and more resilient approach to development, and I look forward to working with our partners at the United Nations to mainstream these tools to meet pressing needs and achieve the SDGs,” he added.

Furthermore, Hajjar confirmed the bank’s full alignment with the importance of leveraging social financing to mitigate the impact of the raging pandemic, including production of Covid-19 vaccines to attend to developing and least developed countries. “As we seek to overcome financial constraints, funding shortfalls and financing inequalities, we believe that Islamic social financing, itself built on the principles of fairness and justice, can open pathways to stimulate economic activity and promote social welfare, financial inclusion and shared prosperity,” said Executive Secretary of the UN Economic and Social Commission for Western Asia (ESCWA) Rola Dashti.

“Using the modern tools of the Fourth Industrial Revolution, including blockchain, fintech and artificial intelligence, we can better manage Zakat, Awqaf and Islamic microfinance,” she added, calling for the International Dialogue to explore the possibility of establishing a regional Zakat, Waqf and Sadaqa fund to support instant emergency relief for the most vulnerable and for longerterm poverty eradication.

HE the Special Adviser to the UN Secretary-General Dr Ahmed bin Mohamed alMuraikhi said: “Launching this Dialogue during Ramadan highlights the importance of helping those in need. Never has it been so important to come together in solidarity to achieve the SDGs and alleviate the impact of the Covid-9 pandemic.”

“This partnership between the UN and the Islamic Development Bank will help realise the potential of Islamic social financing to support humanitarian efforts and achieve the

SDGs during these challenging times,” reiterated UN Secretary-General’s Special Envoy on Financing the 2030 Agenda for Sustainable Development Mahmoud Mohieldin.

The International Dialogue will include a series of virtual seminars that will continue until next November, hosted by the United Nations Institute for Training and Research with the support of Qatar.

The seminars will bring together Islamic social finance institutions, scholars, experts, international humanitarian and development systems and other stakeholders to deepen understanding of Islamic social finance and introduce current UN platforms and initiatives.

Expected outcomes of the International Dialogue also include a report on leveraging Islamic social financing to achieve the SDGs; the establishment of a knowledge repository and e-learning modules on the subject at UNITAR; and a roadmap with concrete recommendations on the way forward, contributing to the Financing for Development in the Era of Covid-19 and Beyond Initiative.

According to the latest United Nations economic forecast launched yesterday, economic recovery, despite indicating modest progress compared to 2020, remains under threat amid surging Covid-19 cases and lagging vaccination in poorer countries, widening inequalities and setting back further progress on the Sustainable Development Goals (SDGs) the global blueprint for ensuring a better future for all by 2030.

The world’s only vaccine equity mechanism, Covax, led by the World Health Organisation (WHO), GAVI and the Coalition for Epidemic Preparedness Innovations (CEPI), in partnership with the United Nations Childrens Fund (Unicef), has so far shipped nearly 60mn Covid-19 vaccines to more than 120 participating countries, in an unprecedented global vaccine rollout in history.

Covax still needs $2.8bn to meet its goal of ending the acute phase of the pandemic by year-end. Using traditional instruments such as Zakat (obligatory almsgiving amounting to about $300bn annually), Sadaqa (charitable giving) and Waqf (endowments and trusts), as well as microfinance instruments such as Qard Hassan (benevolent loans), Islamic social financing remains a critical financing mechanism, based on the values of faith and inclusivity, in line with goals of the SDGs to promote social trust, co-operation and solidarity in the fight against poverty and hunger.