Islamic social financing initiative aims to help economic recovery, pandemic response

Coming at a time when millions have been pushed into extreme poverty, the International Dialogue on the Role of Islamic Social Financing in Achieving the SDGs has the potential to provide urgently needed support, including for 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 and vehicles to ensure equitable access to vaccines, diagnostics and therapeutics”, Deputy Secretary-General Amina Mohammed said, in her opening statement at the high-level launch event.

Global health in crosshairs

Despite modest progress compared to 2020, the latest UN global economic forecast published on Tuesday, has revealed that surging COVID-19 cases, lagging vaccinations in poorer countries and widening inequalities, have dealt a major setback to the Sustainable Development Goals (SDGs).

Meanwhile, the UN-backed COVAX initiative continues to be the world’s only vaccine equity mechanism, to try and make sure developing countries don’t get left behind.

While COVAX has seen nearly 60 million COVID-19 vaccines shipped to more than 120 participating countries, it still needs $2.8 billion to end the acute phase of the pandemic by year’s end.

Traditional financing

Islamic social financing, which operates on a faith-based principle of inclusivity and in line with the SDGs, remain a critical mechanism in promoting social trust, cooperation and solidarity in fighting poverty and hunger.

This encompasses traditional instruments – including $300 billion in annual obligatory almsgiving or zakat, charitable donations known as sadaqa, and endowments called waqf – as well as microfinancing instruments – such as benevolent loans.

“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 Rola Dashti, Executive Secretary of the UN Economic and Social Commission for Western Asia (ESCWA).

Broad participation

To foster a better understanding of both Islamic social financing and existing UN platforms, the UN Institute for Training and Research (UNITAR) will facilitate the International Dialogue through a series of virtual seminars.

“Launching this dialogue during Ramadan, highlights the importance of helping those in need”, said UN Special Adviser to the Secretary-General Ahmed Al Meraikhi. “Never has it been so important to come together in solidarity to achieve the SDGs and alleviate the impacts of the COVID-19 pandemic”.

Running until November, Islamic social financing institutions, scholars and experts, are likely to join others in the international humanitarian and development system to take part in an extended conversation.

Dialogue outcomes

The Dialogues expect to produce an outcome report on leveraging Islamic social financing for the SDGs; establish a knowledge repository and e-learning modules at UNITAR; and yield concrete recommendations on the way forward – contributing to the Financing for Development in the Era of COVID-19 and Beyond Initiative.

“This partnership between the UN and the Islamic Development Bank will help realize the potential of Islamic social financing to support humanitarian efforts and achieve the SDGs during these challenging times”, said Mahmoud Mohieldin, UN Special Envoy on Financing the 2030 Agenda for Sustainable Development.