GAVI, UNICEF and UNHCR Leads Mainstreaming of Islamic Social Finance and Philanthropy through Sukuk Issuances and Specialist Funds

Islamic social finance and philanthropy is increasingly going mainstream and cooperating with the World Bank and International Monetary Fund (IMF) and several United Nations (UN) agencies including UNICEF and UNHCR.

The main agency for this cooperation is the Islamic Development Bank (IsDB), which already has an impressive track record of such funding including in cooperation with the International Finance Corporation (IFC), the private sector funding arm of the World Bank Group, as well as the Bill & Melinda Gates Foundation. One particular focus has been funding vaccination and eradication of diseases such as polio and malaria programmes in IsDB member countries.

The latest engagement is the IsDB’s US$50 million investment on 11 April 2019 in a private Murabaha Sukuk issuance by the International Finance Facility for Immunization (IFFIm) promoted by GAVI, The Vaccine Alliance – an international organisation established in 2000 bringing together public and private sectors with the shared goal of creating equal access to new and underused vaccines for children living in the world’s poorest countries. Proceeds will be used to accelerate funding for immunization efforts in 33 Organization of Islamic Cooperation (OIC) member states.

This is the second participation of IsDB in a Sukuk issuance by IFFIm after a similar effort in 2015.

“GAVI’s record of delivery in saving lives through immunization is a perfect fit with the IsDB’s priority to deliver impactful public health investments.  By working in collaborative partnerships such as this, we can accelerate progress towards the UN Sustainable Development Goals (SDGs). That’s why we are very pleased to support IFFIm’s Sukuk and extend our relationship with GAVI,” said Dr. Bandar Hajjar, President of the IsDB in a statement.

Dr Bandar Hajjar, through The President’s 5-Year Programme (P5P), by virtue of the powers of his office, has put partnerships with development institutions like GAVI, at the centre of the Bank’s priorities.

Since its inception in 2000 to the end of 2017, the Vaccine Alliance helped to immunize more than 288 million people in 33 OIC member states.

In another important initiative, the IsDB and UNICEF, the UN’s Children Fund, signed on 3 April 2019 an agreement to launch a Global Muslim Philanthropy Fund for Children at the sidelines of the IsDB’s 44th Annual Meeting of its Board of Governors, which was held in Marrakesh, Morocco.

In a statement, the IsDB stated that “the fund would aim to mobilise Islamic giving, including philanthropic and Zakat resources, towards humanitarian and resilience development programmes that ensure the well-being of children in IsDB member countries.”

IsDB and UNICEF are now developing the fund, alongside key partners and potential supporters, in anticipation of a formal launch during the United Nations General Assembly in September 2019 in New York.

IsDB and UNICEF have a history of collaboration going back to the Bank’s commencement of operations in 1976.  In 2017, the two organisations consolidated this partnership by signing a Strategic Partnership Framework Agreement related to the achievement of the Sustainable Development Goals.

“Leveraging our respective strengths has always been at the heart of our partnership with UNICEF.  Now we are set to take our collaboration to new heights through an innovative and timely mechanism that sits at the nexus of Islamic finance and global humanitarian and resilience efforts,” said IsDB President Dr Bandar Hajjar.

UNICEF Deputy Executive Director Charlotte Petri Gornitzka emphasised that global humanitarian needs are at critical levels and children are especially vulnerable faced with the highest risk of violence, exploitation, disease and neglect. “Establishing a Muslim Philanthropy Fund with IsDB will enable us to provide many more of these children with access to safe water, nutrition, education, health and protection,” she added.

In another potentially game-changing development, the UN launched on 25 April 2019 a new Refugee Zakat Fund in a bid to raise US$208.6 million that its refugee agency (UNHCR) has projected it needs to fund some 154,740 of the most vulnerable displaced families.

The new fund is a result of the restructuring of the UNHCR’s existing Zakat programme that raised US$14.4 million from individuals and institutions from 2016 to 2018. According to the agency, the funds raised directly assisted 6,888 displaced families, primarily Syrian refugees in Jordan and Lebanon.

The fund, stresses UNHCR, is fully Sharia-compliant and backed by fatwas from leading Islamic scholars and institutions, and subject to strict governance, aimed to ensure high levels of transparency.

“It was inevitable for our Zakat programme to evolve into a structure that better appeals to the global Islamic finance industry.  The Fund allows UNHCR to be even more transparent and trusted in how it receives and distributes Zakat funds,” said Houssam Chahine, UNHCR Head of Private Sector Partnerships in the MENA region in a statement.

IsDB’s research on Zakat in 2015 conservatively estimates between US$232 billion and US$560 billion circulating annually. This figure may be under-reported given that millions of dollars of Zakat are given informally and some anonymously.

UNHCR already has an active Zakat Programme which finances refugees whether from Syria, the Rohingya from Myanmar, Afghanistan, the Sahel region of Sub-Saharan Africa. Proceeds from the Zakat giving are used to fund directly refugees in abject need, but also programmes for refugees who aspire to be entrepreneurs and are engaged in such activity at a micro-level even in the camps.

“These aspirations for human dignity under the UN’s SGDs, and ‘to leave no one behind’, whether in basic entrepreneurial facilitation as per the example of our Prophet or through the various funds and initiatives, are all fully in line with the principles and objectives of development from an Islamic perspective (Maqasid Al-Sharia),” stressed IsDB President Dr Hajjar in a recent speech.

UNHCR aims to raise over US$26 million into the fund by the end of 2019.  In its UNHCR Zakat Programme: 2019 Launch Report, the agency estimates current global Zakat giving at US$76 billion, which it says is “far below its potential” of US$356 billion.  A mere 10 per cent of current global Zakat, according to UNHCR could fully address the agency’s 2019 budget.

UNHCR estimates there were 68.5 million forcibly displaced persons in 2017, with refugees increasing from 16 million in 2007 to 25.4 million in 2017.  Of these, 40.8 million of the displaced persons are Muslim.

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