News Icon

IsDB Launches Comprehensive US$2bn Plus Financing Package to Help Combat the Health and Socio-economic Impact of COVID-19 in Member Countries

The Islamic Development Bank (IsDB), the multilateral development bank (MDB) of the OIC countries, has embarked on a comprehensive strategy to help combat the global threat caused by the novel Coronavirus (COVID-19) pandemic.

In March 2020, IsDB Group President Dr Bandar Hajjar issued two statements expressing deep concern “about the loss of lives, the socio-economic disruptions and the strain on countries’ health systems caused by the emerging pandemic. IsDB Group expresses solidarity with our 57 member countries (MCs) and stands ready to extend all possible support to address the threat caused by COVID-19 virus and address the challenge of containing the spread. The global supply chain disruptions, demand compression and macroeconomic instability will have severe economic growth and poverty impacts on the member countries, if not managed appropriately.”

Following the declaration of COVID-19 by the World Health Organization (WHO) on 11 March as a pandemic, Dr Hajjar in a second statement conceded that the “IsDB Group fully recognizes the limited ability and capacity of its member countries to cope with these adverse impacts of COVID-19 and assures them of the Group’s full and unwavering support to get through this tough period.”

The number of IsDB member countries affected by COVID-19 has reached 45 out of 57, with total confirmed cases reaching 27,579 people, 1,691 of whom have died as of 22 March 2020. These figures are set to rise dramatically as many African and Middle Eastern member countries lag up to four weeks behind China, Europe and the US in the transmission cycle.

Micro, small and medium-sized enterprises (MSMEs) are hardest hit in certain IsDB member countries and will deteriorate further. Globally, the world is set to lose 25 million jobs according to many studies, stressed the IsDB, which has already received requests for financial support from more than 20 member countries. In OIC countries, MSMEs have an even greater importance with a rate of 53.2 enterprises per 1000 population, which is more than twice the global rate of 25.2 enterprises per 1000 population.

As such, the IsDB Group has launched a series of initiatives, which cumulatively are all aimed at supporting member countries in lessening the impact of the COVID-19 pandemic on the healthcare systems and economies of its member countries. The basis of these initiatives is the IsDB’s call for joint global action and cooperation. “We will partner with many implementing agencies through the country platforms, including but not limited to: WHO and other UN Agencies, philanthropic and international NGOs, OIC and other regional Agencies, as well as private contractors and suppliers,” explained Dr Hajjar.

The Bank is also engaging key donors and development partners including the Arab Coordination Group to mobilize resources to support the member countries.  Significant number of partners including Asia Infrastructure Investment Bank, OPEC Fund for International Development, Saudi Fund, and Kuwait Fund for Development have expressed interest in joining the Bank’s efforts for responding to the COVID-19 Pandemic.

As the current chair of the Heads of MDBs meetings in 2020, the IsDB President is also using his position to highlight the ongoing joint COVID-19 Response Initiative led by IMF and WB with an anticipated package of US$120 billion.

The IsDB’s own initiatives include:

  1. i) A comprehensive US$2 billion package based on “The 3 Rs” (Respond, Restore, and Restart) principles.

‘Respond’ is aimed at delivering immediate action through South-South and North-South reverse linkage operations focused on strengthening health systems to provide care to the infected; building capacity in production of testing kits and vaccines; and building Pandemic Preparedness capacity, in cooperation with the G20 Global Initiative.

‘Restore’ is aimed at delivering medium-term action through financing for trade and SMEs to sustain activity in core strategic value chains, and to ensure continuity of the necessary supplies mainly to the health and food sectors, and for other essential commodities. 

‘Restart’ is aimed at delivering long-term action to build resilient economies on solid foundations and catalyse private investment by supporting economic recovery and countercyclical spending, with a targeted US$10 billion that aims to unlock US$1 trillion USD worth of investments.

“We will deliver “The 3 Rs package” through a unified country platform, in line with G20 principles. This will ensure coherence and coordination among key stakeholders. To that effect, IsDB will launch a joint global platform in May 2020 to track delivery among all the country platforms and to mobilize resources. We will make this available to partner MDBs,” confirmed Dr Hajjar.

  1. ii) The establishment of a special US$730 million Strategic Preparedness and Response Facility (SPRF) to mitigate the negative health and socio-economic impact of the COVID-19 pandemic. The SPRF facility includes US$280 million from the IsDB and its Islamic Solidarity Fund for Development to finance COVID-related sovereign projects and programmes; US$300 million from the International Islamic Trade finance Corporation (ITFC), the trade fund of the IsDB Group, to finance strategic trade of member countries; and US$150 million from the Islamic Corporation for the Insurance of Investment & Export Credit (ICIEC), the export credit agency (ECA) of the IsDB Group to cover strategic exports, imports and investments through direct insurance and reinsurance cover.

“The facility will extend financing to both the public and private sector in minimizing the spread and impact of the pandemic in IsDB member countries and to build their resilience. Financing will be extended in the form of grants, concessional resources, trade finance, private sector lending and political and risk insurance coverage. The IsDB Group will deploy all the available financing instruments to channel the funds in a fast track manner to support its member countries,” explained Dr Hajjar.

According to the IsDB the SPRF funding will target interventions that focus on emergency preparedness and response to curb and contain the spread of the COVID-19, minimize socio-economic impact of the pandemic especially on the poor, and to build resilience of member countries in responding to outbreaks and pandemics. The facility will support strengthening of the health systems, funding of national epidemic preparedness and response plans, community awareness and education, disease surveillance, data collection and analysis, sustained provision of essential social services, provision of social safety nets, and support private sector activity.

iii) The IsDB Group is also investing in R&D and providing technical assistance support for development of innovative solutions for preventing and containing the pandemic under its Science, Technology and Innovation Programme; and will use its Reverse Linkage programme facility to share lessons, best practices and technical expertise from other member countries in addressing the response and management of the COVID-19.

In this respect, The IsDB at end March also issued a Call for Innovation under its US$500 million Transform Fund, launched in 2018, whereby the Bank will financially support ideas that help curb the spread of COVID-19, minimise the socio-economic impact of the pandemic and build the resilience of the Bank’s member countries in responding to outbreaks and pandemics long-term.

“One of the many issues this pandemic has shown us,” explained Dr Hajjar, “is that survival depends on heavily on investment in science, technology and innovation. We encourage entrants that have innovations with a focus on advanced technology, innovative health supply chain management, low cost rapid tests and capacity building innovations. We have identified these key categories for innovation as the building blocks for preparedness and response in tackling present and future outbreaks and pandemics.”

Open from 1 April 2020, the call for innovation will identify, encourage and reward innovative proposals that will benefit local communities focused on: a) the application of advanced technology, such as IoT, Big Data, Blockchain and Artificial Intelligence to track and monitor the spread of COVID-19 and other emerging Infectious diseases for improved diseases surveillance systems and patient care; b) the development of innovative health supply chain management systems, powerful search engine of medical supplies, new Biosafety Laboratory Level-3 Design technology and biocontainment; c) the development of low-cost rapid tests and screening methods, such as Point-of-Care rapid tests, molecular tests and diagnostic test quality, for early detection, diagnostic, treatment and prevention solutions including vaccine production for COVID-19; and d) capacity building interventions targeted at improving operational capacities of health care providers in the field epidemiology and infection control management of highly pathogenic cases, such as training, deployment of software applications, awareness campaigns, service delivery or research centres.

The Fund will look for applications specifically linked to tackling COVID-19 in relation to the following six UN Sustainable Development Goals (SDGs): SDG2: Zero Hunger; SDG3: Good Health and Well-Being; SDG4: Quality Education; SDG6: Clean Water and Sanitation; SDG7: Affordable and Clean Energy; and SDG9: Industry Innovation and Infrastructure.

The Call of Innovation documents and terms and conditions can be found at: https://www.isdb-engage.org/en/challenge/call-for-innovation-via-transform-fund-2020   The submission for application is open from 1 April to 1 June 2020. 

  1. iv) A key target group of the US$2 billion COVID-19 package is the MSMEs sector, which according to the IsDB “will experience the greatest loss and is now in the eye of the storm.” In fact, the Bank has allocated US$500 million of the US$2 billion package to the MSME sector.

The aim is to provide MSMEs part of the necessary liquidity with preferential modes for member countries through their financial sectors. It is expected to be supported by a lending guaranty programme and capacity building grants for member countries in the preparation of support programmes and incentive packages for such enterprises. This has been designed in order to save direct and indirect jobs, energise economic activity, and help regain the growth pace to overcome the current crisis and its potential future consequences.

The programme, says Dr Hajjar, is expected to contribute to saving more than 200,000 direct jobs in addition to indirect jobs. With this the Bank will contribute to saving nearly 5% of at-risk jobs globally and a higher percentage in the OIC countries.

Dr Hajjar also believes that the COVID-19 pandemic “is an opportunity to shift towards actively shaping and creating markets that deliver sustainable and inclusive growth, rather than continue limiting our role at the government and international community level to reacting to market failures. We can proactively invest in creating and strengthening institutions that prevent crisis. We can coordinate scientific and technological responses, and R&D activities steering them towards public good. We can forge Public-Private-Philanthropic-People-Partnerships to ensure both citizens and economies are going to benefit.” 

Share this post

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email