islamic finance

Islamic social financing to support efforts to recover and rebuild from COVID-19 pandemic

May 16, 2021

(TAP) - The United Nations and the Islamic Development Bank (IsDB) launched on Tuesday an initiative to assist finance efforts to recover better as the world continues to grapple with the COVID-19 pandemic.

'Coming at a time when the global health and economic crisis have pushed millions of people into extreme poverty, Islamic social financing has the potential to provide urgently needed support for poverty alleviation, economic recovery, pandemic response, and sustainable development,' the IsDB said.

The initiative will include the International Dialogue on the Role of Islamic Social Financing in Achieving the SDGs, which will launch critical discussions including with global leaders and Islamic institutions on the role of Islamic social financing.

'As the world comes to terms with the evident fragility of our socioeconomic systems, especially during the current pandemic, the tools of Islamic social financing provide an opportunity to usher in much needed resilience,» said Mr. Bandar Hajjar, the President of the Islamic Development Bank Group, 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 grass-roots, 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.

According to the latest United Nations economic forecast, 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.

«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 Ms. Rola Dashti, the Executive Secretary of the UN Economic and Social Commission for Western Asia.

«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 longer-term poverty eradication.

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