How Islamic finance contributes to achieving the Sustainable Development Goals
This report identifies the opportunities that Islamic finance presents for donors.
To achieve these, Arab and OECD Development Assistance Committee donors need to mobilise
innovative forms of financing and deliver the call to deepen the transformation of
development finance systems. DAC members could do so by broadening and deepening exposure
to alternative forms of financing, such as Islamic finance. Islamic finance represents
USD 2.5 trillion – a share of which could be mobilised for development – and its tenets
resonate across the member countries of the Organisation for Islamic Cooperation and
beyond. Arab donors could harness Islamic finance, as a means to strengthen partnerships
with DAC members, whilst increasing the effectiveness of existing aid flows in countries
and contexts where they have considerable access. Doing so could create a more equitable
and stable development finance order capable of delivering the SDGs and achieve greater
impact in partner countries. Both communities would then be able to chart a path for
all development actors, notably the private sector, development finance institutions
and other bilateral donors. This report provides a set of action points for Arab and
DAC donors, highlighting the benefits of engaging in and co-operating through Islamic
PRESENTATION - Tuesday 1 December 2020 01:30pm – 03.00pm CET
Presentation of the OECD Islamic Finance Report: How can Arab and DAC donors collaborate through Islamic finance tools and concepts?
To achieve the Sustainable Development Goals (SDGs) by 2030, providers of development co-operation need to work together to mobilise financing, provide innovative forms of financing and deliver the UN Secretary-General’s call to deepen the transformation of development finance systems. This call is even more pressing given the current context of the COVID-19 pandemic, which has hurt global economic activity, negatively impacting on households and businesses across developing countries. The current context makes it harder than ever to reach the SDGs, especially in vulnerable and fragile settings.
Against this background, providers need to explore all possible options to mitigate the impact of the outbreak and support developing country economies to recover from the crisis. Islamic finance can play a crucial role in this recovery process. This webinar provided a set of action points for Arab, Muslim-majority and DAC donors to harness Islamic finance for development, highlighting the benefits of engaging in and co-operating through Islamic tools and concepts
What are the areas where Islamic finance can maximise its contribution to development?
Zakat and awqaf (alms-giving and endowments);
Sukuk financing (analogous to a bond); and,
What are the avenues for joint Arab and Muslim-majority development co-operation provider collaboration with the DAC?
Raise awareness on how to use Islamic finance, including that emanating from OECD countries, can be used to promote sustainable development objectives. Doing so could ultimately increase openness towards this mode of financing, as well as encourage the development of expertise in Islamic finance for development.
Pursue a research agenda to understand in which contexts it makes more sense to use Islamic finance, in which other contexts it would make more sense to use so-called conventional finance, and when blending approaches could maximise impact.
Arab, Muslim-majority donors and DAC members could consider developing partnerships around Islamic finance concepts and tools. The COVID-19 context should further encourage both communities to join up forces for securing the progress achieved towards the SDGs.