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 finance.
