Islamic Finance 

INTERVIEW-A lot of overlap, acceptance of SDGs within Islamic economy: UNDP Senior Advisor

| 19 November, 2018 | Interview
INTERVIEW-A lot of overlap, acceptance of SDGs within Islamic economy: UNDP Senior Advisor
Photo: United Nations Secretary-General Ban Ki-Moon addresses the Annual Conference of Swiss Developement Cooperation in Zurich, Switzerland January 22, 2016. On the screen behind are displayed the 17<span class="highlight" data-qa-component="highlight-text"> goals </span>of UN's 2030 Agenda for<span class="highlight" data-qa-component="highlight-text"> Sustainable </span><span class="highlight" data-qa-component="highlight-text">Development</span>. REUTERS/Arnd Wiegmann

How does the United Nations Development Programme (UNDP) work with the global Islamic finance sector to achieve the Sustainable Development Goals (SDGs)? Aamir Rehman, UNDP Senior Advisor, says there is a lot of overlap and acceptance of the SDGs within the Islamic finance and Islamic economy community.

Listen to our interview, or if you can't access audio, the full transcript is provided below.

 

INTERVIEW TRANSCRIPT:

Emmy Abdul Alim (EAA): Thank you for listening to Salaam Gateway. You’re listening to our interviews with Islamic economy people from the Global Islamic Economy Summit that was on October 30 and 31 in Dubai.

Salaam, Aamir!

Aamir Rehman (AR): Wa-alaikum assalaam wa rahmatullahi.

EAA: Thank you for joining us today on Salaam Gateway.

AR: Thank you, it’s my pleasure to be with you and me.

EAA: And you too! It’s great to see you here in Dubai for the Global Islamic Economy Summit. You were previously based in Dubai, if I am not wrong?

AR: Indeed. I have been based in Dubai for quite… for about 6 years.

EAA: With Fajr Capital?

AR: With Fajr Capital.

EAA: And are you still working with Fajr Capital?

AR: I am a shareholder of Fajr Capital. I serve on the Board of a couple of Fajr entities. And I’m very much involved still at the governance level and shareholder level with Fajr, as well as my current role with the United Nations Development Programme and a few other activities around Islamic finance.

EAA: Tell us a little bit about what you do with the UNDP.

AR: So, with UNDP, we are working on engaging with Islamic finance and the Islamic economy more broadly, on aligning its activities with the Sustainable Development Goals. And the United Nations Development Programme is very much focused on sustainable development and particularly the financing of sustainable development and we at the United Nations, more broadly and specifically at the UNDP, have seen that Islamic finance can play a very important role in supporting the Sustainable Development Goals. So I have been asked to advise the organisation on how we can engage with this vital sector that has a lot of alignment with the sustainable development.

EAA: How specifically does the UNDP work with the Islamic finance sector and with you in particular? I mean, could you give us some concrete examples?

AR: Sure, we have three ways in which we engage in Islamic finance. The first is what we call harnessing, which is when we work directly with Islamic finance stakeholders and help them achieve the sustainable development impact that they are trying to have.

So, in particular, I will give you two examples of relationships we have. One is a very long-standing one with the Islamic Development Bank, by which the Islamic Development Bank provides grant funding to projects which are implemented by the United Nations Development Programme. We’ve been doing that for well over a decade with the IDB Group. And one example is in Palestine where there is a microfinance programme, which is financed not only by the IDB but also by a number of partners that you may not automatically think of when you think of Islamic finance. So we—

EAA: For example?

AR: The Government of Japan is one. The Government of New Zealand is another. Also, a handful of European governments and entities are also funders of that, alongside the Islamic Development Bank. And we as UNDP implement that project.

It is for Islamic microfinance, so it’s providing microfinance to entrepreneurs in Palestine and it’s structured in a way that conforms with Islamic requirements. So that’s one.

Another one which is more recent that we are very excited about with is the partnership with BAZNAS Indonesia. So BAZNAS is the national zakat collection agency in Indonesia and they have begun giving grants to UNDP and those grants are funded on their side by zakat money.

From our perspective, we do not opine on zakat or on any matters of Islamic law, but what we do is accept the grants and implement the projects in line with the requirements of the donor.

And of course those requirements conform and always do conform to the UN Charter and the UNDP policies.

So, we are taking grants from BAZNAS and implementing projects in Indonesia and helping them achieve the sustainable development impacts that they would like to have on behalf of their zakat donors. So that’s on the harnessing side.

In addition to that, the other two areas include catalysing or aligning, which is the second category.

And the third is convening.

Let me state now on the second, which is aligning. One of the key thrusts of UNDP more broadly is helping financial flows that might already be taking place or that are envisioned to take place, be better aligned with the Sustainable Development Goals. And we recently announced a very exciting partnership with Al Baraka.

EAA: The banking group based in Bahrain?

AR: Correct. It’s based in Bahrain, it’s active in 16 countries and our partnership with Al Baraka is to align more than $600 million of their banking portfolio, of their loan portfolio, you might say, with specific SDGs.

So this was a partnership that was built through a lot of discussion and collaboration between our Bahrain office and Al Baraka Group and their various subsidiaries around the world.

And we’re very pleased with this partnership for a number of reasons. One is that it is very much in the core business of Al Baraka to be providing these financings.

So we are helping a stakeholder in the private sector and in the Islamic finance space, in this case, align their activities that they would otherwise be doing, with sustainable development.

So this is very much aligning sustainable development into the core business.  So we are excited about that. That’s one.

EAA: Baraka is very well-known in the Islamic finance space for its CSR activities. And it is one of the first, I remember, to come up with a whole CSR report. So are you taking what they have already been doing and then aligning that with SDGs?

AR: Well, you know, they have been a pioneer and it’s not surprising that they would then take the step to enter the partnership with us. And indeed they had been working for a long time on something called the Al Baraka Goals.

So indeed, as you said, they’ve been aware of CSR, corporate social responsibility, for a long time.

Now, they took the step forward in partnership with our office in Bahrain, the UNDP office and the United Nations more broadly, to align those goals with the SDGs, recognising that the SDGs have become a global framework. It’s something that’s recognised around the world and so, very much the spirit of CSR that has been part of Al Baraka has now been translated, if you will, through the SDGs to a global audience.

And we are very happy to be part of that journey with them. And the scale of it for us is important. So we are pleased that it is more than $600 million of financing. So that is quite a significant sum by any standards for SDG alignment.

And also, we like the fact that Al Baraka has a footprint that crosses across regions. It’s in the Middle East, it’s in North Africa, it’s in Sub-Saharan Africa, it’s of course also in Asia and in Turkey as well. So for us, that crosses a number of our regions and it shows the global relevance of sustainable development and also how stakeholders in the Islamic economy can be involved in supporting the financing of the SDGs.

EAA: So the third one you say is convening?

AR: Convening. So we, for the past four years, have been hosting an event at the United Nations General Assembly on Islamic finance.

And for many in the development community, this is their first exposure to Islamic finance and how it can be applied for sustainable development and for development more broadly.

So we’ve been doing this on a continuous basis at the United Nations and plan to continue doing so.

We also work with our partners in the development community, including the World Bank, the Islamic Development Bank, and others, to participate in discussions around Islamic finance.

Recently we’ve been speaking fairly frequently about awqaf or Islamic endowments and how they align with the Sustainable Development Goals and that has been happening most recently at the World Bank IMF annual meetings in Bali, where we were present and speaking about this topic, as well as sukuk, where one of the examples of aligning is work that we’ve done with sukuk, particularly the government of Indonesia, which has issued a green sukuk, for which we are the advisor on the green aspects of it, along with the World Bank.

And so we’re helping them think through the environmental sustainability components of that green sukuk. So we spoke about that.

So we’re organising convenings, we are participating in meetings around Islamic finance. The intent there is really to show the potential for the SDGs and the Islamic economy to be aligned and to encourage more SDG financing.

Ultimately, our objective as UNDP is to promote financing of sustainable development and we see that the stakeholders in this particular community are very much geared and oriented in that direction.

EAA: You’re probably the best person to ask this question, Aamir. You know a lot about the SDGs, there are 17 of course, from number 1, no poverty, to number 17, partnerships and collaborations. You’re also very familiar with Islamic finance and the Islamic economy. We talk a lot about the Islamic economy being aligned with the SDGs. Can we talk about things the other way? How about… are there certain things within the Islamic economy that are not included or are extra to the SDGs that we should be aware of? And is there any effort to sort of highlight this or further discuss this?

AR: Well, you know, the SDGs were formed through a very iterative process. And they were preceded by the Millennium Development Goals. And certainly, in the development community, we speak a lot about how there was learning from the Millennium Development Goals and the SDGs are an enhancement, to be more inclusive, to be more comprehensive, and to apply not only to less developed countries but also middle-income countries and even what we’d call developed economies.

From an Islamic finance perspective, the Islamic Development Bank and others, but particularly the Islamic Development Bank, have written quite extensively on the SDGs and how they see them conforming with the principles and ideals of Islamic finance.

So I think that, in general, there certainly is a lot of overlap and acceptance of the SDGs within the Islamic finance and Islamic economy community.

And so, I would say, while I’m sure there could be adaptations and additions that people may wish to add from an Islamic finance perspective or an Islamic economy perspective, the SDGs are quite comprehensive and they cover a lot of areas.

So I do think that part of the strength of the SDGs has been that it has been applied and accepted across faith groups, across regions, across stages of development. So, I believe it’s quite a compelling framework and it works for both Islamic finance and of course, for the development community.

EAA: If you could maybe just educate me on this matter: when the UN measures how countries achieve certain SDGs and certain levels, they do that at a country level, is that right?

AR: So we do work with countries on SDG assessments when invited to do so by countries. And the United Nations is a collection of the world’s governments, so yes, most of our work takes place at the country level. And certain countries have SDG plans, or their National Development Plans are linked to the SDGs. So our resident coordinators and our offices in those countries will work on those plans with those countries when invited to do so. So yes, we do work at the country level.

EAA: How does that assessment trickle down to private sector companies? Do you also help with that?

AR: We very much do. And our work with Al Baraka is an example of that.

And it’s a big growth area for UNDP, is working with the private sector and engaging with them.

One of them is the example I gave, where we’re working with a banking group to align their activities with the SDGs.

Another very important platform that we have in UNDP in partnership with the Islamic Development Bank is something called GIFIIP – the Global Islamic Finance and Impact Investing Platform.

And that, as the name suggests, is a platform which seeks to bring together the impact investing community and the Islamic investing community and show the alignment, the underlying values being similar, the screens being similar, the outcomes being similar, and also creating familiarity, because these are two communities that don’t necessarily interact that much, the global impact investing community and the Islamic finance community.

So, we are, through this platform, working to build those bridges. So we work with governments, as you asked before, but in the private sector, we also work with companies and with institutions on helping them achieve their SDG outcomes, both identifying what SDGs they want to serve and how they’ll do so, and then measuring that impact with them. And we believe that that is increasingly important as we address the funding gaps for sustainable development.

EAA: So from where you sit at the UN, you have a huge global overview. Are you happy with the way that Islamic finance and the Islamic economy have been moving with regards to alignment with the SDGs?

AR: I am very encouraged by what I see. I see that when we have conversations in the Islamic finance and the Islamic economy sector, there is a great deal of receptiveness, there is a great deal of openness and enthusiasm.

And Islamic economy has a language and a perspective around social impact and values and sustainability which is very refreshing for us to see. And it stands out amongst the business community that this is a group of companies, individuals and stakeholders who are very deliberate about their values and very deliberate about their impact.

So it is very encouraging. I’ve been quite pleased to see the work… it has been about a year now since we formally started this particular initiative at the corporate level of UNDP to engage with Islamic finance and the Islamic economy more broadly, and I’m very encouraged by what I have seen so far.

EAA: So it’s only been quite a short time, it’s only been a year. Do you have a timeline and deadlines as to what you want to achieve and when you want to achieve them?

AR: So we’re working at the corporate level to develop an action plan around Islamic finance which should be completed… the plan will be completed in the early part of next year and that would be for us to set our global targets and priorities around this space.

But certainly, we’ve been active for quite a long time.  You know, our relationship with the Islamic Development Bank dates back to the formation of the bank, which was 1975, and our country offices have been doing a lot of work around Islamic finance.

In fact, part of the work we did at the corporate level when we began this exercise was to do a landscape analysis of what UNDP has already been doing around Islamic finance and we were pleased to find no fewer than 19 different projects at different stages of development.

So, certainly, we’ve been engaged with Islamic finance in different ways and the strategy process is about creating a centralised approach to engaging with this very vital, dynamic community which can do a lot for the Sustainable Development Goals.

EAA: So we can expect that to come out in the first quarter of 2019?

AR: We’ll be working on it internally and I expect you will be hearing more from us in 2019 about our objectives and the precise timing will of course depend on our internal processes and our communication approach, but certainly we intend to be visible around Islamic economy and Islamic finance and we intend to do our part in helping with the alignment towards sustainable development.

EAA: We look forward to that and we’ll catch up when that happens.

AR: Thank you so much, Emmy. Appreciate the chance to speak with you.

EAA: Thank you Aamir.  

(Interview by Emmy Abdul Alim emmy.alim@refinitiv.com)

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