Islamic Finance 

OPINION-Strategic Compassion: The power of Islamic finance in the service of global good

| 22 April, 2019 | General
 HRH Princess Sarah Zeid and Amir M. Abdulla
OPINION-Strategic Compassion: The power of Islamic finance in the service of global good
Photo: A displaced Somali woman sits with a box of food distributed by the Turkish Red crescent in a camp in Mogadishu, Somalia May 23, 2017. REUTERS/Feisal Omar. In 2018 the International Federation of the Red Cross and Red Crescent Societies pioneered and co-designed a zakat-financing instrument with a Malaysia zakat authority to support Kenya’s Drought Assistance Programme, chanelling $1.2 million to farmers in Kenya.
This opinion piece is co-authored by HRH Princess Sarah Zeid, Global Advocate for Maternal, Child and Newborn Health in Humanitarian Settings, and Amir M. Abdulla, Deputy Executive Director of the World Food Programme.

The rich culture of altruism in Islam emphasizes giving to those most in need. Today, nowhere is this generosity more strategically needed than in the countries where the religion is most widely practiced.

Eight countries alone concentrate nearly two-thirds of the 113 million people facing acute hunger. Of those, five are member states of the Organization of Islamic Cooperation (OIC). By the same token, most of the world’s 25 million refugees are hosted by Muslim-majority nations.

Take Bangladesh, which hosts the largest refugee camp in the world. In August 2017, Rohingya Muslims, violently driven out of Myanmar, joined their co-religionists already exiled in and around the city of Cox’s Bazar. More than 900,000 Rohingya now live in this deeply impoverished area of southern Bangladesh. The overwhelming majority depend on the World Food Programme to survive.

Conflict, migration and other political challenges have saddled Muslim-majority countries with high maternal, stillbirth, newborn and child mortality rates – higher than both the global average and the non-Muslim average.

Why does all this matter?

It matters because behind every statistic, there are mothers, young people, children and newborn babies.

It matters because behind every headline there are tens of thousands of broken families in flight. And that is when they still make the headlines: all too often, they become invisible. Our “hardest to reach” women, newborn, children and adolescents are melting into urban settings that are already overburdened, often living without status or access to services, and unwanted by host communities themselves stretched to the limit.

When pregnant and breastfeeding women are malnourished, the repercussions can be irreversible for future generations. Adequate nutrition during the first 1,000 days, from conception to a child’s second birthday, is decisive for brain development, healthy growth, and a strong immune system. Without it, impaired neurological and physical development will cause learning difficulties; greater susceptibility to disease; and a lifetime of lost earning potential. Millions will see their lives ruined before they have had a chance to run down the street, sit before a teacher, be gainfully employed or raise healthy sons and daughters.

The practitioners of Islamic finance are increasingly framing their practices as ethical, socially responsible and conducive to humanity’s wellbeing. Could Islamic finance play a central part in supporting the humanitarian landscape? Some examples, in fact, suggest it is already helping alleviate poverty.

Tools like the obligatory zakat, and charitable donations in the form of sadaqat and philanthropic giving, generate between $200 billion to $1 trillion annually. According to the World Bank, zakat can alleviate poverty in 20 of the 39 OIC countries where the tithe is regulated. But better strategic thinking and channelling of zakat, sadaqat and philanthropic efforts could help the sector direct funds to those most in need, and where we can see sustainability and scalability of results.

In Indonesia, Baznas—a national institution mandated to collect, distribute and manage zakat— has benefited around 6.8 million people. Baznas is also believed to be the first zakat organization anywhere to have formally committed to supporting the United Nations’ Sustainable Development Goals (SDGs).

In 2018, in neighboring Malaysia, the International Federation of the Red Cross and Red Crescent Societies (IFRC) pioneered and co-designed a zakat-financing instrument with a local zakat authority to support Kenya’s Drought Assistance Programme. The sum of $1.2 million in zakat from Malaysia was channelled to farmers in Kenya in a forecast-based initiative, which anticipated the most viable crop for the region. Green-gram seeds were bought with the zakat monies and distributed to 175,000 households. In six months, the crops produced and sold a yield worth $20 million.

But although there is progress in places, it is neither fast nor deep enough to resist the powerful dynamics of global insecurity.  We are not succeeding as we should in critical areas, and must find the courage and determination to think differently, solve problems effectively and quickly, and on a massive scale.

The true character of our faith, commitment and leadership – yours and mine - will be revealed in our collective engagement to design frameworks and strategies that meet global humanitarian and development needs; create innovative financial models which look beyond traditional grant-based financing; forge a new vision for the future; and fight to make it happen.

To do more for more, and to do it better, we must constantly challenge ourselves to do things differently. This involves shifting mental gears; tackling issues with unusual partners; forcing ourselves out of the comforting bubble of familiar faces and like-minded opinion; and always acting with compassion for those struggling in the toughest of places and the worst of times.

Princess Sarah will be delivering the keynote address at the RFI Summit on ethical and Islamic finance, 29th April 2019 in Abu Dhabi, UAE.

Please do not reuse this image Princess Sarah Zeid headshot

SalaamGateway.com 2019

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