Islamic finance partners
Islamic finance can become a vital innovative financing modality to fill the SDGs funding gap. The core principles of Islamic finance – channeling funding to the real economy by promoting risk sharing, avoiding excessive speculations, and limiting debt to the value of assets – and Islamic social finance tools – Zakat (mandatory almsgiving), Sadakah (charitable giving), Waqf (endowments) - are highly aligned with the spirit of the SDGs.
UNDP is already scaling up efforts to engage countries on Islamic finance in innovative ways. With presence in over 170 countries and over 50 years of experience, UNDP can support Islamic Finance organizations to align with the SDGs, monitor, report and communicate development impact, as we are already doing in Indonesia and other countries.
UNDP's current engagement on Islamic finance
- In Indonesia UNDP has partnered with BAZNAS – the national Zakat collection body – to apply Zakat funds, for the first time ever, towards local SDG projects, beginning with renewable energy projects in underserved communities.
- UNDP Indonesia is also working with Badan Wakaf Indonesia, the national Waqf board, to collaborate on SDGs and develop a digital platform for Waqf contributions.
- UNDP is also working with the Indonesian Ministry of Finance to support their first $1.25bn sovereign green sukuk (bond). This sukuk, which is oversubscribed, shows the vital potential to leverage Islamic Finance partnerships for green investments.
- In Palestine, UNDP facilitates the mobilization of funds for SMEs through Islamic microfinance.
- In Turkey, we are exploring new ways to blend Islamic finance with crowdfunding through Blockchain technology.
- In 2017, UNDP and the Islamic Development Bank (IDBG) launched a joint report I for Impact: Blending Islamic Finance and Impact Investing for the Global Goals, a key step forward in conceptualizing Islamic finance-based impact investing, and building an ecosystem in support of this idea.
- UNDP and IDBG also launched the Global Islamic Finance and Impact Investing Platform (GIFIIP), which promotes market-based solutions to sustainable development challenges, with the aim of positioning Islamic finance and impact investing as leading enablers of global SDG implementation through private sector engagement.