Did you know Indonesia is the second most generous country in the world, with a whopping 79 percent of people having donated funds in the last month?
Zakat, a mandatory annual donation under Islamic law, is estimated to be worth US$16 billion in Indonesia. This may seem like a huge sum, but if every eligible Muslim were to pay $74 a year, that figure can be reached. Now, just one percent of that amount is collected.
Together with domestic private investment, which accounts for almost half of all financing in the country, this represents a huge potential to support the Sustainable Development Goals (SDGs). And it points to a key consideration for establishing an SDG Country Platform in Indonesia.
The UNDP Strategic Plan 2018-2021 envisions Country Support Platforms to help countries design and deliver integrated solutions on the SDGs. These Platforms respond to a greater demand for collaboration among a wider range of actors, and they will look different according to context. This is where our local knowledge comes in.
Indonesians are generous people, and there is immense potential for religious giving and private investment to support the SDGs. At the same time, funding from international development partners is falling and the Government has a budget deficit preventing the needed $353 billion in infrastructure investment. Only $23 million has been channelled towards impact investment, a potentially trillion-dollar global industry that is still in its infancy in Indonesia.
The challenge that we have set ourselves as UNDP Indonesia is how to attract these abundant resources in the country to where they are needed, that is, to support the SDGs. Our response, the Innovative Financing Lab, is a pioneering Country Support Platform to support the 2030 Agenda.
With our new focus on the SDG financing challenge, it became clear we had to work differently. We sought out partners unlike ourselves, including commercial investors, and began working in a strongly collaborative manner, where organizational boundaries are blurred. We broke down barriers between units and invested in new skillsets and profiles, including Islamic finance scholars and young people. A platform provided the solution to consolidate and scale up the multiple initiatives underway into a line of services and a lean, open way of working together.
These nine characteristics are key to our Country Platform
A collaborative space: It involves UN, Government, private sector and civil society in Indonesia and around the world to come up with better solutions for achieving the SDGs.
Partnerships are at its core: We are asking the banking sector, business, government, religious funds, philanthropists and investors, international financial institutions and civil society to get involved. Participation can include setting the agenda, providing funding, seconding staff, becoming investment partners and providing space.
It tests and scales innovation: The platform pilots new solutions that can be replicated within and across countries. It also advises large-scale investments to ensure that they are more sustainable and inclusive.
It is networked: The platform is part of a horizontal network of platforms, linked with and servicing other countries, where countries can guide each other through South-South Cooperation.
Focused on SDG financing: By focusing on financing, we are responding to a demand and are able to produce tangible results. The platform’s scope is designing financing instruments, informing investments, developing and advising on policy and knowledge sharing.
Positioned for maximum innovation: Positioning the platform with one foot inside and one foot outside the government means that it can leverage change and be free to innovate.
Capacity-building: The skills in the platform include systems-thinking and design, SDG impact measurement, private investment and Islamic finance, technological and web solutions.
Sustainable: The estimated annual cost is between $450,000 and $1 million, depending on ambition level. The business model is based on a combination of grants and fees for services, with reliance on the latter increasing over time. A pricing policy has been developed and waiver is under preparation to allow provision of services to the private sector.
Integrated: In line with the emerging principles UN reform, UNDP acts as integrator in the platform, bringing together partners and a system wide approach to SDGs, providing a space for innovation and bolstering the role of the Resident Coordinator.
Through the platform, we present the SDGs as the trillion-dollar investment opportunity that they are, rather than focusing on the funding shortfall. The appetite among partners and the momentum around this work has caught us by surprise.
“Once we started discussing with UNDP, we realized that when you are talking about SDGs you are talking about zakat,” said Zainulbahar Noor, Deputy Chairman of BAZNAS, the state zakat agency. “We are working together on zakat inclusion: when we collect zakat through branchless banking, we can use the funds for SDGs with UNDP.”
I’ll conclude with the words of Anita Nirody, UN Resident Coordinator in Indonesia:
For the first time, the United Nations in Indonesia, through UNDP’s Country Support Platform/Innovative Financing Lab, has an exceptional opportunity to test new financial instruments and unlock significant resources from multiple private and religious sources to support SDG implementation. The services and knowledge generated by the Platform will have benefits for Indonesia and beyond – for other UN offices that are working on innovative and integrated solutions for the SDGs.
We are excited at the prospects for our Country Platform, which we think sits well in the context of Indonesia. We look forward to hearing from other Country Offices and learning from their experiences developing their own platforms.
About the author
Francine Pickup is the Deputy Country Director for UNDP in Indonesia, Follow her on Twitter: @f_pickup