Social and faith-based financing, such as Islamic Social Finance, are important additional sources of financing that can be better leveraged to reduce vulnerability. Every year, Muslims worldwide donate generously to Islamic Social Finance mechanisms to alleviate human suffering.
Given that the majority of people in need of aid are in Muslim countries, the role of Islamic Social Finance is particularly important. Innovative investments in humanitarian action, such as sukuk (bonds), will not only lead to long-term social improvements, but also to long-term resilience and to adaptive capacity-building for communities at risk. Such investments will empower communities to recover more strongly from shocks as well as facilitate social and economic inclusion within their populations.
The report of the UN High-Level Panel for Humanitarian Financing, Too Important to Fail: Addressing the Humanitarian Financing Gap, launched by the UN Secretary-General in Dubai on 17 January 2016, which informed the UN Secretary-General’s report, One Humanity: Shared Responsibility, advocated for the recognition and use of Islamic financial solutions. As a result, Islamic Social Finance for Humanitarian Action was featured prominently in the deliberations and recommendations of the WHS.
The meeting of the Joint Task Force for this initiative, convened by HRH Sultan Nazrin Shah, Co-Chair of UN High-Level Panel for Humanitarian Financing and Ruler of Perak (Malaysia), hosted by Worcester College, Oxford University, United Kingdom, on 2 April 2016, followed the above-mentioned reports and the high-level private meeting on Humanitarian-Development Collaboration convened by the UN Secretary-General, hosted by the World Bank President on 16 March 2016.
The session was convened with the aim to secure collective commitments towards the development of platforms for Islamic social financing mechanisms, leading to the mobilisation of additional financial resources for humanitarian assistance. These include:
(a) further commitments by donors and relevant financial institutions to support the development of Islamic Social Finance instruments focused on prevention, resilience building for conflict-affected and disaster-affected countries, as well as protracted crises;
(b) supporting innovations for mobilising finance such as the issuance of an inaugural humanitarian sukuk (social impact bonds) programme; and (c) enabling funding from nontraditional sources directly to frontline responders.