Tan Sri Jemilah Mahmood test file
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Islamic Social Finance & the Future of Humanitarian Action
4 November 2015
“We look to the World Humanitarian Summit to generate strong global support for bold changes in humanitarian action. This is the only way we will meet the enormous challenges we face in the coming years and decades.”
20 April 2015
Istanbul, 23-24 May 2016
“The Summit will be a platform for Heads of State and Government, and leaders from civil society, the private sector, crisis-affected communities and multilateral organizations, to announce how they intend to act on the priority areas” – Ban Ki-moon
In total…*
80% aid distributed
to conflict areas
60mn+ peopleDisplaced - Highest since 1945
*as of October 2015
17 years average number
of years displaced
Islamic Social Finance & the Future of Humanitarian Action
• A total of US$24.5 billion was International humanitarian response in 2014
• 3x growth in 10 years!Source: GHA Report 2015
Current Humanitarian Funding System & widening funding gap
80% 20%Traditional Donors
(OECD-DAC)/Multilateral
Institutions
UN Central Emergency Response Fund(CERF)
International NGOs
UN Agencies
UN Country Based Pooled Fund (CBPF)
Private
Sector/
Giving
Islamic Social Finance Funds
?
NGOsCountry
Level OrgsLocal
Responders
Out of total $19.5bn pledged by the humanitarian system in 2014, <70% UN funding
requirement were met last year, leaving $7.5bn in unmet funding gap.
Source: GHA Report 2015
Widening Gap between Funding & Unmet Requirement 2005-2015
There is insufficient funding to provide assistance to everyone in need…
Islamic Social Finance & the Future of Humanitarian Action
Watch the elliptical space
The OIC Countries
The global conflict map in 2013
Islamic Social Finance & the Future of Humanitarian Action
The global conflict map in 2014
In 2015, more than 95% of the world’s conflicts are occurring in the Muslim dominated countries
Poverty & Unequitable growth = protracted conflict & impaired resilience
> 1 billion people still live on less than $1 dollar/day (World Bank)
> 3 billion live on less than $2/day and in abject income poverty (World Bank)
~805 million people or 1/9, routinely go hungry (FAO)
~750 million people around the world lack access to safe water (WHO)
~2.5 billion do not have access to adequate sanitation (WHO & UNICEF)
Approximately 100 million people without any kind of shelter, whatsoever (UN)
12
Urgent need for “social finance” because capital is not yet aligned with social, economic, and political justice
State of the World We are In…
The conditions are worse in the Muslim countries…
5 of the OIC member countries account for over 0.5 billion of the world’s poor with incomes below $2 a day or national poverty line.
Another 5 OIC countries, account for over 600 million of the world’s poor
Most OIC member countries rank among the lowest as per standard development Indicators
13
Hence, crises perpetuate in these fragile states, some aid dependent for more than 10 years, unable to lift themselves out of poverty cycle let alone prepare for future impacts of climate change and disasters
Islamic Social Finance & the Future of Humanitarian Action
With more than 60 million people currently displaced
Living in camps such as this one - Zaatari camp, Jordan
OCHA/Federica Gabellini – Central African Republic
“Over half the world's refugees are children”
- UNHCR 2015
Photo: UNHCR
“We cannot solve
our problems with
the same thinking
we used when we
created them”
- Albert Einstein
5 Key Action Areas
*Islamic Social Finance Report 2014 & 2015 (study for 40 OIC countries with excess zakat funds & conservative estimate after accounting for domestic poverty alleviation needs)** India and assuming 10% return p.a.
19
• Latest studies by IDB* showed that at a minimum of USD600 billion of excess
zakah from the Organization of Islamic Cooperation (OIC) member countries is
potentially distributable annually for humanitarian action; and
• It is estimated that the market value of waqf assets in a country** could be as
much as USD24bn and generate USD2.4bn per year.
• To put things in perspective, only 1% of the annual excess Islamic Social
Finance funds were sufficient to plug the humanitarian funding gap last year.
How Islamic Finance can plug the funding gap
Potential Pilot ProjectsEducation - School Feeding Program
Aims at helping the children overcome damage – physical and mental – caused by years of isolation, deprivation and conflict and provide hope for the larger refugee communities
Potential Instruments: Zakat – Provision of daily meals to ensure the children gets at least 1 meal a day to for
proper nutrition & to keep them at school Waqf – Facilities for school compound Sadaqah – School uniform & stationery
Potential Pilot ProjectsCash Based Interventions for Refugees & IDPs
To enable refugees to meet their priority needs through flexible and appropriate assistance and prevent harmful coping strategies, such as survival sex, child labour, family separation and forced marriage.
Potential Instruments: Zakat & Sadaqah – Cash assistance through various transfer modalities. This can take
the form of a commodity vouchers, cash vouchers or direct cash deposit through identified financial service providers, through competitive tenders with the lowest overhead and relating banking fees
Potential Pilot ProjectsCommunity Rebuilding Post Earthquake in Indonesia
Address immediate needs such as clean water, food and livelihood during period of emergency as well as long term infrastructure, shelter rebuilding & also investment in preparedness for future events
Potential Instruments: Zakat – Provision of clean water, food, and livelihood during period of emergency Awqaf – Blanket, tents, shelter, clothing & basic cooking equipment Sukuk – Infrastructure rebuilding & also investment in preparedness for future events
(where taqaful (risk insurance) could also be considered)