Achieving the 2030 Agenda for Sustainable Development requires coordinated effort and significant financial support from different stakeholders, speakers said that at a roundtable discussion on ‘Scope of Islamic Financing in Achieving SDGs in Bangladesh’, organised by the United Nations Development Programme (UNDP) on 25 July 2019 at its office.
The meeting explored scopes and identified challenges and opportunities facing the sector for participation in the 2030 agenda that seeks to eradicate poverty in all its forms and promote sustained and inclusive economic growth.
Developing countries require approximately USD 4.5 trillion investment annually for attaining SDGs. All possible sources have to be mobilised alongside Official Development Assistance to meet this financing gap and implement the agenda.
According to the Planning Commission, Bangladesh needs an additional USD 928.48 billion for attaining SDGs during FY 2017-2030 and the annual average will be USD 66.32 billion. Looking for alternatives funding for SDGs is essential in the context and Islamic finance sector has the potential to play a critical role in this regard.
The fast-growing industry is comprised of Islamic banking, capital market instruments such as Sukuk, Islamic microfinance, Islamic insurance (Takaful) and other non-commercial instruments such as Zakah, Sadaqah, Waqf and Qard al-Hasan (interest free loans). Bangladesh Bank’s data shows that Islamic banks held 24% share of the banking sector in 2018.
UNDP Bangladesh, considering the need for inclusivity and unity in working towards SDGs, offered to commission a study exploring the scopes for Islamic finance sector. The roundtable brought together leading experts from National Zakat Fund, Waqf Administration, government and non-government organisations, research institutions, academia, and media alongside private sector representatives.
It focused on both the current landscape of Bangladesh’s Islamic finance industry and the future opportunities and presented the unique opportunity to discuss challenges and opportunities. This allowed sharing of in-depth knowledge and experience on different forms of innovative Islamic financing to minimize the SDG funding gap in Bangladesh.
At the discussion, Dr Hossain Zillur Rahman, executive chairperson of Power and Participation Research Centre, highlighted the immense potential of Islamic financing, “Institutionalisation of zakat funds can play a vital role in poverty alleviation and is an innovative process of collectively disseminating wealth. It is effective for financial inclusion.”
“This practice is based on morality, and it must be utilised in a manner that respects the ideology behind it. By offering zakat through institutions, capable Muslims can ensure proper utilisation to achieve SDGs.”
Tasmima Hossain, Former Member of Parliament and Editor of the daily Ittefaq, emphasized on utilizing young human resources in innovative and scientific ways while integrating Waqf and Zakat for poverty alleviation and social development.
The discussion was moderated by Shaila Khan, Assistant Resident Representative of UNDP Bangladesh, while Resident Representative Sudipto Mukerjee gave the welcome remarks. Foyasal Khan, from UNDP, made the keynote presentation.
UNDP has facilitated SDGs through Islamic financing in other Muslim-majority countries of the world. The zakat funds are being utilised efficiently in Indonesia as UNDP partnered with the national zakat collection body and channeled the funds towards renewable energy projects in underserved communities.
Initiatives involving Islamic financing is also underway in Palestine, Bahrain, and Turkey, among other countries. Sustainable development goals aim to leave no one behind, and in order to achieve these goals, we must ensure that everyone puts their best foot forward.