In order to end poverty and to ensure global prosperity, the UN member countries in one voice adopted Sustainable Development Goals (SDG) on September 25th 2015. There are 17 goals such as Zero Hunger, Good Health and Well-being, Quality Education, Sustainable Cities and Communities, Responsible Consumption and Production, Life on Land, and Peace & Justice; goals to be achieved by 2030. For realizing these goals everyone like Governments, Private Sector, Civil Society and people in general have a role to play To ensure implementation of the Sustainable Development Goals also called Agenda 2030 we need a large amount of financial resources, beyond traditional development financing. In September 2017 public and private stakeholders, including investors gathered in New York for a high level event titled-‘Realizing Agenda 2030: How Islamic Finance through Impact Investing can help achieve the SDGs.
During the event it was thoroughly discussed how Islamic finance can be tapped for global development especially to end poverty and above all to achieve the target goals by 2030. The event was co-organized by the Islamic Development Bank (IDB) and United Nations Development Programme (UNDP) with the support Organization of Islamic Cooperation (OIC) New York office. The event coincided with the 72ndsession of the UN General Assembly.
While deliberating on Islamic Finance and its role in global development, Magdy Martínez-Solimán, UN Assistant Secretary General and Director of UNDP’s Bureau for Policy and Programme Support said :
“Islamic Finance is one of the fastest growing sources of finance in the global financial industry. Global assets in Islamic finance are expected to reach US$3.5 trillion by 2021. Considering the scale, I would like to underline that Islamic finance could offer a strong, non-traditional source of financing to advance SDG implementation “
Partnership between IDB & UNDP
On May 18th 2016 Islamic Development Bank (IDB) and United Nations Development Programme (UNDP) signed a Memorandum of Understanding (MoU) to strengthen the collaboration between the two leading development institutions, to support the effective implementation and achievement of the SDGs. IDB & UNDP are collaborating on priority areas such as crisis response and recovery, peace building, poverty eradication, youth employment, skills , innovation, disaster reduction, climate change, sustainable energy etc. In addition to it the partnership is to focus on scaling-up ongoing initiatives, and exploring new opportunities to collaborate for the effective realization of the Sustainable Development Goals (SDGs). The partnership will also work to promote inclusive markets, business models for inclusive development and increased entrepreneurship including advancing the Global Islamic Impact Investing Platform for blending Islamic financing and private sector resources in achieving the SDGs.
Role of Zakat
Zakat as we know is Islamic mandatory giving and one of the 5 pillars of Islam. Four others pillars are being testimony of faith (shahada), prayer (salah), fasting (saum) and pilgrimage (hajj). Zakat is an obligatory duty on all Muslims who are eligible to pay it. The eligible wealthy muslims are to donate at least 2.5 percent of their accumulated wealth or income for the benefit of the poor, the needy and other beneficiaries classified as mustahik. Zakat aims to provide services, benefits and improve welfare for those mustahik. Holy Quran Chapter 10 (Sura Tauba) verse 60 reads as “Alms are for the poor and the needy, and those employed to administer the (funds); for those whose hearts have been (recently) reconciled (To Truth); for those in bondage and in debt; in the cause of God; and for the wayfarer ”
According to a joint report published by United Nations Development Programme (UNDP) and Indonesia based Badan Amil Zakat Nasional (BAZNAS), Zakat has an important role to play in addressing the generally-higher poverty and hunger levels witnessed in countries with large Muslim populations. Most of these countries are located in Africa and Asia. In some Muslim-majority countries state sponsored organisations have been established to collect and spend zakat funds. Six Muslim-majority countries namely Libya , Malaysia , Pakistan , Saudi Arabia , Sudan and Yemen have a mandatory zakat system in place. It is compulsory for citizens of these countries to pay zakat. In a further nine countries like Bahrain , Egypt , Indonesia , Jordan , Kuwait , Lebanon and UAE zakat contributions is made through formal voluntary organizations. “Poverty, poor health and food insecurity can cause stunting, poor schooling and affect intellectual capabilities. Zakat can facilitate access to healthy nourishment, quality education and make them more productive in the future” the report reads
Haseeb Drabu on Islamic Finance
In his article “Islamization of Indices” (Live Mint Jan 27th 2011) Dr Haseeb Drabu present Finance Minister of J&K and former Chairman Jammu & Kashmir Bank while supporting Interest Free financial products said :
“Islamic financial products can be effectively used for promoting financial inclusion, especially among the under-banked Muslim community. As the Sachar Committee has documented, the 175 million Muslims who account for 12% of all account holders have a mere 4.5% share in total outstanding loans. The credit per account to Muslims is about half that of other minorities and one-third of “others”, even as the deposit per account for Muslims is almost the same as the national average. With 97% of Muslims engaged in unorganized sector enterprises, this state of financial penetration has an impact on the entire mini and micro enterprise sector “
Conclusion
Before the introduction of Sustainable Development Goals (SDGs) in the year 2015, UN member countries were working on Millennium Development Goals (MDGs 2000 -2015 ). The proposed goals under MDGs could not be achieved in toto. It is now upto the member countries of UN to carry forward the MDGs agenda through SDGs. UNDP Administrator Achim Steiner in his 2016 keynote address at the High-Level Conference on Financing for Development and the Means of Implementation of the 2030 Agenda for Sustainable Development, at Doha, Qatar also voiced for tapping the potential under Islamic finance. The Islamic social finance – including Zakat, endowments, and philanthropy represents an important opportunity to leverage the resource for poverty eradication. Islamic Development Bank (IDB) has estimated that Zakat contributions may exceed 500 billion US dollars per year. Tapping into a fraction of this pool for the 2030 SDG Agenda would have a very large impact. In-spite of special thrust of UNDP and other economic, developmental and financial institutions of world on Islamic Finance , I am not able to understand why Narendra Modi Government is not tapping this huge potential to address poverty and backwardness of Indian Muslims and other weaker sections of society. It is so shocking that Government of India has not acted upon the recommendations of the Inter Departmental Group (IDG) of Reserve Bank of India (RBI) which had given green signal to implementing Interest Free Banking in India. If Kerala Government can go ahead with Non Banking Financial Companies (NBFC) and Cooperative Societies on Interest Free model, why Jammu & Kashmir Government isn’t taking similar steps? To ensure complete financial inclusion of muslim population, J&K Bank can impress upon RBI to allow it to start an Interest Free window in all the branches of J&K Banks.