Bali, Indonesia, 14 July 2022 - Islamic Development Bank (IsDB) President and Group Chairman, H.E. Dr. Muhammad Al Jasser, says the conflict in Eastern Europe is casting a shadow on the global economy, leaving no country unaffected, noting that the effects of this political crisis are multiple: food security challenges, higher energy and commodity prices, and disruptions in global trade, remittances, tourism, and capital flows.
Dr. Al Jasser made the remarks while addressing the High-Level Discussion on Financial Inclusion, with a focus on the role of Awqaf and Endowments in a G20 event held in Bali, Indonesia on Thursday 14th July.
Expressing his concerns about the unprecedented challenges, the IsDB President highlighted the Bank’s response to the emerging needs of its member countries.
“The Islamic Development Bank has realigned its strategy for the period 2023-2025. The focus, now, is on boosting recovery from the economic losses inflicted by the pandemic, while laying the foundation for tackling poverty, building greater prosperity, and sustained inclusive and green economic growth,” he explained.
In order to achieve these strategic objectives, the IsDB will finance priority development projects in its member countries under two strategic pillars. The first aims at developing green, resilient and sustainable infrastructure. The second pillar is to foster inclusive human development.
The IsDB recognizes, in such difficult times, the importance of sustainable finance to support a strong recovery and drive green growth. “We believe that sustainable finance markets have the potential to mobilize the necessary capital efficiently. These markets need the necessary infrastructure and policy frameworks”, Dr. Al Jasser explained.
The IsDB is committed to using Islamic social financing to mitigate the impacts of the pandemic and overcome financial constraints, funding gaps and financing inequities. “We believe that Islamic social financing can stimulate economic activity and promote social welfare, financial inclusion, and shared prosperity. This can be done by utilizing the traditional instruments, such as Zakat, Sadaqa, Waqf and microfinance instruments, through modern tools such as blockchain, fintech and artificial intelligence”, he elaborates.
Dr. Al Jasser then presented a quick glimpse of the Bank’s contribution to reinvigorating the developmental role of Awqaf by establishing the Awqaf Properties Investment Fund (APIF) in 2001. “APIF's double mandate of achieving sustainable financial returns and social impact is entirely aligned with the Bank's Strategy and the Global 2030 Sustainable Development Goals agenda. APIF promotes Awqaf as a social-finance-based instrument for development while observing the relevant principles of Islamic jurisprudence,” he said.
“IsDB, through APIF, has supported various non-profit beneficiaries - ranging from governments to research centers and charitable organizations, helping increase public service standards where its projects are located,” Dr. Al Jasser explained adding: “With its mandate to finance the establishment and development of real estate endowments, APIF is a unique fund in the community of multilateral development banks, with a strong focus on long-term, intergenerational financial sustainability. Indeed, it has provided proof of concept, which is now ready to be scaled up”.
In his speech Dr. Al Jasser stated that, any solution to combat the present crisis should be devised in a manner that does avoid the creation of further indebtedness of individuals, businesses, societies, and countries. “Most developing countries are facing serious threats of debt sustainability, and their fiscal space has already shrunk, with no capacity for further borrowing”, he continued. “We believe that many of these challenges need nonconventional solutions, which are adequately found in the core tenets of Islamic economic and financial system,” he added.
The IsDB President concluded his speech by expressing pride over IsDB Group’s contribution to Indonesia's socio-economic development and impacting people's lives. “Today, Indonesia is one of our most active member countries. In fact, the total IsDB Group financing for Indonesia stands about US$6 billion, in addition to providing political and credit risk insurance and sukuk investments.
I would like to congratulate the Government of Indonesia for bringing to the G20’s presidency such enthusiastic initiatives and discussion topics under the motto “Recover Together, Recover Stronger”, he said.