On September 29th 2016, the IsDB and its development cooperation partners launched a US$2.5 billion Lives and Livelihoods Fund (LLF). This is the largest development initiative of its kind in the Middle East and serves many member countries. 

The major LLF donors are the IsDB’s Islamic Solidarity Fund for Development (ISFD), the Bill and Melinda Gates Foundation, the Qatar Fund for Development, the King Salman Humanitarian Aid and Relief Centre, and the Abu Dhabi Fund for Development. 

By the end of 2016, the LLF had raised some $400 million of its targeted $500 million in grant funding. 

The LLF model has a horizon of five years and provides unique access to finance. It does so by pooling grant resources from regional and international donors with market-based ordinary project financing to offer highly concessional funding that targets previously unreachable sub-sectors and project areas. 

Its primary targets are the IsDB’s least developed member countries (LDMCs), where the majority of the poor live. These are countries in urgent need of financial assistance, which are constrained in their access to borrowing due to their limited production capacity and/or restricted financial conditions. 

The IsDB acts as the LLF’s trustee and has established a management unit to coordinate the fund’s activities. Development projects are processed in accordance with the IsDB’s project cycle after their approval by the LLF’s Impact Committee (the fund’s Board).

Who is managing the LLF and who are the target beneficiaries?

The IsDB is the LLF’s trustee; the fund’s management unit coordinates all its activities. Projects are processed in accordance with the IsDB’s project cycle after their approval by the LLF’s Impact Committee. 

Who does it target? 

The Lives and Livelihoods Fund works within the framework of the IMF’s debt sustainability policy, which takes into account a country’s financial circumstances. The framework guides the borrowing of low-income countries in a way that matches their financing needs with their current and future ability to repay debts.

Which are the sector focus areas?

The IsDB is the LLF’s trustee; the fund’s management unit coordinates all its activities. Projects are processed in accordance with the IsDB’s project cycle after their approval by the LLF’s Impact Committee. 

The Lives and Livelihoods Fund works within the framework of the IMF’s debt sustainability policy, which takes into account a country’s financial circumstances. The framework guides the borrowing of low-income countries in a way that matches their financing needs with their current and future ability to repay debts.

The LLF enables the IsDB’s least developed member countries to finance projects that will help lift millions out of poverty, offering projects a package of 30% grant portion and 70% IsDB financing. Since IMF rules allow lower-middle-income countries to borrow at market rates, the LLF offers packages of 10% grant portion and 90% IsDB ordinary financing. This makes loans
considerably cheaper for the recipient countries.

Some 95% of LLF resources are targeted at the IsDB’s least developed as well as lower-middle income member countries. These countries include: Afghanistan, Bangladesh, Benin, Burkina Faso, Cameroon, Chad, Comoros, Cote d’Ivoire, Djibouti, Egypt, The Gambia, Guinea, Guinea Bissau, Indonesia, Kyrgyz Republic, Maldives, Mali, Mauritania, Morocco, Mozambique, Niger, Nigeria, Pakistan, Palestine, Senegal, Sierra Leone, Somalia, Sudan, Tajikistan, Togo, Uganda, Uzbekistan, and Yemen. Any change in the list of target countries requires approval from the Impact Committee. 

The focus areas of development are in the health, agriculture and rural infrastructure sectors with the following expected outcomes: 

  •     Reduced childhood mortality 
  •     Reduced maternal and neonatal deaths and stunting 
  •     Increased productivity of staple crops for smallholder farmers 
  •     Improved access to market and services 
  •     Increased access to sanitation 
  •     Increased access to power 
  •     Increased access to digital banking 

Approved projects

The LLF’s Impact Committee regularly reviews proposals for projects in IsDB member countries that would benefit from the fund’s unique concessional finance model. This newsletter profiles two recent projects.

Projects approved so far for the first batch 2016 and second batch 2017 of funding were primarily in LDMCs in West Africa. The total approved amount is $605 million for projects in health and agricultural development. 

These funds will be used to protect communities from the risk of malaria and to promote the eradication of diseases such as HIV/AIDS and mother-to-child protection. Funds will help to increase access to water and primary healthcare, and empower poor farmers and pastoralists to grow more food by developing the necessary basic infrastructure and integrated pastoralism.