Dubai: Mohammad Bin Abdullah Al Gergawi, Minister of Cabinet Affairs and the Future, announced the launch of the Awqaf International Organization (AIO) during the opening ceremony of the third Global Islamic Economy Summit.

Instituted by Awqaf and Minors Affairs Foundation (AMAF) in collaboration with the Dubai Islamic Economy Development Centre (DIEDC) and the Mohammed bin Rashid Global Centre for Endowment Consultancy, the pioneering initiative is mandated to enhance the role of endowments in the development of societies worldwide.

During his keynote speech at GIES opening ceremony, Al Gergawi pointed out that AIO complements the leadership’s vision in globalising the Islamic economy ecosystem and enhancing the role of endowments as one of the most important social and economic development tools.

“The initiative is a main pillar for the ‘Dubai: Capital of Islamic Economy’ initiative that aims to develop the awqaf sector and unify the efforts of global awqaf entities and organisations to improve the role of waqf as a key catalyst of economic development,” Al Gergawi said.

“The new organisation will unify all local and global efforts to establish a shared system for endowment investments whose laws and regulations are approved by all awqaf organisations worldwide. This step will further enhance the role of the endowment sector and make it a partner in financial transactions and investments in various Islamic economy sectors,” he added.

Plugging funding gaps

Islamic finance may be the answer to plug funding gaps in sustainable development goals (SDG), governor of the central bank of Kuwait said.

Investments in SDGs are not attractive to investors, as they may not be profitable immediately, and the countries that need them the most may be too poor to pay the market price, Dr. Mohammad Yousuf Al Hashel, Governor of the Central Bank of Kuwait said in his keynote address, adding that the very nature of the Islamic economy may offer a solution to these challenges.

“The Islamic economy promotes the reallocation of profit for the benefit of everyone,” he stressed. “In Islamic finance, credit is channelled for productive consumption rather than speculation. The value-driven nature of the Islamic economy requires people to be considerate of others’ needs. This is the golden rule of a good society. The well-being of the society is above that of the individual. Moreover, the Holy Quran prohibits excess; this resonates with the current global emphasis on sustainability.”

“We need to progress from Sharia-compliant products to a Sharia-based system that doesn’t just mimic traditional banking, but rather innovates and creates new products and solutions,” Dr Al Hashel added.

Broad context

“It is heartening to see the broad context of the conference, ranging from philanthropy to innovations, to Islamic finance and halal industries. This reflects the true essence of an Islamic economic system. Constricting the Islamic economy to a few sectors defies its ubiquity,” Al Hashel said.

Assets of the top 1,000 global banks alone are worth around $115 trillion, yet these banks are facing a serious squeeze on profit margins. Whereas the Islamic finance industry, despite its impressive growth, collectively accounts for just $2 trillion.

“Looking at these figures, one might think that funding is not a constraint to achieve SDGs, however, the reality is quite different. By some estimates, around $3.5 trillion to $5 trillion are needed every year to make desirable progress on SDGs,” Al Hashel said.