Tap Islamic social finance to fund humanitarian aid, says report

Dubai: The $15 billion (Dh55.09 billion) funding gap for humanitarian action can be met with Islamic social finance, a UN report launched on Sunday by the United Nation Secretary General Ban Ki-moon in Dubai suggested.

The report titled ‘Too important to fail – addressing the humanitarian financing gap’, was commissioned by a nine-member high-level panel on humanitarian financing appointed by Ban to bridge the gap between growing humanitarian needs and the available resources.

The report found that the world today spends around $25 billion to provide people devastated by wars and natural wars and disasters with life-saving aid.

While this amount is 12 times greater than 15 years ago, Ban said the report by the panel found that conflicts and natural disasters over the last few years have led to fast-growing numbers of people in need as well as a $15 billion funding gap.

Despite today’s economy totalling $78 trillion and despite the sharp increase in humanitarian funding over the last 15 years, people in need are still suffering due to insufficient humanitarian funds as in 2015, when 1.6 million Syrian refugees had their children’s food rations cut and 750,000 Syrian refugee children could not attend school.

“Since they [the panel] began their work, the needs created by the demand for humanitarian aid has continued to rise dramatically. We are living in the age of the mega crisis. But as the report clearly demonstrates, the gap in funding is a solvable problem.”

Among the recommendations shared by the panel is exploring Islamic social finance (such as waqf [endowment], zakat [mandatory alms-giving] and sukuk [similar to social impact bonds]), especially as the Islamic world’s economy is valued at $15.9 trillion.

“Yet there is no coordination mechanism or an independent and autonomous body to help channel these funds effectively at the global level for humanitarian action,” the report read.

It also stated that while it may not be easy given the scale of coordination required, “the very real potential is there for Islamic finance to provide solutions to the global humanitarian financing problem”, the report read.

Other recommendations mentioned in the report to solve this critical humanitarian funding crisis is having governments voluntarily sign up to the successful model of a solidarity tax (for example the UNITAID micro-levy on airline tickets raised 1.6 billion euros (Dh6.41 billion) between 2006 and 2011, with the participation of just 10 countries, helping to fund treatment and diagnostics for HIV/Aids, malaria and tuberculosis in low-income countries. This can also be applicable to sports and music event tickets and create a steady flow of revenue for humanitarian action.

“We propose that additional revenues from a solidarity levy on air travel or fuel could be used to support the provision of health services in camps and urban areas hosting displaced people,” the report said.

Other recommendations include intensifying funding from new donors and engaging the private sector to commit resources, to name a few.