Zakat, Islamic giving key to plug aid gap

Zakat has “real potential” to plug the dire – and growing – gap in funding for the 125 million people in need worldwide, according to a new UN-backed report

Channelling Islamic forms of giving, such as waqf, zakat and sukuk bonds, towards humanitarian crises was among the recommendations from an expert panel charged with finding a way to make up the $15bn shortfall in aid worldwide.

“The very real potential is there for Islamic finance to provide solutions to the global humanitarian financing problem,” said the report. “Just one per cent of zakat would make an enormous difference to the scale of the global funding deficit for the year 2015.” The report estimated between $232bn and $560bn was given in zakat globally in 2015.

“The very real potential is there for Islamic finance to provide solutions to the global humanitarian financing problem”

“We are living in the age of the mega-crises,” said UN secretary-general Ban Ki-moon, at the report’s launch in Dubai. But, he urged, the funding gap is a “solvable problem”.

Current global spending on life-saving assistance is $25bn – a record amount – but the ever-growing numbers of the desperate outstrips generosity. Ninety per cent of current crises take place in countries belonging to the Organisation of Islamic Cooperation, said the report.

Conflict in Syria and Iraq, as well as long-running wars, means aid agencies’ resources are stretched thin. Last year the UN’s food agency, the World Food Programme (WFP), was forced to halve the value of food vouchers given to Syrian refugees in Lebanon for lack of funds. The UN’s $4.3bn appeal for the Syrian crisis last year was just 58 per cent funded; nearly half of the UN’s appeals in 2015 were unmet, according to the UN.

“We have 60 million children out of school [globally],” said Ban. “This is not an abstract analogy. Three quarters of a million Syrian children last year were shut out of classes because we could not fund their right to an education.”

In 2016, more than 125 million people worldwide will need humanitarian assistance just to survive, according to the UN. If they were a country, it would be the 11th largest country in the world.

The High Level Panel on Humanitarian Financing explored options to close the $15bn gap in funding. Some of their recommendations include a re-jig of aid criteria so funding goes to people most in need, not just countries; directing more aid to fragile and long-running emergencies; a ‘solidarity levy’ among governments to raise more money; and channelling more Islamic social finance to aid.

Islamic finance has already been used to support humanitarian causes. The report cited the example of vaccine alliance Gavi’s matching fund, a social sukuk programme to raise money for immunisations. The first sukuk raised $500m in 2014, and another $200m last year; 65 per cent of investors came from the Middle East.

“A gap of $15bn is a lot of money but in a world producing $78 trillion of GDP it should not be out of reach to find,” said Kristalina Georgieva, vice president of the European Commission, and Sultan Nazrin Shah of Perak, Malaysia, co-chairs of the expert panel. “Closing the gap would mean nobody having to die or live without dignity for lack of money and a victory for humanity at a time when one is greatly needed.”