Responsible financial practices: Islamic Banking and contribution to the Global Humanitarian Assistance

It is globally acknowledged that aid, if it is to make a real impact on reducing poverty and
suffering; needs to be targeted, relevant, and compatible with local cultures and religious
traditions. The realisation is growing that the principles inherent in Islamic countries have a
great contribution to make to this discussion, particularly in terms of the financial assistance
sent to areas where Muslims form a majority of the population. It is within this context that
this chapter focuses on the need for partnerships and cooperation between both international
organisations and non-profit organisations, enabling financial aid to have maximum impact.

A World In Need
Right now, there are 135.7 million people on this planet in desperate need of humanitarian
assistance. This may seem like an insurmountable challenge. However, when considering that
the global economy is valued at US$78 trillion, it is almost unthinkable that a way cannot be
found to share resources to help those in need. Clearly, the problem is not one of available
resources. At the core is a management problem.

Upheavals caused by natural disasters, war, and conflict are global realities that have
displaced millions of people on nearly every continent, which subsequently brought with them
their own unique set of challenges. This is further accompanied by the economic, environmental,
political, and security ramifications that occur with such displacement. Displacement
creates increased demands for food, water, sanitation, education, and healthcare; which in turn
increase pressure on communities and carry significant costs to governments and businesses.1
Recent examples of such emergencies are all too familiar. The Rohingya crisis in Myanmar
has put immense pressure on Bangladesh and surrounding countries, while the Syrian
conflict has created turmoil in states such as Iraq, Jordan, Lebanon, and Turkey; with millions
of refugees needing a level of support that threatens to overwhelm these countries. All told,
Ethiopia, Iran (Islamic Republic of), Jordan, Lebanon, and Pakistan are home to the majority
of the world’s refugees.

Still, in the midst of these heart-breaking crises, evidence emerges that the best of humanity
is at work. There are hundreds of thousands of humanitarian aid workers who selflessly
dedicate their time and energy—and sometimes even their lives—to helping the most vulnerable
on the planet. But, these workers cannot solve such grave crises on their own or without adequate resources. Currently, the world is falling short in providing sufficient funds and support
to these individuals, thus limiting the wider efforts of humanitarian organisations to meet
those needs. Although donors have stepped forward to commit additional funds to meet the
growing humanitarian requirements, more needs to be done.
As per 18 January 2018, a total of US$2.4 billion, or 46% of all funds allocated by the Central
Emergency Response Fund (CERF) have been allocated to 33 Muslim majority countries.
This includes the Rohingya crisis in Myanmar, which is currently the world’s fastest growing
refugee crisis.

If we are to collectively honour the noble principle of the humanitarian imperative—that
receiving life-saving humanitarian aid is a right and providing it is a duty—then there is much
more that will need to be done. However, what is important is not just the level of aid itself,
but that it is delivered in a strategic way that maximizes its impact and acknowledges the
realities “on the ground”. Any aid must involve local people, local groups, and local ways of
working. That calls not only for heightened levels of transparency and accountability, but for a
targeted approach as to how that aid is delivered. As humanitarian funding requirements are
at an all-time high of US$22.5 billion, the need for support could not be more evident. It is time
for people across all faiths and denominations to come together to form partnerships that will
address the significant problems prevailing at this point in time.

How The World’s Needs Are Met
Many organisations do outstanding work in addressing these enormous human needs. Key
among them is the United Nations Office for the Coordination of Humanitarian Affairs (OCHA).
From earthquakes, storms, and droughts to displacement and disruption of basic services,
supporting and coordinating responses to natural disasters and conflicts remains central to
OCHA’s work. OCHA works with humanitarian partners around the world to identify the most
critical humanitarian needs, to strategize appropriate responses, and to determine the levels
of funding support that are needed to ensure that plans are successfully implemented. At the
country level, OCHA helps partners to build common strategies and implementation plans and
to appeal for funds as a group.

Alignment With The Values Of Islamic Finance
In a world where there is more private wealth than ever before, the role of the private sector
in contributing and effectively coordinating humanitarian aid continues to be underutilised.
It is generally recognised that the humanitarian ecosystem is now in a position to harness
the power, skills, and capabilities of business. In short, the world of business has the opportunity
now to participate in partnerships and to maximize assistance efforts. One salient point
that should be considered is that, when a global perspective on humanitarian crises is taken,
presently 90% of crises occur in the Member States of the Organisation of Islamic Cooperation
(OIC). Therefore, Islamic social finance has an obvious opportunity in relation to global
humanitarian aid financing. There is a very real potential that Islamic finance could provide
solutions to the global humanitarian financing problem, and with 72% of Muslims currently
“unbanked”, the business potential for the Islamic finance sector is massive. But, with many of
today’s conflicts occurring in Muslim majority countries, markets clearly need to stabilize for
that to happen. Strategic emergency relief is a vital solution.

By Daan Elffers
Image credit: OCHA