To cater to the increasing need in humanitarian funding to aid victims of armed conflicts and weather-related disasters, UK-based NGO Islamic Relief Worldwide has proposed issuing Sukuk for humanitarian action on the sidelines of the World Economic Forum in Davos. MARC ROUSSOT reports.
The proceeds from the proposed Sukuk are intended to ensure a speedy response to emergencies, according to Kuwait News Agency. Naser Haghamed, CEO of Islamic Relief Worldwide, did not respond to requests for comments. No further details on the issuance itself, including the timeline and the size of the Sukuk were shared.
The number of Islamic papers issued for humanitarian purposes remains relatively small even though the World Bank and the UN have been strong supporters of humanitarian Sukuk over the past few years.
Back in 2015, the International Finance Facility for Immunization issued the world’s first humanitarian Islamic paper, worth US$500 million, to finance projects for the Global Alliance for Vaccines and Immunization (Gavi). The World Bank acted as the treasury manager in the deal.
A year later, the International Finance Facility for Immunization tapped for the second time the Islamic international capital market with a US$200 million Sukuk facility, issued once again to support the immunization and vaccination programs of Gavi.
More recently, a report published during the World Humanitarian Summit 2016, highlighting “the very real potential for Islamic finance to provide solutions to the global humanitarian financing problem”, took Sukuk as an example of a tool that could be utilized to meet humanitarian needs.
Due to humanitarian emergencies caused by armed conflicts in Syria, Yemen, the Democratic Republic of the Congo and Myanmar’s Rohingya refugee crisis, to name a few, some 136 million people across the world require assistance and humanitarian aid. Consequently, the need for humanitarian funding has hit a new record in 2018 with the United Nations Office for the Coordination of Humanitarian Affairs appealing for a total of US$22.5 billion.