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Islamic finance, a big chance to back SDGs
Some 30 million Indonesians — or 12 percent of the total population — lack sufficient access to electricity, a major constraint to achieving the SDGs in Indonesia.
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Muslims pay zakat fitrah alms at Istiqlal Mosque in Jakarta on Friday. During Ramadhan, Muslims are obliged to pay the special alms that will be distributed to those in need. (JP/Seto Wardhana)
Last month marked a milestone in how Islamic finance can contribute to address inequality and eradicate poverty in Indonesia.
When the National Alms Agency (BAZNAS) agreed to support the widening of electricity access to the poor in Jambi province in July, it marked the first official disbursement of the Islamic zakat fund to support the sustainable development goals (SDGs). The agreement sees Baznas disbursing US$350,000 to the project of the United Nations Development Program (UNDP) to deliver renewable energy to poor rural communities through the development of two micro hydro power plants.
Some 30 million Indonesians — or 12 percent of the total population — lack sufficient access to electricity, a major constraint to achieving the SDGs in Indonesia.
This agreement is a breakthrough and it should set a precedent in how Islamic finance can play a greater role in contributing to the 2030 global goal agenda. Against this backdrop, this week Indonesian Finance Ministry is hosting the 2nd Annual Islamic Finance Conference, titled “The role of Islamic Finance in eradicating poverty and income inequality” in Yogyakarta.
Eradicating poverty and socioeconomic inequalities are two of the 17 SDGs and a major constraint to sustainable development. Eight men own the same wealth as half the world, according to a recent Oxfam report.
With support from UNDP and other development partners, Indonesia has been leading the way in the implementation of SDGs. The recent Presidential Decree No. 59 of 2017 gave the muchneeded institutional framework, roles and responsibilities for the implementation of SDGs. But the country will be implementing this ambitious agenda amid low government revenues, the decreasing significance of Overseas Development Assistance, and lagging international private financial flows.
This is where Islamic finance industry, along with the private sector, can come in.
