Recalling the promise, world’s richest countries made on 24 October 1970 through a landmark UN resolution, to give a small percentage of their income annually – just 0.7% – in international aid to poor countries, Chema Vera, Interim Executive Director of Oxfam International estimates that had all donor countries kept their promise they would have donated, over the last 50 years, an extra $5.7 trillion to the recipients.
Since they did not, therefore, by Mr. Vera’s logic the rich donor countries owe the world’s poor recipients as much (The world’s poorest people are owed $5.7 trillion, published in World Economic Forum’s Newsletter dated Nov. 3, 2020).
“This is not largesse. It is not charity,” says Mr. Vera but a duty and an obligation, “if only in a small way, towards making up for the colonial exploitation of the developing world by wealthy nations.”
Too many rich nations continue to fail to meet the target they set. Last year, members of the OECD club of rich nations contributed on average just 0.3% of their gross national income (GNI) to aid. In 2019, over a third of that amount ($55 billion) was in fact paid back to wealthy nations in debt repayments by countries in sub-Saharan Africa alone – a harsh reminder of a global economic system rigged in favor of the richest nations and richest people.
To put it in perspective, $ 5.7 trillion is enough money to help the world’s poorest 59 countries meet the Sustainable Development Goals for the next decade. That’s every girl and boy having a school to go to free of charge, and universal healthcare systems with millions of doctors and nurses on the front line. And more.
While many rich countries have failed to keep the promise some have proven that the 0.7% target is realistic, sensible policy. Five countries - Luxembourg, Norway, Sweden, Denmark and the United Kingdom – are all meeting or exceeding their target. In doing so, they have responded to the calls of millions of citizens around the world.
Because of the generosity of the above mentioned countries aid has, 50 years on, helped to eradicate polio in Africa and save 38 million lives through the Global Fund to Fight AIDS, Tuberculosis and Malaria. Millions of children have gone to school, especially girls. Aid has helped countries around the world to strengthen their governance – from raising taxes more progressively to ensuring citizens hold them to account. It is helping poor countries to adapt to climate change.
According to Mr. Vera, today aid is needed more than ever, not least in the wake of a pandemic that is wreaking havoc on the poorest and an inequality crisis that is driving our world apart. The pandemic risks pushing as many as 200 to 500 million people into poverty. Aid can mean the difference between life and death for millions of people in the years to come.
We certainly need more aid, he says, “but we also need to do it better: aid that writes itself out of a job – not the colonial kind that fuels dependency. We need a kind of aid that respects the leadership of local communities, not the whims of rich men in rich capitals. And we need aid to be truly effective, long-term and predictable – instead of the wasteful public-private partnerships, for example on health and education, that do an injustice to people in poor countries, as well as to taxpayers in rich countries in squandering their contributions.”
According to Douglas Broom, Senior Writer, Formative content at World Economic Forum (These countries give the most aid - and are the most principled about it published on April 4, 2019), the 30 rich nations who make up the OECD’s Development Assistance Committee (DAC) use three criteria: the extent to which their aid is targeted at actual need; the degree to which it contributes to addressing problems that can only be solved by global cooperation; and how little of the aid is tied to the donor’s commercial or strategic interests.
Using this approach, Luxembourg is rated the most principled aid donor, followed closely by the UK and Sweden. Ireland and Norway complete the top five nations in the index. Italy is the lowest performing G7 country in the rankings at number 20 while the US, where the administration is reviewing US aid priorities, ranks at number nine. Denmark, which also exceeds the UN aid target, came 11th in the rankings because of a low score on the global cooperation measure.
However, in 2016, a high-level panel commissioned by the then UN Secretary-General, Ban Ki-moon, estimated a humanitarian financing deficit of $15 billion – and the gap is widening each year. Last year, only 58.5% of requested humanitarian funding needs were met.
UN Under-Secretary-General for Political and Peace building Affairs, Rosemary DiCarlo, warned the Security Council earlier this year, observing that “climate change has heightened competition for diminishing land, forage and water resources in certain countries, fueling tensions between herders and farmers, compounding socioeconomic exclusion and raising the chances of youth being recruited into armed groups”.
In the humanitarian sector, international aid organizations are looking to new sources of capital and utilizing Islamic social finance for humanitarian projects.
According to Maram Ahmed, Fellow, School of Oriental and African Studies (SOAS), University of London (How traditional Islamic giving can play a role in the future of aid—published on May 2, 2019), Islamic finance could be the answer to pressing humanitarian issues, from drought relief to development.
Given the complexity and likely continuation of current conflicts, by 2030 an estimated 80% of the world’s extreme poor will live in areas defined as fragile – the majority of which will be Muslim-majority countries, or states with significant Muslim populations.
Islamic social finance was developed in adherence to the Sharia principles of socioeconomic justice, equality and collective prosperity. Through mobilization of tools such as Zakat, Waqf and Sadaqah, it can help deliver much-needed financing for the humanitarian challenges caused by climate change.
Zakat – wealth tax and a means of wealth distribution – is thought of as harmonizing the relationship between the individual and public interest (“maslaha”). Each year, Muslims are required to donate 2.5% of one year’s total cumulative wealth to the poor in the form of Zakat. Last year alone, approximately £300 million worth of Zakat was donated by Muslims in the UK. The Islamic Development Bank estimates the global value of Zakat to be between $232 billion and $560 billion annually.
Waqf is an endowment to a religious, educational or charitable cause, most frequently used to build schools, hospitals or religious institutions. Given its communitarian nature, Waqf is often used to fund social projects and services.
Sadaqah is voluntary charity given on an ad-hoc basis. Think of putting coins into a charity donation box. Due to its irregular nature, Sadaqah is often difficult to calculate, because it varies from individual to individual and depends on their disposable income and level of generosity.
Islamic social finance tools such as Zakat, Sadaqah and Waqf have enormous potential to be leveraged and scaled.
For example, in Indonesia, Zakat has been used to fund renewable energy projects in rural areas. The country’s national Zakat collection agency, BAZNAS, used approximately $350,000 to finance the building of a power plant in the province of Jambi, to help to provide much-needed electricity for residents in deprived villages.
Last year, the International Federation of the Red Cross and Red Crescent Societies (IFRC) used Zakat collected in the Malaysian state of Perlis to fund a drought-assistance program in the Kenyan county of Kitui, pioneering a sustainable humanitarian Zakat initiative.
The aim of the programme was to assist communities affected by climate change-induced drought in southern Kenya, using a two-level approach to tackle both water access and cash crop problems concurrently.
The programme provided access to clean water and livelihood opportunities to the county residents by using Zakat funds to repair boreholes used to extract water and dig new ones. In addition, green gram seeds (a regional staple) were purchased using Zakat funds and distributed to local families for farming purposes. On average, each family received 2kg of seeds, which had the capacity of yielding 180kg of harvest.
The results speak for themselves. In total, $1.2 million in Zakat funding was channeled to Kitui county. Not only was a total return of approximately $20 million generated from green gram crop sales, but access to much-needed clean water was made available to 175,000 families.
Given that out of the two-thirds facing acute hunger in the world, 62.5% belong to Muslim countries, the example of Kenya’s Kitui county demonstrates that Islamic social finance can provide sustainable solutions to food and water problems.
Islamic social finance was highlighted at the World Humanitarian Summit in 2016 as an important source of funding. Its full potential, however, is yet to be unlocked.
The examples of Indonesia and Kenya show how tools such as Zakat can be mobilized to address climate change-induced humanitarian problems. More importantly, they provide models on how to move from a charity-based “disaster relief” approach to long-term development, bringing us closer to achieving the United Nations’ Sustainable Development Goals. Policymakers and international humanitarian organizations need to start considering Islamic social finance as a viable option. In an era when climate change is unprecedentedly stretching humanitarian response mechanisms, the traditional modes of giving enshrined in Islamic culture offer a way forward.
Copyright Business Recorder, 2020