This report by OECD identifies the opportunities that Islamic finance presents for donors, as they look to deliver the Sustainable Development Goals (SDGs). To achieve the SDGs by 2030, Arab and OECD DAC donors need to mobilise innovative forms of financing and deliver the UN Secretary-General’s call to deepen the transformation of development finance systems. DAC members could do so by, amongst other things, broadening and deepening exposure to alternative forms of financing, such as Islamic finance. Islamic finance represents USD 2.5 trillion – a share of which could potentially be mobilised for development – and its tenets resonate strongly across the member countries of the Organisation for Islamic Cooperation (57 members, many of which are developing countries) and beyond (e.g. with Muslims in DAC member countries).
Arab donors could consider harnessing Islamic finance, as a means, to strengthen partnerships with DAC members, whilst increasing the effectiveness of existing aid flows in countries and contexts where they have considerable access.
Doing so could create a more equitable and stable development finance order capable of delivering the SDGs and achieve greater impact in partner countries. Both communities would then be able to chart a path for all development actors, notably the private sector, development finance institutions and other bilateral donors to harness Islamic finance for development. This report provides a set of action points for Arab and DAC donors, highlighting the benefits of engaging in and co-operating through Islamic finance to deliver the SDGs.
