Despite a tremendous increase in the number of initiatives dedicated to sustainable development since the adoption of the 2030 Agenda in 2015, a persistent $2.5 trillion annual financing gap stands in the way of the Sustainable Development Goals (SDGs). The international community has committed to turn promises into reality as we enter the “decade of action and delivery”, acknowledging that the progress made so far has been very slow in many areas. The increased call for accountability in achieving the SDGs has given rise to harnessing innovative and untapped financing sources.

In January 2016, the High-Level Panel on Humanitarian Financing Report to the Secretary-General specifically highlighted the very real potential that Islamic social financing has to help address the challenges of ending extreme poverty, boosting shared prosperity and achieving the SDGs. Islamic social financing broadly comprises traditional Islamic instruments such as zakat (obligatory almsgiving), sadakah (charitable giving) and waqf (endowments and trusts), as well as Islamic microfinance (mainly based on qard hassan “benevolent loans”). Zakat mandates that all eligible Muslims pay at least 2.5% of their accumulated “zakatable” wealth. It is a cash and/or in kind contribution to the poor that encourages cooperation, fair dealings, transparency and spending on others. Alleviating hunger, poverty and inequality, promoting peace and protecting the environment are central to the core Islamic principles known as the Maqasid Al-Shariah. The Quran identifies eight categories of eligible use for Zakat, including helping the poor and needy, refugees and displaced people and liberating those in bondage. 

In the Islamic faith, there are five foundational goals also known as Maqasid al Sharia. These include: protection of faith, life, progeny, intellect and wealth. Annual Zakat contributions amount to around USD $300 billion across the Islamic world, representing an important source of SDG finance. Zakat, waqf and sadakah are at the heart of the Islamic social finance. These instruments collectively promote the principles of social justice, solidarity, brotherhood and mutuality whereas social and microfinance enable the poor and their small businesses as that they cannot access traditional financing. In order to access financing for small projects that generate income and therefore reduces their reliance on charity, benevolent sources of Islamic social finance assist in an effective manner. Consequently, Islam’s promotion of social trust, cooperation and  solidarity, means that Islamic social financing aligns strongly with the SDGs.