Ideas exchange: International Federation of Red Cross and Red Crescent Societies (IFRC) undersecretary-general for partnerships Tan Sri Jemilah Mahmood (left), Islamic Development Bank (IDB) governor for Yemen, Mohammed Abdul-Wahed Al-Maitami (second left), Statistical, Economic and Social Research and Training Center for Islamic Countries director general Musa Kulaklikaya (second right) and National Disaster Mitigation Agency (BNPB) deputy chief for prevention and preparedness B. Wisnu Widjaja take part in a panel discussion on Sunday as part of the IDB’s 41st annual meeting in Jakarta. The seminar covered how governments and communities build resilience to risks related to poverty, crises and conflict. (JP/DON)

Global multilateral agency the Islamic Development Bank (IDB) and Bank Indonesia (BI) are endorsing an advanced mechanism for Islamic-based social financing aimed at alleviating poverty and improving welfare.

Both parties expect that IDB member countries, which have potentially masses of Islamic social aid in the form of zakat (alms) and waqaf (endowments), will work together to support better management and channeling of those funds as alternative resources for supporting global development.

Speaking during a discussion on the first day of the IDB’s annual meeting in Jakarta, a number of panelists expressed their view that certain global crises, including the Syrian civil war refugee crisis and those triggered by climate change, had rung a loud bell, signalling a critical need for improved global resilience.

They agreed that Islamic social aid should play more of a role in reducing the negative impacts of those crises, which affect vulnerable societies in almost all Islamic countries.

Tan Sri Jemilah Mahmood, under-secretary-general for partnerships at the International Federation of Red Cross and Red Crescent Societies (IFRC), cited data that suggested global Islamic social aid was potentially worth roughly US$600 billion, but said only around 1 percent of that was currently being collected.

She said Indonesia, the world’s largest Muslim-majority country with thus a large potential pool of alms, was expected to set a good example for the mobilization of Islamic social aid, with the help of the IDB.

According to data at the National Alms Agency (Baznas), which records the amount of money raised by regional alms agencies (Bazis) and private foundations, the country collected Rp 3.2 trillion ($239.9 million) in alms in 2014, up from Rp 68.4 billion in 2002.

However, the amount of alms raised in 2014 was equal to only 1.5 percent of the potential Rp 217 trillion that could have been raised, according to a joint report from the IDB, Baznas and the Bogor Institute of Agriculture (IPB).

Dadang Muljawan, BI’s deputy director for Islamic finance and economic development, said the central bank had been involved in an international working group with the IDB, Baznas and other stakeholders in a number of countries aimed at improving the management of Islamic social aid.

In the Indonesian context, he said the main idea was to establish a special body that would manage the aid with good governance, accountability and improved channeling, possibly including the creation of sukuk (Islamic bonds) to support the fund management.

The IDB is holding its 41st annual meeting along with seminars and exhibitions from May 15 to 19 in Jakarta, gathering together government officials and various member-country stakeholders to look for development solutions amid a weak global economy and various crises.

Countries involved in the meeting, including Egypt, Morocco and Turkey, have signed off on $22.3 million of aid and a number of partnerships, all ready to be utilized for developing Islamic countries through various sectors, such as science, agriculture and natural-disaster management.

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