Financing for Development
Your Excellency, Dr. Mulatu Teshome, the President of Ethiopia Excellencies, Heads of States Distinguished Guests Ladies and Gentlemen
It is a great privilege to address you today at this epoch-making Conference — the third in a series of global efforts to mobilize resources for global development agenda. We gather here to discuss how to fund and finance the new Sustainable Development Goals (SDGs) – a proposed set of 17 goals and 169 targets — which replace the 15-year-old Millennium Development Goals (MDGs) by the year end. I take this singular opportunity to thank the Government and the people of this great country for hosting this Conference and for their generous hospitality accorded to us since arriving in this beautiful city of Addis Ababa.
In the annals of development finance, 2015 will be remembered as a momentous year for concluding a number of international agreements on Sustainable Development Goals, climate change, and global trade. Success on these agreements largely depends on the outcome of today’s conference. In this regard, we need to take bold and decisive actions and act firmly to meet the expectations of our future generations. As agreed in the seminal Monterrey Consensus of 2002, each and every country has primary responsibility for its own economic and social development; however, the depth of the current involvement with the Sustainable Development Goals requires that the international community act as one as reflected in the 2011 Busan Partnership for Effective Development Cooperation.
The Millennium Development Goals that were adopted in 2000 have truly stimulated international community to collectively address one of the most pressing development issues of the 20th Century – extreme poverty. However, the SDGs have changed the narrative from reducing abject poverty to ending it, with greater attention to sustainable development. The challenges addressed by the SDGs are numerous and require resources in the range of trillion dollars. Therefore, better synergy and strategic alliances at national, regional and global levels to coordinate the resource requirements for SDGs will make a significant difference.
In mobilizing these resources, it is important to explore alternative and complementary innovative financing mechanisms such as Islamic finance, which has gained traction around the world over the years. It has footprint in Asia and Middle East; ripe for growth in South America and Europe; and has future markets in North America, Central Asia and Australia. Its global assets have grown considerably and estimated to reach US$1.8 trillion by 2014 with compounded annual growth rate of about 15-20 percent.
For a successful implementation of SDGs in a timely manner, certain prerequisities have to be met as necessitated by the impact of recent economic and financial crisis on many countries. These are financial stability, financial inclusion, and shared prosperity. Islamic finance offers promising potential solutions to these critical domains.
In fact, these major areas of contribution of Islamic finance could be instrumental in supporting international efforts targeting ending poverty (SDG-1), achieving food security (SDG-2), ensuring healthy lives (SDG-3), and promoting peaceful and inclusive society (SDG-16). Additionally, innovative Islamic financial instruments especially for infrastructure development can also be used to mobilize resources to finance water and sanitation projects (SDG-6), sustainable and affordable energy (SDG-7), build resilient infrastructure (SDG-9) and shelter (SDG-11).
For more than four decades, the Islamic Development Bank Group (IDB Group) has successfully pioneered the development of Islamic finance to fund short and long-term development activities in various sectors of the economies of our member countries. The Islamic financial services industry has now supported many projects of considerable sizes in social, economic and environmental sectors and it has great potential of being instrumental in funding several components of the SDGs as well.
To date, the IDB Group has applied various forms of Islamic financial instruments to finance projects and mobilize resources for infrastructure, energy, health, education, water, sanitation, trade, housing and other sectors and can also meet the needs of governments and private sector to finance mega projects as well as micro level operations.
I would like to recognize the efforts of our member countries and international institutions in promoting Islamic finance notably the G20 by including Islamic finance on its agenda, and the World Bank’s establishment of a Global Islamic Finance Development Center in Istanbul. It is my hope that this conference will consider Islamic finance as one of the tools for SDGs implementation and mainstream it in the global financial system.
Before concluding my speech, I am pleased to announce that the IDB Group will double its development assistance activities from around US$80 billion recorded during the MDGs-period to more than $150 billion in the next 15 years (2016-2030) to support programs and projects for the successful realization of SDGs in our member countries.
Indeed, we are on the cusp of history. We have this one-time opportunity today to change our destiny by ending human misery, saving our planet, and achieving inclusive growth.
While wishing this Conference a successful deliberation and outcome, I thank you very much for your kind attention!