Islamic Finance and Impact Investing for the SDGs: The Way Forward New York, USA September 2016

1. The SDGs &
Islamic Finance
Senior Vice President
Mahmoud Mohieldin
September 2016

2. 1
PROGRESS ON THE MDGs IN OIC MEMBERS
Success on some MDGs offset by underachievement in other vital areas
OIC Members, on average, have
significantly lower access to
sanitation than the world average
Maternal Mortality is significantly higher than
the world average
54%
56%
58%
60%
62%
64%
66%
68%
OIC Members World
Access to Sanitation
200
210
220
230
240
250
260
OIC Members World
Maternal Mortality Ratio
(per 100,000 live births)

3. 2
OIC MEMBERS WITH
ISLAMIC BANKING VS. WITHOUT ISLAMIC BANKING
Countries with Islamic Banking had better performance on financial
inclusion and financial depth indicators
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Bank Account Financial Depth
W/ Islamic Banking
W/O Islamic Banking

4. GLOBAL FRAMEWORKS FOR DEVELOPMENT:
FROM MDGs TO SDGs
MDGs (2000-2015) SDGs (2016-2030)
Goals 8 17
Targets 21 169
Indicators 60 ~231
Priority Areas Human Development
Holistic: Economic, Social,
Environmental
Scope Developing Countries Universal
6

5. GLOBAL TRENDS AFFECTING THE 2030 AGENDA
GLOBAL
TRENDS
SDG implementation
Evolution of
globalization
ADDRESSING THE CHALLENGES AHEAD
• Protecting the poor and displaced from conflict,
violence, fragility and other disruptions (SDG#1;
SDG#16)
• Sustainable health and welfare systems for
vulnerable population segments (SDG#3)
• Jobs and economic opportunities (SDG#8)
• Disaster risk preparedness and mitigation of macro-
shocks (SDG#13)
• Adaptation of agriculture to changing climate
(SDG#2)
• Shift in public/private spending from fossil fuels to
renewables and energy efficiency (SDG#7)
• New sources of growth and trade, especially for
commodity exporters (SDG#9)
• Urban management for sustainable cities (SDG#11)
• Private expertise/funding for infrastructure/urban
services (SDG#11; SDG#9; SDG#17)
Cycles, disruptions,
and fragility
Pressure on resources
and climate change
Urbanization
Demography
4

6. ISLAMIC FINANCE –
A PRO-DEVELOPMENT FINANCIAL SYSTEM
•Economic and
Social Justice
•Inclusive Growth
• Entrepreneurship
• Redistributive
Instruments (Zakaat,
Qard-al-Hassan, Waqf,
Sadaqaat, etc)
• Economic Institutions
• Property Rights
• Contracts
• Trust
• Rules of Markets
• Business Ethics
• Prohibition of
Interest,
• Promotion of
Exchange and Trade
• Information
Asymmetry (gharar)
Risk Sharing
Corporate
Governance
and
Leadership
Economic
Development
Financial
Inclusion
21

7. 6
 Helps Islamic financial institutions to be more
resilient to particular shocks
 May help to diffuse risk in the financial system
 Helps achieve empowerment of marginalized
groups
 Helps access funds used for nutrition,
healthcare and education
ISLAMIC FINANCE SUPPORTS A NUMBER OF
SUSTAINABLE DEVELOPMENT OBJECTIVES
 Helps attract investment in infrastructure
 Can be leveraged to attract private funding and
form private public partnerships (PPPs)
Financial
stability
1
Financial
inclusion
2
Social
impact
3
Infrastructure
development
4
 Helps widening the range of products and
services available to businesses and
households
 Helps improving access of the underserved to
financial services

8. 7
• Issuance of various
Islamic Finance
instruments, incl.
sukuk, which have
raised $700M in 2015
EXAMPLES OF WBG IMPLEMENTATION OF ISLAMIC FINANCE
DIFFERENT PARTS OF THE WBG SUPPORT ISLAMIC FINANCE
• Establishment of the
IFC Sukuk Company,
which issued $100M in
trust certificates in
2015
• Provision of a $427M
Sharia-compliant
investment guarantee for
infrastructure projects
• Political risk insurance
worth $450M in 2015
The WBG is working with partners to leverage the potential of Islamic finance and
has introduced investment projects that use Islamic financing across the world

9. Thank You
Senior Vice President
Mahmoud Mohieldin September 2016
@ WBG2030

10. Annex 1: Contribution of the financial and social sectors to
the achievement of the SDGs
SDGs
Financial
Inclusion
Financial
Stability
Social/Environmental
Impact
Infrastructure
Development
End poverty everywhere
X X
End hunger, achieve food security and improved nutrition and promote sustainable
agriculture
X X X
Ensure healthy lives and promote well-being for all at all ages
X X X
Ensure inclusive and equitable quality education and promote lifelong learning opportunities
for all
X
Achieve gender equality and empower all women and girls
X X
Ensure availability and sustainable management of water and sanitation for all
X X
Ensure access to affordable, reliable, sustainable and modern energy for all
X
Promote sustained, inclusive and sustainable economic growth, full and productive
employment and decent work for all
X X
Build resilient infrastructure, promote inclusive and sustainable industrialization and foster
innovation
X
Reduce inequality within and among countries
Make cities and human settlements inclusive, safe, resilient and sustainable
X X
Ensure sustainable consumption and production patterns
Take urgent action to combat climate change and its impacts
X
Conserve and sustainably use the oceans, seas and marine resources for sustainable
development
X
Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage
forests, combat desertification, and halt and reverse land degradation and halt biodiversity
loss
X
Promote peaceful and inclusive societies for sustainable development, provide access to
justice for all and build effective, accountable and inclusive institutions at all levels
X X
Strengthen the means of implementation and revitalize the global partnership for sustainable
development
X X

11. Annex 2: Zakah can fill poverty gaps in 20 Muslim countries
(1)
Country name
(2)
Survey year
(3)
GDP
PPP
Current USD (Billion)
(4)
Muslim pop.
(%)
(5)
Adjusted GDP PPP USD
(Billion)
(6)
Domestic Zakah
(Billion USD)
(7)
Incoming
remittances
(Billions USD)
(8)
Domestic savings rate
(% of GDP)
(9)
Zakah considering
Remi-ttances
(% of GDP)
(10)
resource shortfall under
$1.25 per annum as %
of GDP
(11)
Does Zakah cover
(10)?
Albania 2008 26.45 79.9 21.13 0.38 1.50 1.60 1.44 0.01 y
Algeria 1995 129.75 98 127.16 2.29 1.12 28.11 1.77 0.14 y
Azerbaijan 2008 76.73 99.2 76.12 1.37 1.55 64.89 1.82 0.01 y
Bangladesh 2005 163.73 89.6 146.70 2.64 4.31 18.06 1.62 5.58 n
Benin 2003 9.14 24.4 2.23 0.04 0.06 5.98 0.44 5.78 n
Burkina Faso 2003 12.09 59 7.13 0.13 0.05 4.51 1.06 9.83 n
Cameroon 2007 39.77 17.9 7.12 0.13 0.17 18.53 0.32 0.26 y
Comoros 2004 0.63 98.3 0.62 0.01 0.01 0.00 1.77 8.89 n
Cote d'Ivoire 2008 34.30 36.7 12.59 0.23 0.20 17.85 0.66 2.05 n
Djibouti 2002 1.24 96.9 1.20 0.02 0.01 4.87 1.75 1.49 y
Egypt 2005 333.22 94.6 315.22 6.30 5.02 15.71 1.90 0.04 y
Gabon 2005 17.84 9.5 1.69 0.03 0.01 58.35 0.17 0.03 y
Gambia 2003 1.46 95 1.38 0.02 0.06 11.05 1.72 5.42 n
Guinea 2007 9.78 84.4 8.25 0.15 0.15 9.68 1.52 6.71 n
Guinea-Bissau 2002 1.26 42.2 0.53 0.01 0.02 0.00 0.76 8.21 n
Guyana 1998 1.54 7.2 0.11 0.00 0.01 16.94 0.13 0.88 n
Indonesia 2009 965.57 88.2 851.63 8.52 6.79 33.76 0.89 0.39 y
Iran 2005 643.50 99.4 639.64 11.51 1.03 41.09 1.79 0.02 y
Iraq 2007 94.97 99 94.02 1.69 0.00 0.00 1.78 0.09 y
Jordan 2006 26.14 98.2 25.67 0.46 2.88 0.00 1.77 0.01 y
Kazakhstan 2007 169.63 56.4 95.67 1.72 0.22 43.84 1.02 0.00 y
Kyrgyz Republic 2007 10.62 86.3 9.17 0.16 0.71 0.00 1.55 0.02 y
Malaysia 2009 384.88 60.4 232.47 4.18 1.13 36.03 1.09 0.00 y
Maldives 2004 1.20 98.4 1.18 0.02 0.00 46.15 1.77 0.02 y
Mali 2006 12.67 92.5 11.72 0.21 0.21 14.75 1.67 8.20 n
Morocco 2007 127.85 99 126.57 2.28 6.73 23.37 1.81 0.06 y
Mozambique 2008 18.89 22.8 4.31 0.08 0.12 1.57 0.41 13.62 n
Niger 2007 9.25 98.6 9.12 0.16 0.08 0.00 1.77 8.31 n
Nigeria 2004 224.62 50.4 113.21 2.04 2.27 0.00 0.91 8.26 n
Pakistan 2005 340.26 96.3 327.67 5.24 4.28 15.21 1.55 0.91 y
Senegal 2005 18.21 96 17.48 0.31 0.79 14.09 1.74 3.05 n
Sierra Leone 2003 2.72 71.3 1.94 0.03 0.03 0.00 1.28 16.10 n
Suriname 1999 2.02 15.9 0.32 0.01 0.00 11.25 0.29 0.61 n
Syrian Arab 2004 70.02 92.2 64.56 0.97 0.86 20.20 1.39 0.02 y
Tajikistan 2004 8.77 84.1 7.38 0.13 0.25 0.61 1.51 1.70 n
Togo 2006 4.96 12.2 0.61 0.01 0.23 0.00 0.22 6.42 n
Turkey 2005 781.24 98 765.62 14.55 0.89 16.49 1.86 0.04 y
Uganda 2009 39.81 12.1 4.82 0.09 0.75 12.52 0.22 3.10 n
Yemen 2005 46.13 99.1 45.71 0.82 1.28 0.00 1.78 0.87 y
Source: Mohieldin et al. 2011