Achieving the SDGs demand for multifaceted and 360 degree approaches. So does it compel for catalyzing existing powerful mechanisms that we often don’t realize. Or don’t realize yet their amplitude. One of those impactful and yet unrecognized mechanisms is Islamic Finance—striving for just fair, risk-sharing and asset-based financing and equitable wealth distribution, Islamic finance is strongly linked to the real economy and is associated to the impact investing industry (World Bank, 2017). A few things strike us when we look closer at Islamic Finance Potential: What does it take to effectively leverage Islamic Finance for development ? What does it take to unlock its untapped potential to nurturing inclusive finance, alleviating poverty, and advancing the SDGs?
Then, raising-awareness efforts about the compatibility between Islamic finance and impact investing have to be swift and widespread. But if we are to truly harness Islamic finance as an engine for achieving the SDGs, then raising awareness must be backed up with actionable suggestions and ready-to-implement policies.
But even more encouraging than words is to effectively foster the development of a capital market system for Islamic finance impact investing. That would suggest to adapt and comprehend legal frameworks and tax standards. Together with aligning the impact measurement metrics with the global impact investing standards.
Another way may be to look at this could be to bring together Islamic financiers with impact investors and high-impact entrepreneurs designing innovative market-based solutions that tackle global development challenges.
With this in mind, UNDP and IDB Group have created the Global Islamic Finance and Impact Investing Platform (GIFIIP) with the aim to make the Islamic finance impact investing at the worldwide frontline of SDGs implementation.