Building Resilience for Equitable Growth in the Post-2015 Development Agenda Statement of Dr Ahmed Mohamed Ali President Islamic Development Bank Group Jeddah Saudi Arabia For 11 th World Islamic Economic Forum: Building Resilience for Equitable Growth, 3-5 November 2015 Kuala Lumpur, Malaysia 1
بسم هللا الرحمن الرحيم الحمد هلل رب العالمين والصالة والسالم على أشرف المرسلين H.E. DATO SRI NAJIB TUN ABDUL RAZAK, PRIME MINISTER, MALAYSIA H.E. DRAGAN COVIC, CHAIRMAN OF THE PRESIDENCY, BOSNIA AND HERZEGOVINA H.E. YAQUB EYYUBOV, DEPUTY PRIME MINISTER, REPUBLIC OF AZERBAIJAN H.E. SUN CHANTHOL, SPECIAL ENVOY TO PRIME MINISTER HUN 2
SEN, SENIOR MINISTER AND MINISTER OF COMMERCE, CAMBODIA H.E. TUN MUSA HITAM, CHAIRMAN, WORLD ISLAMIC ECONOMIC FOUNDATION السالم عليكم ورحمة هللا وبركاته Excellencies, Ladies and Gentlemen, On behalf of the Islamic Development Bank Group, I renew my warm congratulations to the People and Government of Malaysia and the World Islamic Economic Foundation, for increasingly sustaining the high quality and 3
relevance of the World Islamic Economic Forum. The WIEF is undoubtedly one of the finest showcases of the Ummah, an excellent platform for partnership, exchange, and knowledge sharing on critical development issues. It is our duty to commend this outstanding achievement and provide support for further success. In this regard, it is my pleasure to reaffirm the Islamic Development Bank Group s commitment to pursue fruitful collaboration with the Foundation and Malaysia in the service of the Ummah and the entire world. 4
In this special forum, I want to express strong appreciation to the Government of Malaysia for the excellent relations since the establishment of the Islamic Development Bank. Malaysia has been very active with its initiative of capacity building program for the Least Developed OIC member countries in the areas of agriculture, education and Islamic finance to share Malaysia s knowledge, experience and expertise. In fact, this has been inspirational for IDB Group s Reverse Linkage program, whereby OIC Member Countries themselves are primary, forefront, and direct agents in the provision of specific expertise, knowledge, 5
know-how, investments, success stories, and best practices to achieve a win-win outcome. Excellencies, Ladies and Gentleman, The theme of the forum Building Resilience for Equitable Growth eloquently reflects some of the major challenges confronted by developing countries, especially emerging market economies, as the global economy is experiencing some major transitions. While recovery from the Financial Crisis of 2008 is still to firm up, the global economy is facing many headwinds: oil prices instability, exchange rate adjustments, divergence of monetary policies and the ramifications of 6
China s slowdown on commodity prices and global trade. OIC member countries are facing many other challenges as well. There are more than 60 million people displaced due to conflict and disasters in the world today. More than 90% of them come from OIC member countries. In Yemen last week, not only are people affected by war, but a category-4 cyclone landed on them over the weekend. Countries subject to these tragic challenges will have little chance of achieving full potentials whilst development gains are eroded as a result of war and disasters. The Ummah has no excuse now but to lead in rethinking how we assist in building resilience 7
and preventing conflicts. We are pleased that the first ever World Humanitarian Summit is going to be held in an OIC member state Turkey and the main preparations are led by your very own Malaysian Dr Jemilah Mahmood. This is the time we stand behind the opportunities and IDB will be working closely with the United Nations and His Royal Highness Sultan Nazrin Shah who is the co-chairman of the high level panel for humanitarian financing leading to the Summit. We must apply all our knowledge on Islamic social finance and be innovative. Failing to do so, we will fail the youth and children and lead us to greater risks of radicalization. Today, we can classify more 8
than 60 various drivers of conflicts, but many of them are rooted in development deficits. OIC countries need to place more emphasis on building resilience to shocks and vulnerabilities to conflicts through more effective and inclusive governance and greater collaboration. The complex causes of conflicts as well as prevention and early recovery need to be addressed with collective efforts of all OIC community as well as international partners active in humanitarian, peacekeeping, and development fields. Excellencies, Ladies and Gentleman, As you are aware, the year 2015 has been marked by the adoption of the Sustainable 9
Development Goals (SDGs) during the UN Summit held in New York last September wherein the Global Leaders set a new global agenda to end poverty by 2030 and pursue a sustainable future. Indeed, the sustainable development agenda places a clear emphasis on promoting inclusive growth, reducing inequalities and building resilience. There is now a growing consensus among scholars and development practitioners that growth cannot be socially transformational if it fails to translate into shared prosperity. It means that growth dividends should benefit more to the poorest and the most vulnerable. 10
My vision is for a structural approach, focusing on the social infrastructure to promote incomegenerating activities that will support access to social services. In practical terms, as we build schools and health centers, especially in remote areas, we develop the rural infrastructure as well for agriculture, pastoralism, and trading facilities. I would also like to insist on the importance of financial inclusion. As a large portion of population in our member countries lack access to basic financial services, greater attention should be paid to extending financial resources to support excluded people and SMEs. 11
Building greater resilience will also be strengthened through sustained efforts towards economic diversification, technological upgrading and innovation, and through fostering the growth of micro-, small- and medium-sized enterprises. Excellencies, Ladies and Gentleman, The new development agenda covers the means of implementation, highlighting finance and partnership. Even the conservative estimates for a meaningful realization of the SDGs start from a trillion dollar global financing requirement annually. Coupled with the recurrent financial and economic crisis, this ambitious agenda cannot be achieved by 12
relying only on traditional sources of development finance, and there is an obvious need for fresh and innovative alternatives. In this context, I would like to particularly mention the opportunities provided by Islamic finance. Islamic finance has strong potential in promoting financial stability, financial inclusion and shared prosperity, and infrastructure development, all contributing to building resilience for equitable growth. The principles of Islamic finance can minimize the severity and frequency of financial crises by introducing greater discipline into the financial system and requiring the financier to bear or 13
share in the risk of the underlying economic activity. When it comes to promoting solidarity and combating inequality, the implementation of Zakat principle, complemented by the establishment of Awqaf, have historically played a major role in serving the social needs of the Ummah. I encourage the authorities in all the Muslim communities to fully endorse and support these institutions, the development of which can address many shortcomings in social and redistribution policies. 14
Likewise, the partnership financing, the core element of Islamic finance, is an important source of funding for SMEs that can provide opportunities for entrepreneurship, jobs creation and income generation. Moreover, the growing sukuk industry at the global level gives a tangible evidence that Islamic finance will play a major role in development financing especially for largescale infrastructure. In this regard, I would like to assure you of the readiness of the entire IDB Group, as a leading institution in fostering Islamic finance development, to cooperate with all stakeholders in developing the requisite enabling 15
environment for Islamic finance, establishing and supporting Islamic financial institutions, developing Islamic microfinance sector, and enhancing awareness about Islamic finance. I believe that together with the WIEF Foundation and all the Islamic institutions we can further impulse the growth of Islamic finance and enhance its contribution in achieving the SDGs for our Member Countries and beyond. In this regard, I call for a stronger partnership with governments, private sector institutions, multilateral development banks and donor institutions, with the view of mainstreaming Islamic finance into the global financial system 16
to improve resource mobilization and financial inclusion. Considering their critical roles in achieving the SDGs, IDB Group is organizing a Side Event this afternoon with the theme Financial Inclusion for Achieving SDGs: The Role of Islamic Finance and I am very pleased to invite you all to this event. Excellencies, Ladies and Gentleman, I would like to mention another important event that marked the year 2015 which has a significant importance for the development agenda. In fact, the active and energetic G20 Presidency of Turkey during the year 2015 provided an excellent opportunity for all developing countries to place their development 17
challenges in the forefront of the G20 agenda and also to reinforce dialogue, cooperation and integration among them for greater progress and more inclusive prosperity. The priorities initiated by Turkey during its G20 Presidency, namely, the three I s: Inclusiveness, Investment and Implementation are pertinent and important for developing countries. We all commend Turkey, the Chair of the G20, for giving special prominence to the private sector in the G20 process and initiating within the B20 various working groups and organizing a number of consultation meetings. In this context, the B20 Regional Consultation Forums, held in 8 major cities including Jeddah 18
and Baku discussed the most pressing economic issues and policy priorities for businesses in these regions. The newly created global platform of the World SMEs Forum is timely and most welcome. I urge our standard setters and policy makers to engage fully with this forum for addressing challenges facing the SMEs sector in our Member Countries, and to develop innovative tools and products of Islamic finance for SMEs. In this respect, I suggest the immediate establishment of a working group, among OIC institutions and specialized business forums like WIEF, to study the ways and means of leveraging support by Islamic finance to SMES, 19
through research and exchange of expertise. The IDB Group is more than committed to providing solutions in these areas and in particular the areas of regulations, including the development of the requisite legal, regulatory, supervisory and Shariah framework. The initiatives introduced by Turkey under its G20 Presidency, are extremely important for the developing countries as a whole and particularly the OIC Member Countries. I am confident that Turkey, Indonesia and Saudi Arabia, the three OIC Members Countriesmembers of G20, will pursue these initiatives and particularly the role of Islamic finance in ensuring more robust and inclusive growth. 20
Excellencies, Ladies and Gentleman, In conclusion, and in view of the tragic situation that a number of OIC Members Countries are living today, I would like to suggest to the WIEF to establish a platform for Experts to provide innovative ideas and to advice OIC institutions on ways and means to play a more active role in addressing the enormous challenges facing the Ummah today. Further, the 2030 Agenda for Sustainable Development stimulates action for the 5 Ps, People, Planet, Prosperity, Peace and Partnership, which can inspire and guide the work of this platform. 21
Excellencies, Ladies and Gentleman, Once again, I thank the Prime Minister, the people of Malaysia, and the World Islamic Economic Foundation for inviting IDB Group to this very important Forum. I wish the Forum successful deliberations in its entire dimensions: knowledge, business and partnership. I thank you all for your attention. والسالم عليكم ورحمة هللا وبركاته 22