The 13th IDB Global Forum on Islamic Finance has recommended leveraging the risk-sharing framework and other ethical principles of Islamic finance to attract long-term investments required to achieve the gobal development goals.
Held under the theme "Leveraging Risk Sharing for Long-Term Investment" on 2 April 2018, the forum was organized by the Islamic Research and Training Institute (IRTI) in partnership with Ez-Zitouna University, during the 43rd Annual Meeting of the Islamic Development Bank (IDB) Group in Tunis.
During the forum, a panel comprising seasoned development practitioners, investment experts, and academics noted that a huge gap exists between the funding required for development projects and the resources pooled together by development partners—even though funds that could be tapped are either available or are being invested elsewhere.
Among the major causes of this situtation is that the private sector is not keen to take the potential risks and that multi-lateral development banks (MDBs) are not doing enough to attract investors. There is also "short-termism" fueled by demands for immediate returns by investment funds.
The forum therefore recommended leveraging the risk-sharing principles of Islamic finance to tap from the available resources for long-term investment in development programs. It was noted that with its principles that discourage speculation and link finance to the real economy, Islamic finance can facilitate long-term investment.
The forum also recommended a public-private partnership in which the public sector provides guarantees against the risks of long-term investment.
Furthermore, the forum urged MDBs to use risk-sharing principles as a way to attract investment for development projects, and called on governments to have the political will to utilize the opportunities offered by Islamic finance.
The panel discussants were Dr. Khaled Sherif, Vice-President, Regional Development, Integration and Business Delivery, African Development Bank (AfDB); Dr. Michael Bennett, Head of Derivatives and Structured Finance at the World Bank; Dr. Thorsten Beck, professor of Banking and Finance at Cass Business School, London; Mr. Bilel Sahnoun, Chief Exectuive Officer, Tunis Stock Exchange; and Dr. Walid Abdelwahab, Director General, Country Relations and Services, IDB.
IDB President Dr. Bandar Hajjar and Tunisian Finance Minister Mr. Mohamed Ridha Chalghoum attended the opening ceremony of the forum, where they spoke on the need to find effective ways of mobilizing long-term funding to address the critical development needs of the people.
The forum also featured the launching of the second edition of the Global Report on Islamic Finance 2018, jointly produced by the IDB Group and World Bank.