ISLAMIC FINANCE AND IMPACT INVESTING

The scale and ambition of the SDGs require massive financial and technical resources. The pre-pandemic annual financing gap of US$ 2.5 trillion in developing countries to achieve the SDGs increased to US$ 4.2 trillion in 2020.

Financing the Global Goals, however, is not an insurmountable task. Globally we have more than enough resources – but only if all available resources are effectively deployed to support the implementation of the 2030 Agenda. This includes an exploration of innovative sources of finance and the leveraging of private investments alongside traditional forms of development finance.

Islamic finance can be a strong and non-traditional source of financing for the SDGs. With global assets reached US$3.4 trillion in 2020, and projected growth of 8% per annum until 2025, Islamic finance has a footprint in Asia and Middle East; is ripe for growth in South America and Europe; and has future markets in North America, Central Asia and Australia.

Another important source of funding for the SDGs is impact investing. The IFC’s latest estimate of the global market for impact investments shows that US$2.3 trillion were invested for impact in 2020. The market is estimated to sustain strong growth with a potential to reach US$ 26 trillion in the near future.