UNDP ICPSD and GIFIIP Provide Technical Assistance to Türkiye’s First Private Sector Social Sukuk Issuance
The Global Islamic Finance and Impact Investing Platform (GIFIIP), a joint initiative of the United Nations Development Programme (UNDP) Istanbul International Center for Private Sector in Development (ICPSD) and Islamic Development Bank (IsDB), provides technical assistance to Türkiye’s first private sector social sukuk issuance.
Social sukuk, known as Islamic social bonds, is an innovative financing mechanism for addressing complex social concerns while adhering to the Sustainable Development Goals (SDGs) and Islamic finance principles. In developing nations where inequality and access to financial resources pose societal challenges and where the need for transformative change is most urgent, such social impact initiatives play a critical role for small- and medium-sized enterprises (SMEs) and vulnerable populations. Through prioritizing social impact projects, social sukuk enables SMEs to access essential funds and actively participate in economic growth, contributing to the development of sustainable communities.
The Global Islamic Finance and Impact Investing Platform (GIFIIP), a joint initiative of the United Nations Development Programme (UNDP) Istanbul International Center for Private Sector in Development (ICPSD) and Islamic Development Bank (IsDB), builds on innovation, entrepreneurship and multistakeholder collaborations to maximize the scale and effectiveness of sustainable development investments. Engaging the private sector, governments, and key stakeholders operating in the Islamic finance and impact investing markets; the Platform aims to promote market-based solutions to sustainable development challenges by policy dialogue, knowledge sharing and technical assistance.
In February 2024, Türkiye’s first private sector social sukuk totaling TRY50.000.000 (Fifty million Turkish Liras) with a one-year term has been issued under the sukuk issuance programme amounted TRY100.000.000 (One hundred million Turkish Liras) which is obtained from the Capital Markets Board of Türkiye in January 2024. Türkiye Emlak Katılım Bankası (Emlak Katılım), holding a leading position in the sector with its high-volume and innovative sukuk issuances in the domestic market, executed the sukuk transaction as bookrunner through Emlak Varlık Kiralama A.Ş. (issuer), which is a wholly owned subsidiary, with 100% ownership.
The funds raised from this issuance are earmarked to contribute to project categories outlined in the Social Sukuk Framework (the Framework) established by the WorqCompany Dış Ticaret A.Ş (WorqCompany Foreign Commerce Inc. – WorqCompany), focusing on supporting economic development, financial inclusion, socioeconomic progress and job creation.
UNDP ICPSD and GIFIIP provided technical assistance, supported by Emlak Katılım, for the development of the Framework designed in accordance with the International Capital Market Association’s (ICMA) Social Bond Principles and IsDB’s Sustainable Finance Framework, as well as to obtain an independent second party opinion to verify its impact and credibility. The Impact Report, to be developed in alignment with the social sukuk‘s maturity, will present quantitative and qualitative assessments of the societal impact and benefits of the projects. GIFIIP will also provide technical assistance to support this endeavor.
WorqCompany aids young entrepreneurs and e-commerce businesses on online marketplaces in overcoming working capital challenges during growth phases by providing procurement support based on a revenue-sharing model through its technology, a pioneering approach in its sector in Türkiye.
With the proceeds of the social sukuk issuance, WorqCompany will prioritize its focus on sustainable growth and development of SMEs in Türkiye, supporting development priority regions, providing capital support to female and social entrepreneurs, and tech-savvy young entrepreneurs with limited access to traditional financing sources. By focusing on areas such as gender equality and sustainable economic growth, these initiatives directly contribute to several SDGs, including SDG 5 Gender Equality, SDG 8 Decent Work and Economic Growth, SDG 9 Industry, Innovation, and Infrastructure and SDG 10 Reduced Inequalities.