Tackling poverty reduction: the role of the Islamic Development Bank.

• Author: Cisse, Amadou Boubacar

Poverly reduction is the greatest challenge facing humanity today. An ideological commitment to reduce or eradicate this phenomenon should be contemplated as part and parcel of social moral responsibility and shared human values across countries and generations. Failure to do so will have unprecedented repercussions on human development. Although the Millennium Development Goals (MDGs) have been accepted as a basis for action to free men, women and children from the dehumanizing conditions of extreme poverty, more than 1 billion people are estimated to be in absolute poverty worldwide. Of these, about 40 per cent, or 400 million people, are living in member countries of the Islamic Development Bank (IsDB).

Aware of the need for accelerating progress towards the MDGs and to achieve significant measurable improvement in people's lives in its member countries, the IsDB launched in May 2007 a poverty reduction fund--formally known as the Islamic Solidarity Fund for Development (ISFD)--with a targeted capital of $10 billion to be contributed by all member countries of the IsDB. The Fund's main purpose is to contribute to poverty alleviation by reducing unemployment, fighting diseases and epidemics, eliminating illiteracy and building capacities in member countries.

Fighting poverty, however, is not a new concept to the IsDB. It has always considered poverty as a moral wrong that should be fought by all stakeholders as a matter of moral necessity. This is, in fact, as important as protecting human life and dignity. Since it started its activities in 1975, the Bank had provided, as part of its overall financing, more than $5 billion to member countries for pro-poor activities, such as agriculture, education, health, water and sanitation. However, unlike other multilateral development banks, which traditionally have dedicated windows for concessionary financing, the IsDB had been depending upon its ordinary capital resources to provide concessionary financing to those activities. This, by its very nature, was unsustainable. The establishment of ISFD was, therefore, an important step in ensuring a sustainable and expanded social sector and pro-poor financing, leading to the achievement of the MDGs.

In order to formulate and rethink its policy activities to implement this new programme, the IsDB approach to poverty reduction has been based on the notion that human dignity, brotherhood, social equality and justice constitute natural and inviolable...