Leverage potential of Islamic finance industry to aid the vulnerable, says Perak Ruler

KUALA LUMPUR: More needs to be done to leverage the potential of the Islamic Financial industry, especially in helping those in poverty and crisis, says Perak Ruler Sultan Nazrin Shah. His Royal Highness, who is Mercy Malaysia’s Royal patron, said while the Islamic finance industry is poised to exceed US$3.5 trillion (RM16.4 trillion) by the end of this year, 35% of the global population facing poverty, totalling two billion people, are Muslims, despite Muslims constituting 22% of the world’s population. “…we are not yet realising the full humanitarian potential of Islamic social finance. Poverty is disproportionately concentrated in Muslim-majority countries, with 21% of the OIC (Organisation of Islamic Cooperation) population living below the poverty line. “Poverty, we know, pushes people into crisis, live without adequate food, shelter, medical care and infrastructure. “Of course, I believe that Islamic social finance should be targeted to help those in need regardless of faith. But when these mechanisms exist, when the global Islamic finance industry as a whole is flourishing, and yet a disproportionate number of Muslims worldwide continue to suffer in poverty, it is clear that more needs to be done to leverage Islamic finance’s potential,” said Sultan Nazrin. He said this in his keynote address, “Humanitarian Development Nexus: Building Resilence, Transforming Lives” in conjunction with the International Humanitarian Conference 2024 organised by Mercy Malaysia here Tuesday (May 28). Also present were Natural Resources and Environmental Sustainability Minister Nik Nazmi Nik Ahmad and Mercy Malaysia president Datuk Dr Ahmad Faizal Perdaus. Sultan Nazrin highlighted the transformative potential of Islamic finance, citing examples such as the Islamic Development Bank and the Development Investment Bank of Turkey formalising a US$200mil (RM938mil) financing arrangement to support businesses affected by the devastating Turkish earthquakes last year and facilitate long-term recovery. “I believe we need more of these large-scale mobilisations of Islamic Finance, combined with technological innovations that improve the collection and targeting of funds such as zakat on an everyday basis. “Platforms like Ethis (Malaysia’s Syariah-compliant equity crowdfunding platform), (Yayasan) Hasanah and the Maybank Islamic Mosque Adoption Programme are great examples of fintech solutions already in action, and I would like to see more of this going forward,” Sultan Nazrin said. In his speech, Sultan Nazrin also emphasised the issue of climate change, citing the UN Refugee Agency (UNHCR), which notes that climate change is increasingly linked to conflict and human displacement. “Environmental issues are a rapidly growing cause of humanitarian suffering, and we are all responsible for addressing this problem, we alone have the power to consciously impact its fortunes for better or worse. “Improving climate resilience requires some large-scale scientific interventions, for instance, better early warning systems for approaching disasters, also humanitarian diplomacy including high-level diplomatic efforts to reduce carbon emissions across the world,” Sultan Nazrin said. – Bernama