Funding Gap for SDGs in Islamic Countries Nears $1 Trillion Per Year

The Islamic Development Bank (IDB) has estimated the financing gap of member states of the Organization of Islamic Cooperation (OIC) to achieve sustainable development goals by about USD1 trillion per year, of which $700 billion to cover infrastructure shortages only.

In an interview, Dr. Bandar Hajjar, IDB President, said that the world’s 14 development banks, including those of Asia and Africa, have offered no more than $175 billion in 2017.

“This amount represents only a drop in the sea compared to the size of this gap,” he said.

On the sidelines of his visit to Morocco, in preparation for the annual meetings of the IDB, which will take place in Marrakech on April 3-6, Hajjar expressed the need to re-examine the adopted development approaches in order to involve the largest number of actors, and allow for a greater contribution by the private sector by improving the investment climate, developing laws, building strong institutions, and enhancing transparency.”

He pointed out that the IDB annual meetings would be an occasion to sign many cooperation agreements with member countries and with Morocco, the host country, in particular.

Asked about the IDB’s particularity compared to other multilateral development institutions in the world, Hajjar said: “The Islamic Development Bank is a multilateral development bank. However, it is the only one among all the multilateral financial and development institutions in the world that consists exclusively of the countries of the South, namely developing countries.”

The IDB includes the 57 member states of the OIC, with a population of about 1.7 billion, as well as Muslim communities in non-OIC countries, he explained.

“Development is the central issue, which poses great challenges to us. The countries served by the bank are experiencing strong demographic growth. We expect their population to rise to 2.2 billion by 2030 and over 200 million new people will reach the labor market. Those challenges require economic plans that turn them into promising investment opportunities,” Hajjar noted.

“The biggest challenge is how we use the population growth as a factor of production rather than a burden on the country,” he added.

Hajjar underlined that the developing countries also suffered from difficulties in financing, in public budgets, high indebtedness, in addition to rising unemployment.

“According to studies, these countries need investments of about $1 trillion per year to achieve the goals of sustainable development and to establish a strong infrastructure,” he stressed.

He went on to say that the IDB alone was not able to offer solutions to such difficulties.

“Given the magnitude of these challenges, the IDB alone cannot provide the solution… That is why we seek to rally support to achieve this goal,” he said.

Asked about the amount of the IDB Group’s financing for member states, he noted that since its establishment, the IDB’s financing reached USD131 billion.

“This figure compared to the size of needs, which I previously pointed out to be about a trillion dollars, is just a drop in the sea; even taking into account the funding of all 14 multilateral financial institutions in the world, including Africa and Asia, which did not exceed $174 billion in 2017,” Hajjar stated.

He emphasized that development was not limited to funding, but was an integrated package.

“Financing is only one of its components, in addition to capacity development, institution building, and the creation of an appropriate investment climate,” the IDB president said.

“If we want the private sector to contribute and invest in these countries, we must create a suitable environment for investments, a competitive economic climate, in addition to the development of laws and the consolidation of transparency,” he remarked.