Report of the UN High-Level Panel on Humanitarian Financing

Workshop on
Reaffirming Global Solidarity, Restoring Humanity
Casina Pio IV, 22 February 2016

H.R.H Sultan Nazrin Shah
The Ruler of Perak, Malaysia
and Co-Chair of the UN High-Level Panel for Humanitarian Financing 

Before I give a flavour of our recommendations on deepening and broadening the resource base for humanitarian action, allow me to thank the Pontifical Academy for hosting this Global Solidarity event today, in the presence here, in the Holy See, of so many world religious leaders, heads of humanitarian agencies and major donors.  We should make every effort to meet global humanitarian needs.  Indeed, His Holiness Pope Francis has already made a strong case for sustainable development in his recent Encyclical, Laudato Si’.  As the Holy Father pointed out, our globalised world is urgently in need of justice, mercy and peace, especially towards in his own words, ‘the least of our brothers and sisters’—that is to say, those who are marginalized in our society.   I am therefore glad that we are all taking the opportunity at this event to ‘reaffirm global solidarity’ with the intention of ‘restoring humanity’.  As a Muslim, I am humbled by the fact that the basic principles of humanity and dignity for the human life are shared in common between all religions in this world.

Now, the question for us should no longer be about the philosophical ‘what’ and ‘why’, but ‘how to’ think out of the box to find actionable solutions for us to tap into other funding potentials and broaden the resource base for humanitarian action.  Our Panel is conscious not to write a report for the UN that will just end up being shelved; instead we wanted to come up with actionable solutions.  So in the end there are many practical recommendations made by our Panel, but here I would like to emphasize three points from Chapter Three of the Report (Deepen and Broaden the Resource Base for Humanitarian Action):

Firstly, when we looked at the landscape of global funding we found that most money comes from a small group of donors – the five biggest from the OECD countries provide two thirds of the money given by governments.  This concentration of donors serves to highlight the imbalances in the present system—these few countries are making a disproportionate contribution towards world peace.  We see how insufficient funding can lead to more global instability.  The prevention of the spread of instability is a global public good.  Therefore, providing resources for doing so should be a collective responsibility. 

We wish to highlight the example of countries who, even with economic challenges at home, strive to achieve or even exceed the 0.7% target—set by the UN in 1970—of GNI for international aid spending.  And we are encouraged by the emerging donors who act on the premise that with greater wealth comes greater responsibilities and who are now giving more.  The Panel recognizes the crucial difference that these new donors will make to humanitarian financing and we believe in the importance of expanding their numbers, while at the same time protecting the fundamental principles of humanitarian aid.  We believe that states and non-state actors which are appropriately credited and recognised for their contributions to humanitarian aid are more likely to respond generously.  There is therefore a need to better reflect what all donors contribute to humanitarian action.  The Panel believes that the work of the OECD should be built upon for designing and implementing a ‘generosity tracker’ to better reflect government giving to humanitarian aid. 

We recognize that deepening and broadening the available resource base for humanitarian action will not happen overnight, but we must start somewhere and we must start now.  The Panel feels it is important for us to set in motion a ‘post-ODA plan’, so that the dependency on the current model of international aid flows is complemented by the involvement of more participants.

The Panel also considered the political feasibility of a Financial Transactions Tax (FTT) or Tobin Tax which has the potential to serve broad development objectives, including funding humanitarian action.  But the Panel recognizes that this is a subject of continuing debate and it is unlikely that the FTT will be adopted and implemented in the near future.  In the meantime, the Panel recommends the creation of a voluntary solidarity levy which we encourage governments to sign up to by the time of the World Humanitarian Summit in Istanbul later this year.   

Secondly, in a world where there is more private wealth than ever before, the role of the private sector continues to be under-utilised.  The Panel takes the view that there is a deficit trust that exists between the private sector and humanitarian agencies.  A significant factor behind this under-utilization and mistrust is the perception that the private sector’s role is principally philanthropic.  Going beyond government help, the Panel believes that the humanitarian community must harness the power of business to leverage on its key skills and capabilities.  But in order to do so, we need to embrace the private sector in a more meaningful way.  For example, the present system requires potential partners to navigate a series of individual agreements with hundreds of humanitarian organizations.  We therefore recommend a one-stop shop—a digital platform where private companies can see the vetted requirements of any humanitarian organization and respond to them directly.

Business has the creativity and capacity at scale to provide new solutions to risk management, support aid delivery, create jobs and modernise transparency and accountability.  There is huge potential, and we are already getting glimpses of this from various companies.  For example, UPS—a global logistics company—mobilized hundreds of its staff to volunteer during a humanitarian crisis, working alongside aid organisations to manage airports, expedite customs clearance, and to support the distribution and tracking of humanitarian supplies.

The role of the financial services industry should also be explored and expanded to include making fragile societies more resilient.  Remittances to the developing world, for example, enable people to meet their basic needs and not depend on external aid.  The Panel recognizes the money transfer agencies who already lower their commission rates in times of crises and encourage others to follow suit, preferably even waiving charges altogether in such moments.   The WHS could be a platform for rallying support for states to meet the Sustainable Development Goals (SDG) target of lowering transaction costs to less than 3% by 2030.   

Thirdly, the Panel made recommendations regarding innovative investments in humanitarian action—which we believe will lead to long-term social improvements.  Here, the Panel is thinking specifically about social impact bonds and of unleashing the full potential of faith-based funding for humanitarian action, such as Islamic Social Finance.  Given that the vast majority of conflict-afflicted populations are in Muslim countries, the role of Islamic Social Finance is particularly important.  We believe that ‘Islamic Social Finance is an under-explored territory’.  Ongoing work on waqf (endowments), zakat (mandatory alms-giving) and other instruments such as sukuk (social impact bonds) are already taking place at the local level.  What is missing is that there is no coordination mechanism or an independent and autonomous body to help channel these funds effectively at the global level for humanitarian action.  This will not be easy, given the scale of coordination and harmonisation that is required.  But the potential certainly exists for Islamic Finance to provide solutions.  For example, on zakat, the Islamic Development Bank (IDB) has conservatively estimated there is between $232 to $560 billion circulating annually.  Imagine if we could just tap 1% of this amount it would make an enormous difference to the scale of the global funding deficit.

Another good example is the award-winning Global Alliance for Vaccines and Immunisation Matching Fund, issued by the International Finance Facility for Immunisation and supported by various governments, the Bill Gates Foundation and the World Bank, which is a unique vaccine social impact bond, or sukuk, programme launched last year at the World Economic Forum in Davos.  The inaugural sukuk raised US$500 million when it was first launched, followed by a second US$200 million issuance in September 2015, which was 1.6 times oversubscribed (65% of investors came from the Middle East, 18% from Asia and 17% from Europe).  The sukuk structure made it possible for Islamic investors to participate, and this is a new way of mobilizing resources that can be applied to increasing sustainable humanitarian financing, using capital market instruments to reach non-traditional donors and even conscientious investors.

I have mentioned earlier that the Panel made the case for Islamic Social Finance since the majority of humanitarian caseloads happen to be in Muslim countries and concern Muslim refugees.  Here, our Panel would like to extend the invitation for faith-based funding to include other faiths, especially the Christian tradition.  There are already noble efforts, for example, made possible by Christian Aid with the Government of Denmark.  However, more initiatives and programmes involving faith-based organizations like this, I think, could be done, and we hope that the Vatican, through the good auspices of the Holy Father, could champion this. 

To recap, we need a laser focus on finding new funding sources—though the participation of more governments, through harnessing the power of the private sector and through the use of innovative financial tools—not least, faith-based financing.

The UN Secretary-General launched our High-Level Panel Report in Dubai last month.  This should not be the end of the journey, but it is the start of the work to make our recommendations become a reality.  We believe that providing for people in need is not only morally right, as we stressed in the Report, rather we should also see it as an investment in global stability to which we all can contribute.  Our different faiths, although diverse, teach us the importance of compassion and of one common shared humanity.  Even the current work of secular humanitarian organisations is very often inspired by the ethos of religion and spirituality, which has in turn inspired a culture of sustainable development as highlighted by His Holiness Pope Francis.  

Let us hope that by the time of the World Humanitarian Summit (WHS) in Istanbul in May 2016, we will have commitments supporting the changes that need to take place in order to make sure that humanitarian aid can always reach those who need it.

Just think a moment about those 125 million people in dire need—if they were a country it would be the world’s 11th largest, where most people do not work, their children do not go to school and where everyone lives in fear.  We have a moral responsibility to change their circumstances for the better.  We hope this report will contribute to that.

Thank you and God bless!

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