Is Islamic Social finance viable solution to the rising humanitarian crisis in Somalia amid covid19?

Humanitarian crisis response in Somalia should be locally driven and owned to achieve efficiency and effectiveness.

As of March 14 2021, the UN OCHA Somalia office reports a looming humanitarian crisis estimated to hit 2.7 million Somalis in the coming months. This is partly due to poor rainfall anticipated in March to June resulting in crop failure, poor livestock production, and acute food security. The office states that 4 million Somalis -some internally displaced (IDPs) are in need of assistance due to conflict, climate change and COVID19.

The UN office relates that it received only 2.5% of the US$ 1 billion fund it appealed to respond to the crisis.

In 2019, Somalia received US$ 934 million to respond to humanitarian crisis. This is more than double the fund Somalia received ten years ago for humanitarian response. 

The second wave of the covid19 pandemic is likely to exacerbate the humanitarian situation. What is even worse is that if the anticipated rainfall materializes in April, then there is also likelihood of flooding causing more humanitarian needs. This cycle of humanitarianism has been in existence annually since the collapse of the central government in 1991. And how it is responded has never changed.

There has been funding gaps, poor coordination and delay in delivery of the little assistance. Yet before one crisis ends, another emerges. This is why internally displaced persons (IDPs) continue increasing every year in the last decade. 

Moreover, UK, the second largest provider of aid to Somalia is expected to cut aid funding in Somalia by 60%, according to leaked reports. This is likely to cause closure of health clinics, education centers and an end to the assistance support received by many Somalis.

This shrinking fund and the increasing crisis calls for restructuring of the humanitarian funding in Somalia to enhance its efficiency and effectiveness. It is therefore eminent that an effective and efficient humanitarian system should be locally driven and owned. One that uses own potentials to solve own problems.

There are three key areas the locally driven humanitarian system should address; funding, coordination and sustainability.

Funding through Islamic social finance

Islamic social finance (ISF) is a funding mechanism that is rooted in Islamic ethics and mainly focuses to meet the needs of poor and curb the increasing level of relative poverty. They include Zakat, Waqf and Sadaqa.

Whenever an emergency happens, we have seen private sector at the forefront in response before INGOs, UN, Government and other sectors arrive. This despite being their corporate social responsibility, they are active and closely linked to the community.

We have also seen crowdfunding taking place in mosques, and online platforms such as gofundme.com as well diaspora making large contributions.

However, these funds are collected only when an emergency arises. There’s no system ensuring continuous fund flow. In Islam, we have that system. It is called Zakat. Its an obligatory wealth payment by those who have their wealth reached at certain threshold (nisaab). In Case of business inventory, zakat rate is 2.5% of the net asset value in the current year. There’s no specific data to show annual zakat collection in Somalia. 

However, according to the IDB ’s research institute, global Zakat collections alone are estimated to come up to a total of at least US$500 billion a year. This is about 20 times more than total global humanitarian aid. The beautiful system of Zakat alone should be sufficient to eradicate poverty, and we have not even touched on other forms of Islamic social finance.

If the zakat can be established as an institution within the government bodies (ministry of planning/ministry of humanitarian affairs) and earns the trust of the public, it has the potential to provide funding needs. The poor are among the 8 categories prescribed in the Quran to receive zakat. It will also provide employment opportunity to the zakat collectors.

It is important to note that, Zakat as an Islamic institution has historically proved to solve the problem of poverty in Islamic world. During the periods of Umar bin Khattab and Umar bin Abdiaziz, poverty was completely eradicated to such an extent that there was no one to receive Zakat.  

The uniqueness of this institution is that one is paid enough funds to establish his/her own business so that he is able to become a zakat payer in future.

Another funding opportunity is the Waqf (endowment). It is a voluntary charity which is in perpetual existence and is endowed for the benefit of others. Once a person gives away his property as Waqf, then no claim can be made to that property even his heirs after his death. The property remains and serves for the purpose which the donor has intended. It was through Waqf that great services like hospitals and education centers were established.

Poor people have had access to services like health care, education, and the likes through Waqf, thereby improving their living standards. Some Waqf services impart knowledge and skills to develop entrepreneurial talents among the poor. This has helped lower the effects of poverty. Since Waqf is a long-lasting charity, it suits in eradicating poverty in poor countries.

Financing Waqf projects is done by the rich for the benefit of the poor. This has positive implication on the redistribution of wealth in the society thus lessening the effects of income inequality in the society.

Currently, Waqf assets are used to finance education, health and social welfare to promote social development. It is with great opportunity to revive this as an institution to provide social development.

The third and the most effective funding scheme is the Sadaqa (charity). This is usually a crowdfunding done in the mosques (Masjids). Diaspora’s also contribute much when emergencies arises. Online platforms are also effective in fundraising. Imagine 1000 masjids in Somalia each contributing $10,000 in one moment. This is almost $10 million. What if they make collections four times per year. 

The most important part is the coordination and governance of the funds.

Funds will be meaningless if there’s no proper governance and coordination. Religious scholars, government, academics, women and youth are the key drivers and fundraisers. Exclusion of one body from governance will lead to ineffectiveness of the system.

Use of innovative technology to ensure that crisis are not repetitive will strengthen response efforts and provide sustainability. 

And I conclude, humanitarian crisis in Somalia will not end until Somalis themselves want to end it. 

We are responsible- academics, scholars and everyone of us. We have the potential to end or wait till the growing generation also appeal to International community for support. The choice is ours!

Author

Abdikahim Abdikadir

April 29, 2021

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