TOM ESSLEMONT | REUTERS
Published — Sunday 17 January 2016
LONDON: A $15 billion shortfall in global humanitarian aid could be addressed by tapping into innovative sources of finance, such as smartphone apps, the football industry and wealthy Islamic donors, a United Nations panel of experts said on Sunday.
Despite rising global wealth, the ‘outdated’ aid system has been unable to meet all the world’s needs, including those stemming from financial crises, natural disasters and violent extremism, said the nine panelists in a new report.
Among the ideas discussed were micro payments levied on so-called mass volume transactions, such as airline tickets, said Kristalina Georgieva, the European Commission vice president who co-chaired the panel, adding that such schemes already existed.
For example, the UN’s global health initiative, UNITAID, funds its work in finding new ways to treat, prevent and diagnose malaria with an air ticket surtax, the report said.
Ahead of publication, Georgieva said the panel had made initial contact with the world football governing body, FIFA, and had considered how funds might be generated from a ‘global luxury tax’ or small levies on entertainment purchases or taxi rides, for example on users of the Uber smartphone app.
“Five cents that level of micro levy on a massive volume, we think is possible,” said the former World Bank economist.
But the panel, which included banking executives, civil society leaders and government ministers, had not come to a consensus on specific proposals, she said.
Some of its members were “dead against taxation” as a source of such funding and so the debate would continue on how extra cash might be raised, she said.
Tapping Islamic finance
The report’s authors noted the need to better coordinate the rising share of government aid donated by richer Gulf states, especially given the overwhelming needs of people affected by conflict in the Arab world.
Thirty-one of 33 active conflicts are in Muslim majority countries, the report said, yet there are no official targets like ones adopted by wealthy Western nations to cream off part of the Islamic world’s $16 trillion economy at the global level.
“We are working on some very concrete products to tap into different parts of Islamic finance,” said Georgieva.
One of the ideas explored in the report is the use of Islamic mandatory alms-giving or zakat, which is estimated by the Islamic Development Bank to be worth between $232 billion and $560 billion annually, the report said.
Georgieva said $3-5 billion of the $15 billion funding gap could be met by Islamic finance.
Financial contracts known as social impact bonds, which aim to offer return for investors when pre-agreed social outcomes are achieved, could be more widely used in disaster-prone regions, said the report “Too important to fail — addressing the humanitarian financing gap.”
One example cited was the Islamic funding practice known as sukuk, which raised $700 million between 2014 and 2015 for a global immunization scheme, supported by philanthropists, governments and the World Bank.
Its findings are due to be endorsed by the UN Secretary General, Ban Ki-moon, in the United Arab Emirates (UAE), on Sunday (at 1300 GMT), ahead of the first World Humanitarian Summit, due to take place in Turkey in May.
The summit’s 5,000 delegates, including governments, UN agencies, humanitarian charities and the private sector, will then be pressed to turn the proposals into meaningful goals, but they will not be legally binding.
In addition to discussing creative and more sustained funding practices, summit organizers are expected to try to harmonize the aid accounting system to reduce administration costs and the length of time relief workers have to spend on grant applications.
(Additional reporting by Alastair Macdonald in Brussels)