The United Nations High Commissioner for Refugees (UNHCR) is in talks with several law firms and partners to issue a green Sukuk facility to raise funds for refugees, Khaled Khalifa, the UNHCR representative to the GCC countries and senior advisor to the high commissioner on Islamic philanthropy, told ISFI.
According to Khaled, the UNHCR will decide in 2024 on whether to move forward with the Sukuk issuance.
The prospective facility, which will be worth at least US$200 million, will contribute to the fundraising for refugees and internally displaced people who have had to migrate due to adverse climate change effects.
The use of proceeds for the potential Sukuk is in line with the UNHCR’s Strategic Framework for Climate Action launched last year. The framework, among others, aims to preserve and rehabilitate the natural environment and mitigate environmental degradation in displacement settings.
Currently, the agency is conducting an internal feasibility study to understand the technical requirements for the issuance. The amount, currency, modality and whether the Sukuk will be guaranteed will be decided following the study.
“Several factors will determine the possibility of utilizing Sukuk. One of the most critical factors is Shariah compliance, which requires us to ensure that we have the needed infrastructure to solidify its sustainability and maximize its potential impact in bolstering our response,” Khaled explained.
Other factors determining whether the UNHCR will proceed with the green facility include the reception from financial institutions, investors and its partners, Khaled detailed.
As part of the agency’s efforts to explore alternative channels to enhance its reach and impact on the lives of vulnerable communities, it is also looking at Islamic social finance instruments such as Zakat, Sadaqah and Waqf.
The UNHCR has leveraged Islamic financial instruments in the past. In February this year, it announced the activation of the Global Islamic Fund for Refugees (GIFR) in collaboration with the IsDB. The GIFR has a target of US$500 million and comprises a Waqf fund and a non-Waqf fund.
According to Khaled, despite the generosity of the UNHCR’s public and private donors, the current funding reality does not match the scale of the growing humanitarian needs.