IFSB, BI explore financial inclusion and Islamic finance

By HABHAJAN SINGH

Financial inclusion can be channelled to enhance living standards and alleviate poverty, as well as address the suspicion and reluctance of the low-income segments to avail formal financial services.

At the same time, financial inclusion can also assist in developing practical roadmaps for enhancing capacity and competitiveness of Islamic financial inclusion products.

Financial inclusion can also reinforce social objectives of the Islamic economy and finance with a view of addressing the challenges of the poor.

These were among the takeaways at a recent public seminar and workshop on financial inclusion and Islamic finance in Surabaya, Indonesia, according to an Islamic Financial Services Board (IFSB) statement.

Jointly organised by IFSB and Bank Indonesia (BI), the seminar carried the theme “Broadening Economic Frontiers and Reducing Income Gaps through Inclusive Finance: The Islamic Finance Solution”.

It was one of the events that made up the 5th Indonesia Shariah Economic Festival (ISEF) held from Dec 11-14.

The issues were raised in a panel session entitled “Unlocking Economic Opportunities and Enabling Livelihood Creation: The Islamic Finance Proposition” moderated by BI Institute economist Dr Prayudhi Azwar.

One of the panel members were Dr Aida Othman, a partner at Kuala Lumpur-based law firm Zaid Ibrahim & Co and an MD of ZICO Shariah Advisory Services Sdn Bhd.

The other panellists were Hajj Pilgrims Funds Management Agency executive board member Dr Hurriyah El Islamy and Financial Services Authority of Indonesia (OJK) deputy director Luci Irawati.

In the opening remarks, IFSB secretary general Dr Bello Lawal Danbatta said it is important to improve the economic conditions of the Muslim-majority countries which experience high levels of poverty in many instances.

In the statement, he also noted that some of the countries have high levels of financial exclusion, and with voluntary exclusion due to religious beliefs often being cited as a factor.

In the keynote address, BI communications ED Agusman said among Indonesia’s initiatives aimed at addressing the financial inclusion challenge is its collaborations with international partners to support
the development of Islamic social finance policies such as zakat and waqf.

In October, BI governor Perry Warjiyo said Indonesia continues to back Islamic economics and finance towards achieving the Sustainable Development Goals (SDGs).

Islamic economics and finance have vast potential — considering the underlying principles of ethics, fairness and equality, the bank said in an earlier statement.

Islamic economics and finance have penetrated non-commercial instruments such as zakat and waqf as instruments of social finance to support various productive activities, redistribute wealth to the poor and simultaneously help towards achie- ving the SDGs, the statement added.