MICROCAPITAL STORY: $10b Islamic Solidarity Fund for Development Programs Approved with Goals to Reduce Illiteracy and Poverty throughout the Muslim World Focused on Microfinance

The Islamic Development Bank (ISD), a multilateral development financing institution founded in 1975 out of Jeddah, Saudi Arabia announced the implementation of a five year plan to eliminate poverty, reduce illiteracy and fight contagious diseases throughout the Muslim world. The Islamic Solidarity Fund for Development, a USD 10 billion fund will fuel the development of two programs; the Vocational Literacy Program for Poverty Alleviation (VOLIP) and the Microfinance Support Program (MFSP). Both programs will target pockets of poverty throughout the 56 member nations of the ISD which include developing nations in Africa, the Middle East, Asia and the Commonwealth of Independent States. The primary use of funds, however, will target the poorest ISD states, 80 percent of which are located in Sub-Sahara Africa.

Both programs are supported by the contributions of member nations as well as other donations. Some of the larger pledges to fund VOLIP and MFSP included a promised USD 1 billion from Saudi Arabia, USD 300 million from Kuwait, USD 10 million from Iran, and USD 50 million from Qatar and Algeria each. No further information has been made publicly available as to how the remainder of the USD 10 billion will be supplied. Additionally, Iran has pledged to provide educational services, technical and vocational training to 1,000 students from beneficiary countries. President of the Islamic Republic of Iran, Mahmoud Ahmadinejad, stated that his hopes are that “through the efforts of Muslim officials…there will be no poverty and illiteracy in Muslim world…”

With a current illiteracy rate of about 32 percent throughout the Islamic world, VOLIP will work to reduce poverty by eliminating illiteracy, particularly focusing on increased vocational literacy. The program will work with a USD 500 million budget to raise literacy levels and to provide its graduates guidance in starting their own micro enterprises. The target audience will include out-of-school children, teenagers and young adults, women workers and other adult groups. The other USD 500 million budgeted will fund the MFSP which aims to improve quality of life and increase employment opportunities. Participants of VOLIP will receive priority access to the MFSP funds. Both programs kicked off last week.

The two programs may, not only, successfully reduce illiteracy and poverty in member nations, it is also hoped that they will complement other ISD programs already in place. Other plans are in progress, the ISD stated, to address key concerns such as the abolition of diseases and epidemics, the development of basic infrastructure, promoting sustainable economic growth and the creation of jobs since the Fund has a very broad range of objectives they aim to meet.

By Jessica Woodlock, Research Assistant

Additional Sources:

AME – $10bn Islamic Solidarity Fund for Development approves first programs for sponsorship in Fight for Poverty Reduction

Microfinancegateway.org – Islamic Development Bank Commits USD $10 Billion to Fight Poverty

United Nations – Press Conference by Vice-President of Islamic Development Bank

Wikipedia – Islamic Development Bank