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Sana'a - The latest entrant into Islamic finance is leading the industry in the new direction of socially responsible investment, which could even include the fight against Ebola.
Last week an immunisation programme secured a $500m issuance of Islamic bonds, or sukuk, in the largest debut issue ever by a global non-profit organisation, under a broader trend to use bond markets to fund development and humanitarian projects.
The sukuk from the International Finance Facility for Immunisation (IFFIm), for which the World Bank acts as treasury manager, is a break from the predominantly commercial nature of most Islamic finance transactions.
The deal is part of World Bank efforts to adapt sukuk for use in a variety of ethical pursuits, including advising the Dubai government on a funding strategy for the emirate's green investment programme.
IFFIm, backed by nine sovereign donors, including Britain and France, will use the proceeds of its sukuk to finance projects for the Global Alliance for Vaccines and Immunisation (Gavi) and is open to using the format again.
"It's a natural market for us. These kind of socially responsible investments are very much aligned with the core principles of Islamic finance," said IFFIm board chair Rene Karsenti. The sukuk helped IFFIm diversify its investor base and secure competitive pricing, but also helped raise the profile of Gavi activities among Muslim-majority countries.
The sukuk could encourage other non-profits to consider this funding tool, while Gulf countries could be inclined to become Gavi donors themselves, said Paris-based Karsenti, who is also president of the International Capital Market Association.
Founded in 2000, Gavi has financed immunisation efforts in 73 countries, with half of its investment directed to 33 Muslim-majority countries, including Yemen, Mali and Indonesia.
