17 December 2024
IFFIm’s strategic use of Islamic investment certificates, or sukuk, in past years has been an important factor in diversifying both its investor base and investment portfolio, ensuring that Gavi’s vaccination programmes can continue to make an impact globally.
IFFIm’s strategic use of Islamic investment certificates, or sukuk, in past years has been an important factor in diversifying both its investor base and investment portfolio, ensuring that Gavi’s vaccination programmes can continue to make an impact globally. By tapping the Islamic finance market, IFFIm was able to attract a broader range of ethical investors. This in turn has helped channel significant resources to immunise children in low-income countries, particularly in Organisation of Islamic Cooperation (OIC) nations where 50% percent of the children supported by Gavi’s immunisation programs live.
From Pakistan to Sudan, the funding raised through sukuk played a direct role in improving public health and saving lives in this important region. IFFIm’s commitment to using diverse financing tools, including sukuk, demonstrates the potential for financial instruments to drive social change, advancing health equity and supporting global efforts to protect children from preventable diseases.
Sukuk are Sharia-compliant bonds, structured to ensure they do not involve the payment of interest (which is prohibited under Islamic law). Instead, sukuk investors earn returns from the underlying assets or projects funded by the sukuk issuance. IFFIm has issued sukuk in the past as part of a broader strategy to diversify funding sources, attract new investors and ensure a more stable and resilient financial model for supporting immunisation programs worldwide.
Using sukuk as a financing tool, IFFIm has been able to tap a broader pool of investors, particularly in regions with large Muslim populations such as the Gulf Cooperation Council (GCC) countries, Southeast Asia, and parts of Africa. “This has allowed IFFIm to attract ethical investors who prefer Sharia-compliant financial products, contributing to the overall goal of financing Gavi’s vaccination programs,” said IFFIm Board Chair Ken Lay.
Islamic investing, at its very heart, is social. "Islamic finance and socially responsible investing are both based on the principle that individuals should invest in things that align with their values. It’s investing with a purpose," said Lay. IFFIm meets the rigorous requirements to be ethical and to have a social impact—saving lives and improving global health by financing the purchase of vaccines for children in the world’s poorest countries.
Support for immunisation from Islamic countries and financial institutions through three sukuk transactions reached US$ 750 million in 2019. In April of that year, IFFIm issued its third sukuk in Islamic capital markets in a private transaction with the Islamic Development Bank (IsDB) that raised US$ 50 million, following US$ 700 million raised by its two previous sukuk. IFFIm’s inaugural sukuk in 2014 was recognised for its financial innovation by several media outlets, including Islamic Finance News (IFN) which named the transaction “Social Impact Deal of the Year.”
Sukuk transactions have given IFFIm access to a different set of institutional investors and sovereign wealth funds, particularly from countries where Islamic finance plays a dominant role. These markets represent a significant and growing segment of global financial capital, which IFFIm has strategically targeted in order to broaden its funding sources beyond traditional bond markets.
This diversification has been particularly crucial for IFFIm’s ability to support global health programmes, as it helps ensure that Gavi can continue to provide life-saving vaccines to the world’s poorest children, especially in regions with high immunisation gaps and health challenges.
By issuing these sukuk in the past, IFFIm tapped into the growing Islamic finance market, ensuring continued funding for Gavi, and helping to strengthen immunisation programs in some of the world’s most vulnerable regions.
Parkha (10) with her brother Asif (5) stand outside their house observing health workers during the door-to-door polio campaign in Rasheed Garhi, Peshawar city, Khyber-Pakhtunkhwa province, Pakistan. Pakistan is a member of the OIC. Credit: Gavi/2023/Asad Zaidi.
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17 December 2024
17 December 2024