A Global Takaful Alliance to Build Financial Resilience

Of the 30 countries most affected by the changing climate, over half are Muslim-majority populations. While the whole world is adjusting to rising risks driven largely by climate change, financial solutions for Muslim communities, must also comply with faith-based tenets.  Providing financial solutions compliant with Islamic law is an additional challenge to building financial protection, adding to existing challenges such as lack of access, trust, and resources.

Insurance-type solutions that meet the needs of Muslim communities already exist in the form of Takaful. Similar to cooperative and mutual insurance, Takaful is guided primarily by the overall good of the community and is suitable for both Muslim and non-Muslim communities alike. Just like many other forms of financial protection, it can do more than help people better understand and manage their risks, and financially protect lives, livelihoods, and assets. By financially engineering product structures that move away uncertainty and risk, Takaful can incentivize investment, while also widening financial inclusion. 

To protect vulnerable people across the world from the escalating effects of climate change, policymakers and other public and private sector stakeholders must work together to better leverage this essential tool of Takaful. In this regard, UNDP is working with partners to create the largest partnership of its kind: The Global Takaful Alliance. 

The Alliance is making strides in bringing together public and private organizations and institutions with the ambitious target of increasing the financial resilience of 100 million people by 2030. To date, UNDP’s vision to scale Takaful through the Alliance has been joined by the Islamic Development Bank (IsDB), Arab Gulf Programme for Development  (AGFUND), Kuwait Finance House (KFH) Group, and the Mohammed Bin Rashid Al Maktoum Global Initiatives (MBRGI). 

In the coming months, the Alliance and its members will prioritize further building engagement with governments, global and regional institutions, and financial and private sectors, looking to grow both the Alliance’s technical offer, on-the-ground practical operations, and financial strength, while looking to launch the Global Takaful Alliance as a major legacy project at this year’s sixteenth session of the Conference of the Parties (COP16) of the United Nations Convention to Combat Desertification (UNCCD). 

Find out more: 

• The Global Takaful Alliance – Concept Note
• Insuring a Sustainable Future: Building Financial Resilience Through Takaful

For more information or to get involved please reach out to Loic Martel, UNDP Insurance and Risk Finance Research Analyst: loic.martel@undp.org