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16th IsDB Global Forum on Islamic Finance Achieving Shared Prosperity through Social Innovation

02 Jun, 2022

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There is a growing consensus that the intractable social problems facing humanity have proven to be almost impossible to address through traditional vehicles such as government policy and/or market intervention. The situation has been exacerbated by the huge impact of the COVID-19 pandemic on the global economy.

In light of the need to develop novel socially responsible solutions to address the situation, the IsDB Institute organized the 16th IsDB Global Forum on Islamic Finance. The forum was held with the theme ‘Social Entrepreneurship for Shared Prosperity’ on 2 June 2022 on the sidelines of the IsDB Group Annual Meetings in Sharm El Sheikh, Egypt.

Two interrelated panel sessions were held during the forum, one of which was entitled ‘Social Entrepreneurship and Social Innovation’. During this panel session, experts in social entrepreneurship discussed the intractable social problems facing humanity and some of the best ways to address the challenges.

Prior to the panel session, IsDB President, H.E. Dr. Muhammad Al Jasser, delivered the opening speech of the forum in which he noted that the task of fighting poverty and fostering shared prosperity across our communities requires novel approaches. Dr. Sami Al-Suwailem, Acting Director-General of IsDBI and Chief Economist, had earlier welcomed the panelists and participants of the forum.

 

Panel Discussion: Social Entrepreneurship and Social Innovation

Dr. Rami Abdelkafi, Team Leader for IsDBI Knowledge Leaders, moderated the panel discussion. The panelists were Mr. Sahba Sobhani, Director of UNDP Istanbul International Center for Private Sector in Development (IICPSD), and Dr. Ayman Sabae, Co-founder and CEO of the Egyptian Social Enterprise’ Shamseya’ for Innovative Community Healthcare Solutions.

Dr. Rami Abdelkafi opened the session by introducing the panel members and topic of discussion.  He noted that the panel’s focus would be on the role of social innovation and entrepreneurship in addressing socio-economic challenges and poverty trends.

The session discussed the experience of social enterprise and social innovation and explored the difference between entrepreneurship development and innovation. The moderator and the participants posed various questions to panel members related to social entrepreneurship and innovation, profit venture vis-a-vis social responsibility, Islamic finance, the role of public sector and private initiatives and its various social dimensions, bringing out the experience and lessons learned from social enterprise and social innovation.

 

Dr. Ayman Sabae, Co-founder and CEO of ‘Shamseya’

In his intervention, Dr. Ayman Sabae described the concept and process of evolving his institution based in Egypt as a social enterprise “Enterprise Shamseya” and stages of social innovation, explaining the business model. Right to health and access to universal health care is the central pillar of setting up the institution that caters to delivering quality health services including social responsibility. He said it was not easy to find monetary solutions, as both money plus solutions with innovation are required for social enterprises to prosper.

He highlighted the layers of complexities that his institution encountered throughout the 10 years of its journey. The complex changes in time and places, rural and urban, social complex related to people, dynamic health care challenges, and complexity where innovation is critical to finding appropriate solutions. Dr. Sabae stated that participatory solutions to complex problems involving stakeholders are the social innovation.

The process of social enterprise, including stakeholder participation, brings innovation rather than business as usual. As experience suggests, transparency and participatory performance indicators establish accountability for improving service and the overall progress of the business model. The process of social enterprise is as follows:

  • Design and monitor through community monitoring tools.
  • Participatory involvement of the patients in the hospital management functions.
  • 128 particular criteria to improve the quality of services
  • GPS of health care system
  • Health insurance and health coverage from the national schemes.
  • Directly support integration with the government system without creating parallel tracks

The common market dynamics may not be able to solve the complex solution as it requires business plus attitude and mission statement with a conducive organizational structure and design. The processes of social entrepreneurship help to find out new problems and solutions based on data, research, and innovation.

In response to the financing of social enterprise, he described the business model that has been evolving over 10 years with three categories for funding:

-Dependence on project funding, grants, and other funds

-Projects, precise business models, including hospitals, insurance, and tools for patients

-Consultancies, the pool of teams that allows generating revenues.

In response to further questions on private and social business, Dr. Sabae pointed out that both social and private entrepreneurs need profit to function; both private and social businesses need to be financially sustainable. The main difference is how the revenue generation is articulated in the mission statement. Social business is concerned about the stakeholder’s satisfaction and involvement. Spending on social cause and challenges need additional support, leadership, and policy commitment. Social business accounting looks at social impact and social returns on top of revenue generation and profitability.

 

Mr. Sahba Sobhani, Director of UNDP IICPSD

Mr. Sahba Sobhani referred to discussions of an earlier panel session related to multidimensional poverty and pointed out that the entry into solving the social problem through various Islamic banks is a complementary approach. Islamic entrepreneurship is a community approach – a phenomenon that does not promote profit maximization; the target is a social objective. For example, the concept of a hero solving a problem in many social contexts is a social innovation; it can be related to the business model and go beyond.

He cited the example of launching a green Sukuk market globally that has an ecosystem of transactions with a community-based social development goal approach. He reiterated the social objective of not-for-profit enterprise business models that are available in the West. Not-for-profit social enterprise requires a legal structure that distinguishes nonprofits from profit generation entities. Child health care and other social models need a different legal structure. The role of Islamic finance is crucial, including a social impact bond that provides a balance of profit maximization and social obligation.

 

Conclusion

The panel discussions stressed the importance of participatory planning and designing of social intervention that produces innovation. Islamic finance is complementary to various social initiatives and can provide leadership in specific contexts where cultural practices allow it. In social entrepreneurship and social innovation, Islamic finance works well in line with its values and principles and is complementary to social enterprises in many cultural contexts.

Social innovation and social entrepreneurship are distinguished through their mission statements and way of doing things, where profitability is not the primary goal but is equally essential to be financially sustainable to run and achieve the social objective. Leadership, greater empathy, values, and solidarity are critical to addressing problems in finding innovative social solutions.

It is also clear from the deliberations that social objectives need additional support, including conducive government regulatory functions to protect the people’s rights and bring transparency and accountability. The panel members also described tools and processes and provided evidence of the success of the social enterprise and social innovation.

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