Saudi largest donor to $10bn poverty reduction fund

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POVERTY FUND: Saudi Arabia, ruled by King Abdullah pictured, is the largest donor to the Islamic Solidarity Fund for Development. (Getty Images)

Saudi Arabia is the largest donor to a $10 billion poverty-reduction fund set up by the Islamic Development Bank (IDB), the bank's president said on Saturday.

IDB head Dr. Ahmed Mohammed Ali said at a meeting in Bahrain that Saudi Arabia had so far contributed $1 billion to the Islamic Solidarity Fund for Development (ISFD), UAE daily newspaper Khaleej Times reported.

Kuwait and Iran had both contributed $300 million and $100 million respectively, along with 19 other IDB members with the total of the fund now reaching almost $3 billion.

ISDF's objective are linked directly to support the achievement of the United Nations' Millennium Development Goals, and thereby focused on combating poverty in the poorest IDB member nations of which 80% are in sub-Saharan Africa.

Formed at an Organisation for Islamic Conference (OIC) summit in Makkah in December 2005, ISDF's framework was approved by Islamic Development Bank in Senegal in May 2007.

IDB has to raise two-thirds of the fund, whilst the rest can come from zakat (Islamic alms levy), awqaf (endowments) and private donations.

The Millennium Development Goals which ISDF will specifically target include fostering sustainable economic growth and job creation, reducing illiteracy, eradicating diseases and epidemics, particularly Malaria, Tuberculosis (TB) and HIV/AIDS, and developing basic infrastructure.

The fund has been structured as a waqf (endowment/trust), which requires activities of the fund to be financed by the Bank's returns from investments which are then used to provide financing to beneficiary countries.

The ISDF is currently implementing its Five-Year Strategy (2008-2012), which was approved by its board of directors in February this year.

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