Infrastructure Financing through Islamic
Finance in the Islamic Countries
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Issues Recommendations Implemented by
Islamic Financial Institutions
 The short-term and liquid liability
structure of Islamic banks makes it
difficult for Islamic banks to invest
in long-term infrastructure
projects. Since the investors of
investment accounts bear the risks
of the investments, Islamic banks
would hold relatively less capital
for investments made from these
accounts.
 Nigeria has an underdeveloped
Islamic money market with few
liquidity management instruments.
 The Islamic nonbank financial
institutions sector in Nigeria is
insignificant, limiting investments
in the infrastructure sector.
 Introduce long-term risk-sharing
investment accounts in Islamic banks
that can be used for infrastructure
projects.
 Develop a well-functioning Islamic
money market and instruments to help
Islamic banks to mitigate liquidity risks
that may arise from long-term
investments.
 Introduce takaful companies, Islamic
investment banks and Shariah-compliant
pension funds.
 Establish an Islamic infrastructure
fund/bank that can pool resources from
different investors to increase
investments in infrastructure projects.
 Relevant ministry and
regulators
 Islamic banks
 Central bank
 Other stakeholders
such as Islamic
financial institutions
 Regulatory authorities
 Islamic nonbank
financial institutions
Islamic Capital Markets
 Since the sukuk issued in Nigeria
for infrastructure projects were
over-subscribed, there is potential
for the issuance of more sukuk to
fund the huge infrastructure needs
of the country.
 Sukuk structures are complex and
new in the country.
 Retail sukuk can be an alternative
source of funds for infrastructure
projects.
 Issue more sukuk to finance
infrastructure projects.
 Develop a market and infrastructure for
Islamic capital market/sukuk.
 Provide advice on the issuance of sukuk
and develop templates for issuing sukuk
for infrastructure projects.
 Issue retail sukuk
 Introduce financial literacy programs to
increase the literacy of Islamic finance
 Introduce efficient mechanisms for the
delivery and redemption of sukuk issues.
 Issuers (sovereign and
corporates)
 Capital markets
authority
 Capital markets
authority
 Capital markets
authority
 Issuers (sovereign and
corporates)
 Financial institutions
Islamic Social Sector
 Developing innovative models of
zakat and waqf can potentially
provide social infrastructure
services.
 Increase the proceeds from zakat and
waqf by using innovative structures that
can help develop social infrastructure
sectors.
 Zakat and waqf
institutions