Infrastructure Financing through Islamic
Finance in the Islamic Countries
180
5.7. Islamic Social Sector
Chapter 3 shows that there is a great potential to use the Islamic social sector to provide
services to the poorer sections of the population. As indicated, the potential figures of
collecting zakat in the Muslim world can be between USD 114.34 billion and USD 304.9 billion
annually. Similarly, there are a huge amount of assets that are locked in waqf that can
potentially generate significant returns and benefits. Given the current low status and
projected huge gaps and shortfalls in the infrastructure in OIC member countries, the Islamic
social sector can be tapped to provide some infrastructure services.
The country case studies show several ways in which the Islamic social sector (zakat and waqf)
can contribute to providing certain infrastructure services. For example, waqf has been used in
Malaysia and Saudi Arabia to provide medical services to the poor and needy. While the social
sector is mostly involved in social infrastructure such as education and health services, the
social sector can also use certain innovative ways to serve other infrastructure sectors. The
example of BAZNAS and UNDP using zakat funds to provide a Micro Hydro Power Plant that
will provide electricity to 803 households in four remote villages that did not have access to
power shows the way the Islamic social sector can be used to provide infrastructure services
to the deprived segments of the population.
Table 5. 8: Policy Recommendations for Islamic Social Sectors
No. Recommendations Specific Steps Implemented by
7.1 Use Zakat in
provisions of
infrastructure
services
 Develop innovative models of
using zakat to provide social,
innovative infrastructure
services
 Zakat institutions,
government bodies and
international
organizations
7.2 Use Waqf in the
provision of
infrastructure
services
 Develop innovative models of
using waqf to provide social,
innovative infrastructure
services
 Waqf institutions,
government bodies and
international
organizations
5.8. Multilateral Development Institutions
The Islamic Development Bank is the only multilateral development bank that provides
Shariah-compliant financing to its member countries. The distribution of the financing
provided by IDB in different regions from 2016 onwards is shown in Chart 5.4. A total of 148
projects worth USD 7.12 billion were financed by IDB. These figures indicate that the average
size of the projects financed by IDB is valued at USD 48.1 million only.