Infrastructure Financing through Islamic
Finance in the Islamic Countries
181
Chart 5. 4: Total IDB Project Financing 2016+ (USD million)
Source:
While the huge infrastructure financing gap in many OIC/IDB member countries presents a
great opportunity for IDB, the relatively small sources of funds available to IDB relative to the
needs of its 57 members may limit the scale and scope of the funding provided to each member
country. One way in which the resource constraints can be mitigated is to create Islamic
infrastructure funds in which institutional investors can invest. Furthermore, funds can be
created with other multilateral developmental banks. IDB has taken initiatives in the past and
has launched a number of infrastructure funds and also established Islamic infrastructure
funds in collaboration with Asian Development Bank. Similar initiatives can be taken with
other development banks such as African Development Bank and World Bank.
Due to some factors that limit the scope of IDB to provide adequate infrastructure financing, it
is recommended that an International Islamic Infrastructure Bank (IIIB) be established. In
particular, IDB has various mandates related to achieving SDGs and infrastructure project
financing is one aspect of its operations. Given the huge needs and gaps in infrastructure
financing in OIC member countries, there is a need to have additional sources of funding for
investing in the development of the infrastructure sector to meet the SDGs. Furthermore, since
infrastructure projects are large and complex, OIC member countries would require advisory
services in addition to financing. Establishing IIIB would not only raise funds from the market
by issuing sukuk and initiating funds, it can also provide other capacity-building services to
strengthen the legal and regulatory environment, provide standardized contracts and
structures for Islamic syndicate financing and sukuk, and advise on structuring contracts for
enhancing PPP arrangements using Islamic finance.
1,944.3 1,604.0 1,389.6 2,042.5 7,123.4
73
28
22 19
148
0
20
40
60
80
100
120
140
160
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Sub-Saharan
Africa-22
Middle East and
North Africa-18
Asia and Latin
America-9
Europe and
Central Asia-8
OIC Total
No. of Projects
USD Million
Total Project Financing 2016+
US mill.
Total Project Financing 2016+
No.