Infrastructure Financing through Islamic
Finance in the Islamic Countries
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Given the role of infrastructure in economic growth and alleviating poverty, and its current
status and financing gaps, the overall objectives of the study are as follows:
 Provide background information on the nature of infrastructure projects and the
challenges of financing them;
 Explore the potential of Islamic finance for infrastructure financing by examining the
products and approaches;
 Identifying the different sources of Islamic finance for infrastructure investments such as
financial institutions and markets, public-private partnerships and international
multilateral institutions;
 Analyse the prospects and challenges facing infrastructure financing using Islamic finance
in selected OIC countries;
 Providing policy recommendations to enhance the role of Islamic finance in promoting
investments in the infrastructure sector.
1.3.1. Methodology
The key methods to collect information/data for the study are content analyses of various
documents and literature and also surveys of countries used as case studies. Other than
collecting quantitative data related to the size and status of infrastructure financing needs and
the Islamic financial sector in different jurisdictions, some of the information is qualitative in
nature. The sources of qualitative data and information include policy documents from
international organizations and standard setting bodies, national level public policy and
legal/regulatory documents, and academic publications on infrastructure financing.
Information on the strategic approaches and legal and regulatory framework for infrastructure
financing and product structures are collected by carrying out content analyses of relevant
public documents and literature.
The study uses case studies of five OIC countries (Indonesia, Malaysia, Nigeria, Saudi Arabia
and Sudan) and one non-OIC country (United Kingdom) to have an in-depth examination on
the role of Islamic finance in promoting infrastructure development. Different criteria are used
for choosing countries for case studies. First, to ensure regional diversification, countries from
three OIC regions (Africa, Arab and Asia) are included. Second, countries with different levels
of development in terms of income group classifications of the World Bank are also included.
The countries selected for case studies belong to lower-middle income, higher-middle income
and higher income groups. The third criterion is the size of the Islamic financial industry. Since
infrastructure financing by Islamic finance is expected to be in countries with relatively mature
Islamic financial sectors, countries for case studies are selected with relatively larger Islamic
financial sectors but at different levels of development. Finally, as financial sectors are
influenced by legal regimes, countries are chosen so that there is diversity in legal systems.
Legal regimes can be broadly classified as those that are based on Islamic law, common law
and civil law. The countries included for case studies and their features according to the
criteria presented above are shown in Table 1.3.