Sustainable Development: Exploring the Role of Islamic Social Finance in Promoting Sustainable Development and Social Welfare

Abstract

Increasing humanitarian disasters and the need for financial support – specifically within the Organization of Islamic Cooperation (OIC) countries – has forced global humanitarian agencies to consider alternative funding sources. The victims of disaster and those disadvantaged that remain below the poverty line in much of the OIC countries remain concerned about the source of the funding they receive, based on their beliefs. Furthermore, institutions responsible for managing the funding for Sustainable Development Goals (SDGs) targets in their respective countries have also been considering alternative funding. The World Bank and the Islamic Development Bank (IsDB) suggest that the Islamic social finance is largely untapped, with significant potentials for more effective collection and distribution of compulsory alms called zakah and endowments known as waqf within the OIC countries. This chapter assesses the current challenges and opportunities for the Islamic social finance and covers some of the successful cases of the Islamic social finance deployment. The authors review approaches where world-renowned institutions have applied interest-free loans for poverty reduction, banking products for agricultural social financing, the utilization of cross-border social funding for socio-economic development and property management using social finance principles. The authors also assess capital market instruments integrated with the Islamic social finance for managing SDG funding gaps.

Citation

Mahomed, Z. and Saba, I. (2024), "Sustainable Development: Exploring the Role of Islamic Social Finance in Promoting Sustainable Development and Social Welfare", Smolo, E. and Raheem, M.M. (Ed.) The Future of Islamic Finance, Emerald Publishing Limited, Leeds, pp. 103-120. https://doi.org/10.1108/978-1-83549-906-120241007