Enabling Infrastructure

The Islamic economics and finance discipline has embedded features to offer sustainable solutions for infrastructure development: suitable business models based on the realities of sectors, Islamic finance contracts to ensure fairness, and resource mobilization mechanisms to scale up without causing repercussions. Accordingly, infrastructures are categorized, definitions are provided, and sustainability parameters are identified in this chapter. Islamic finance proposes unique business models for infrastructure sectors. In doing so, it categorizes infrastructure projects and proposes financing contracts based on the realities of each sector to assure sustainability. From the Islamic point of view, infrastructure sectors can be categorized as economic infrastructure (transport, ICT, and energy) and social infrastructure (solid waste, water, health, and education). The suitable Islamic business model for social infrastructure is the Waqf model that brings about community ownership for service provision. Waqf assets should be developed with an Istisna Contract, and resources should be mobilized with a Cash Waqf Fund and Cash Waqf Sukuk. Unlike social infrastructure, economic infrastructure, which should be provided by the private sector, needs unique business models, financing contracts, and resource mobilization methods. Transport and ICT first-mile infrastructure can be developed equitably with Islamic PPP. Unlike Istisna for transport infrastructure development, a Murabaha contract better suits the realities of the ICT sector. Asset-backed Sukuk fits for mobilizing resources for transport infrastructure investment, while two-step Murabaha and Mudaraba suit resource mobilization for ICT Murabaha sale. As for the energy sector, the novel distributed renewables for energy access (DREA) system together with a crowdfunding platform is the best business model and resource mobilization method based on the defined sustainability parameters.