Islamic Project Finance and Private Funding Schemes
As governments find it increasingly difficult to finance major projects, private sector companies are becoming involved in electricity generation, telecommunications expansion and infrastructure provision including toll roads, ports and airports. From an Islamic perspective there is no objection to such private provision, indeed the participatory nature of the involvement is welcome, but there are Shar¬cah compliance issues. Recourse to borrowing on the basis of rib® is har®m and Third World debt crisis of the 1980s illustrated the perils of such an approach, as has the more recent Asian financial crisis. The adoption of Islamic financing techniques such as istisn®’ can avoid such difficulties. Proper project evaluation is needed for such financing to be successful, and decision makers require good information. Discounting of future income is seen as legitimate by Islamic economists, as such techniques can be used for the calculation of social rates of return in Muslim societies.
Volume (Year): 6 (1998)
Issue (Month): 2 (June)
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