Blended Islamic Finance: A Tool for Poverty Reduction

The objective of this research is to answer the main question of how to integrate Islamic redistribution instruments with other developmental aids in addressing the persistent poverty issues in Pakistan. Data were collected from both government and private organizations. Thematic analysis was done on the data. The results indicate that in Pakistan, zakat is the most important driving tool, whereas Islamic microfinance, mainly interest-free loans are making a place in the market. However, waqf still needs to make a place in the private ownership. Moreover, no major role is being played by waqf properties for poverty elimination. Being a new and emerging topic in Islamic finance, no proper definition is available for blended Islamic finance (BIF). However, it can be said to be the utilization of Islamic social finance funds, such as waqf, sadaqah, qard hasan, and zakat, and government development aids in mobilizing resources from private sector, including institutional impactful investors, in financing sustainable development initiatives in developing countries. Moreover, BIF can be used to attain the ultimate maqasid Sharia, which is well-being of the people, with focus on poor and needy.