n Development Finance Agenda (DEFA) - The role of Islamic finance in achieving sustainable development




This article sheds some light on the role of Islamic finance as a model for promoting innovative financial solutions that can play a potent role in achieving theUN recently adopted Sustainable Development Goals (SDGs). First, Islamic finance offers strong preference for risk-sharing arrangements allowing both the entrepreneur and the financier to contribute to the success of the investment. Second, Islamic finance offers potent instruments to foster domestic resources mobilization for financing productive activities. For example, Sukuk, (Islamic bonds) is a financial instrument that suits well the funding of sustainable infrastructure. Third, Islamic finance offers models for solidarity-based financing with important features of social sustainability and with the ability to alleviate poverty and increase the resilience of the poor. Overall, Islamic finance is based on the Islamic approach to social progress founded on the need for balanced development covering both material and spiritual development.


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