BY LEVI JOHNSON
IslamicDevelopment Bank Institute (IsDBI) and the World Bank have launched a report highlighting the most important aspects of Islamic finance that relate to infrastructure public-private partnerships.
Entitled “Reference Guide: Islamic Finance for Infrastructure PPP Projects,” the report was launched during the 15th IsDB Global Forum on Islamic Finance held virtually on 28 August 2021, on the side lines of the 2021 IsDB Group Annual Meeting.
It covers the role Islamic finance can play in the infrastructure financing challenge, the major players in the global Islamic finance industry, the potential alternatives offered by Islamic finance to meet the public infrastructure financing gap, and the Islamic finance structures for infrastructure PPP projects.
The document is a timely response to the stakeholder feedback that voiced a need for augmented capacity and for diving deeper into each aspect of Islamic finance as applied to infrastructure and PPPs.
In his opening speech during the 15th IsDB Global Forum on Islamic Finance, the Chairman of the IsDB Group, H.E. Dr. Muhammad Al Jasser, welcomed the joint effort of the World Bank and the IsDB to develop the Reference Guide, explaining that: “As countries try to find sustainable and complementary sources of financing for their post-COVID-19 economic recovery, the reference guide can be a helpful tool”.
Dr. Sami Al-Suwailem, the Acting Director General of IsDB Institute, welcomed the launch of the Reference Guide as an excellent outcome of the collaboration between the IsDB and World Bank. “The document can serve as a practical tool that will help reduce costs and standardize transactions for PPP stakeholders,” he added.
The Global Director of the Infrastructure Finance, PPPs & Guarantees Group at the World Bank, Mr. Imad Fakhoury, in his keynote speech during the forum, stressed the importance of Islamic finance in mobilising private sector infrastructure financing in his keynote speech.
“Islamic Finance has a key role to play in helping developing countries, both Muslim and non-Muslim, achieve the SDGs,” he said. “It can improve the stability of the financial sector with features such as its profit-and-loss sharing arrangements and requirements for a link to the real economy through the creation of physical assets. The asset backed, ringfenced and project specific nature of Islamic finance structures and their emphasis on sharing risks, makes them a natural fit for infrastructure public private partnerships.”
The Reference Guide includes detailed Shariah-compliant PPP case studies on the Doraleh Container Terminal Project in Djibouti, Queen Alia International Airport in Jordan, the Foundation Wind Projects, Foundation Wind Energy I & II, in Pakistan and the Konya PPP Health Campus Project in Turkey. It also provides a complete set of Islamic finance template agreements as practical tools which can be applied, with modification, to a host of infrastructure projects.
