Mobilizing Philanthropy Instruments in Development Assistance

Muslim-majority countries are by and large poorer than non-Muslim-majority countries. The Muslim population constitutes a quarter of the global population, but its share in the total global poor population remains higher than one-third. Most of the Muslim-majority countries have very low per capita incomes and national savings. This hampers the development of vibrant financial institutions and the kick-starting of economic growth. The high incidence of poverty leads to weak financial development and low capacity of government to mobilize tax revenues. Thus, the poor countries with weak financial and public sectors are vulnerable to remain in the poverty trap. In this scenario, it is important to have resources flowing into the poor countries on a non-commercial basis and which can provide the basic funds required to ensure saving human lives and providing basic education and health to the poor population. This chapter discusses the solutions offered by Islamic finance through its underpinning value system and worldview and through its set of commercial and social finance institutions to intervene in development assistance through and beyond markets.