IslamicFinance.de

Islamic finance is making further inroads in agricultural sectors globally. The trend is increasingly adopted in Central and Westerns Asian countries, in Southeast Asia and in Sub-Saharan Africa. Firstly, the impact of Islamic finance can be higher than that of other financial products due to its asset-based structure. It can be applied in many fields, starting from the purchase of farming machines and equipment, seeds and pesticides, warehouses, as well as in the dairy, livestock and fishery sectors. Ijara contracts can be used for leasing or renting farm machines and other equipment. Other structures such as musharaka or mudaraba can be used for long-term developments such as rural housing, reforestation or irrigation. Secondly, Islamic finance can help broaden financial inclusion by establishing cooperatives or partnership-based financing structures. In Pakistan the state bank has now issued guidelines on Islamic agricultural finance. In Indonesia, the government has launched a new national master plan and has explicitly included agriculture as a field for Islamic finance.