The modern world is making do with a host of complex development challenges, from climate change and rapid urbanization to widening inequality, debt sustainability, and a persistent digital divide. Actually, the vast majority of developing countries lack the sustainable and resilient social-sector infrastructure needed to address such complex and overlapping crises.

Many developing countries lack time-consuming large-scale infrastructure projects. And private actors tend to shy away, owing to the perceived high risks of investing in infrastructure projects in developing countries. The good news is multilateral development banks and other stakeholders are increasingly aware of the need for swift action to overcome these challenges.

Asset-based and risk-sharing finance has the potential to change all that since these models have the added benefit of forging partnerships and fostering a collaborative environment. Financiers become stakeholders, meaning that both parties have skin in the game and a vested interest in the project’s long-term viability and sustainability.

Well, these principles form the foundation of Islamic finance, although its participatory nature goes beyond sharing risks. After all, it focused on long-term partnerships and encourages a commitment to the social and environmental sustainability of a project throughout its lifecycle.

In fact, Islamic finance could be a powerful tool for mobilizing infrastructure investments in developing counts. This is more so in a hybrid financing model that makes use of both conventional and Islamic finance since it could scale up investment in infrastructure projects.

Investing in sustainable and resilient infrastructure has the potential to mitigate the effects of climate change, yield long-term economic benefits, and improve people’s quality of life. However, raising the capital will call for harnessing the potential of asset-based and risk-sharing finance.

Of course, there is a lot more you should know about Islamic finance than what is merely included in this simple guide. No wonder you need to do a bit of research here and there to better understand the role ofIslamic financein offering sustainable and resilient infrastructure. Only then do you stand a better chance of using it to your advantage without feeling the heat.