Sharia-compliant Financing of Infrastructure Development in Rural Area

Abstract

Infrastructure development can be implemented with a sharia-compliant project financing scheme. Sharia-compliant financing has more advantages: it has been proven to endure the global economic crisis because it prohibits the existence of value adding money from money without any effort (riba), the imposition of interest on loans, and things that are speculative (uncertain/gharar). Islamic financing thus far is also highly potential for growth. By implementing sharia-compliant financing, it is expected that the growth of infrastructure development in rural areas can be higher and more sustainable. This research aims to identify the type of infrastructure that is most needed by the community, to examine the potential donations or capital grants from the society that is sharia-compliant for infrastructure development, and to determine the person or organization that is most trusted by the community to manage the financing aspect. Research data was obtained using structured-interviewing techniques on residents at the village level and then projected up to the district level. This research demonstrated that the most needed infrastructure by rural residents on location surveyed is that for solid waste treatment. Development of this infrastructure will be financed by donations or musharaka scheme and administered by the local community organizations.