Promoting Islamic Social Finance: A Step Towards Inclusive and Sustainable Growth

Abstract

ABSTRACT

In any nation, inclusive and sustainable growth plays a vital role in helping to achieve long-term economic growth and guaranteeing a better life for the present and future generations. In Nigeria, progression towards achieving sustainable growth has been constrained due to challenges like poverty, hunger, disease, scarcity of resources, corruption, illiteracy, environmental degradation and poor framework implementation.  This paper examines the role of Islamic social finance in bringing about inclusive and sustainable growth in Nigeria. A descriptive survey design was adopted where data were gathered through a structured questionnaire and focus group discussion. Findings revealed that Islamic Social Finance has been functioning as a potential means of enhancing financial inclusion and sustainable growth through zakat (obligatory almsgiving), sadaqah (voluntary almsgiving), waqf (endowment), infaq (almsgiving for God’s sake), qarda hasan (interest-free loan), and Islamic microfinance. These play an important role in bringing about monetary policies that stimulate growth while ensuring stability and equitable distribution of wealth among others. However, irregularity in the payment of zakat, members’ default in paying back loans at the stipulated time, embezzlement, stakeholders’ negligence of responsibilities,  the inadequacy of Islamic cooperative societies and banks, lack of knowledge and public awareness of waqf, and the need for product innovations were identified as major challenges. The study concluded that, the regulatory environment should be developed further to fully support the unique aspects of Islamic social finance and to integrate them into the broader financial system of Nigeria.