Acquiring the Foreign Loans

(iii) Acquiring the foreign loans

To provide an alternative to foreign borrowing, arrangements could be made to attract foreign As well as domestic funds through three ways, which are the issue of certificates or Qard Hassan and establishment of funds.

Issue of certificates

Musharakah (partnership) or Ijara (leasing) certificates can be issued to finance the project, especially development project. Certificates can be denominated in foreign as well as domestic currencies and carry a predetermined proportion of the profit earned by their respective projects. Besides, the certificates issued can be restricted to a particular project or earmarked to a group of projects. Obviously, the latter kind provides more security through diversifications. Nowadays, there are several Funds working in the international Islamic investment market. For example, IDB Islamic Unit Investment Fund and the Bahrain Faisal Islamic Bank'd Ijara Fund, and there is the Flemings Lease Fund in Europe. Besides, in a country like Gambia that has fully convertible currency and that is easily linked to the international investment market.

Qard Hassan

This is a benevolent loan that obliges a borrower to repay the lender the principal sum borrowed on maturity of the loan. However, the borrower has the discretion to reward the lender for his loan by paying any sum over the above amount of the principal. Furthermore, an Islamic bank does not normally lend out money except interest-free. So with the acquiring the foreign loans in the absence of lending at a rate of interest will be the Qard Hassan. Qard Hassan loan could be charity, advance or help for certain time period and it used for short-term bridging financing and social welfare.

The establishment of funds

Funds can be created to finance the economic activities