Chapter in Book

Microfinance has continued to receive positive consideration as a powerful and prospective tool needed in combating poverty and promoting financial inclusion among the poor and lower-income groups. It refers to the provision of financial services to poor and low-income people whose low economic standing excludes them from formal financial systems (IRTI, 2007). Microfinance institutions (MFIs) do enable the poor to gain access to financial services such as micro-credit, venture capital, micro-savings, micro-insurance, and money transfers on a micro level which enhances the involvement of those considered unbankable but with the acute need of financial assistance. Extending financial services to the poor not only enhances their household income and economic security, but also enables them to acquire assets and decrease their vulnerability thereby accelerating the demand for other goods and services in terms of health and education, thus leading to socio-economic development.

Waqf is Islamic endowment, an institution which falls within the ambit of Islamic social finance (Abdel Mohsin and Muneeza, 2020). Waqf was one of the first established public institutions in Sudan. It was introduced by a cluster of Arab Muslims who arrived from Egypt in the seventh century. Abdullah b. Sarah was the commander of this group who fought and stopped the Noubi invasion (Al-'Asqalani, 1978). To commemorate this monumental victory, a church in Donqalah was converted into a mosque and later named "Donqalah al-'Ajouz Mosque" (Noor, 1996). It marked the first waqf establishment in Sudan. Since then, many waqf assets have been established, such as shops, mosques, schools, and libraries. As Islam spread, the Sudanese created waqf in Sudan and outside the country. For example, the leadership of 'Amarah Dunqas (1504-1533/4), the king of al-Sultanah al-Zarqa', was the first Sudanese leader to establish land and house waqf in Makkah and Madinah. It was continued by 'Abdellab, the heir of 'Abdellah Jamma, who also established waqf in Makkah. These waqfs still exist. Most of them are houses and land and some of their locations were identified in the 1990s in Saudi Arabia. Some of the assets are considered as family waqf while others are public waqf. The beneficiaries of those assets were used to free slaves and help certain people who came from Sudan to Makkah and Madinah. For the administration of these waqfs, their founders, who were in Sudan, appointed people from among their relatives or trusted people living in Makkah and Madinah to administer their waqfs (Abdel Mohsin, 2005).

Zakat is compulsory alms given by eligible Muslims around the world every year to legal beneficiaries derived from the Holy Book of Muslims: Quran. These legal beneficiaries include the poor and needy. The general rule followed in the distribution of zakat among Muslims is that zakat money collected is distributed within the legal recipients found in the geographical area in which it is collected or within the same country. It is hard to find instances where zakat money collected is transported to another country to transform the lives of poor and needy in those communities who require such assistance to improve their lives. The main reason for this is due to the Shariah opinions given by the scholars on the permissibility of transporting zakat money from one country to another. Despite this challenge, Majlis Agama Islam and Adat Istiadat Melayu Perlis (MAIPS), which is the state religious authority of one of the states of Malaysia gave permission to transport zakat from Malaysia to Kenya to support a humanitarian project managed by the International Federation of Red Cross and Red Crescent Societies (IFRC). This is a landmark case as MAIPS's decision to transport zakat from Malaysia to Kenya was used to help a drought assistance program in the county of Kitui, located in southern central Kenya that was identified as the worst-affected part of the country.

COVID-19 was first considered to be a health crisis. However, the containment measures implemented by the respective governments of countries around the world led to an economic crisis which eventually led to a human crisis. It is said that due to the pandemic, the global poverty clock has turned back 30 years (Kharas and Hamel, 2020) and the impact of it in different countries depending on their level of development is affected. It is reported that COVID-19 virus has been found in all African countries, but the number of cases recorded is fewer which could be due to lack of capacity to test and report positive cases (United Nations, 2020). Apart from the health issues faced, other issues such as: scarcity of food and medical supplies; inability to work leading to loss of income; and the emergence of a debt crisis leading to political instability (United Nations, 2020). The main difference between the financial crisis of 2018 and the pandemic is that the pandemic crisis has affected more than just the financial sector and includes real economic activities like farming and trading (Muhammad and Ismail, 2020).

Law and Shariah are crucial for the establishment and operation of Islamic finance. The interface of law and Shariah in Islamic finance dictates that both are required in Islamic finance regulations and governance. However, the fact that Shariah has generally been rendered subordinate (where it is recognised) to financial laws under common law legal system means that rules of Shariah are not, by default, applicable to Islamic finance. Such is the case particularly where the rules of Shariah are contrary to the common law, which is often the case, even in Shariah matters of Islamic finance. To this extent, the rules of Shariah have to be 'recognised' by the law otherwise applicable rules of common law would prevail. Thus, it becomes necessary to accord such recognition to Shariah rules in the conventional rule-making sense so that rules of Shariah would not be considered alien under the law of the land (Nigerian law). Accordingly, besides conferring validity on Shariah contracts and enabling enforcement of Shariah rules in Islamic finance transactions, a governance system established by law that encompasses Shariah is the only way of ensuring Islamic finance in Nigeria is truly Islamic in all its activities.

Energy projects are mostly large, irreversible and highly risky investments. The real options valuation approach is widely used to value such investment projects. Indeed, papers covered in the survey article by Fernandes et al. (2011) underscore the relevance of the real options approach to value energy sector investments. However, the related literature overlooks the distributional nature of project cash flows. The work on energy real options overwhelmingly considers log-normally-distributed cash flows, despite the well-documented evidence that cash flows are normally distributed (Burg, 2018; Kanniainen, 2009; Veronesi, 1999). The log-normality cash flows assumption solves the tractability of the problem at expense of ruling out negative cash flows. In other words, the popularity of this assumption stems from its tractability rather than its realism. Given the large and irreversible nature of energy projects, distributional assumptions characterising cash flows are crucially important in these investments. Furthermore, the interaction of normally distributed cash flows with macroeconomic risk associated with business cycles can be different than that of log-normal cash flows. This paper therefore uses a real options approach to value energy projects whose cash flows follow a normal distribution and subject to macroeconomic risk.