Md. Touhidul Alam Khan, PhD :
In a world grappling with food insecurity, climate change, and economic instability, the integration of Islamic finance into agriculture has emerged as a beacon of hope. For Bangladesh, a nation where agriculture remains the backbone of the economy, this integration is not just a financial innovation but a transformative force.
The recent approval of a landmark US$2.45 billion financing package by the Islamic Trade Finance Corporation (ITFC) for the fiscal years 2025-26 underscores Bangladesh’s commitment to leveraging Islamic finance for agricultural and energy sector development.
This move marks a significant milestone in the country’s journey toward sustainable growth, food security, and climate resilience.
Bangladesh’s agricultural sector, which employs nearly half of the country’s workforce, has long been in need of modernization and investment.
The ITFC’s financing package, which includes US$200 million for fertilizer imports by the Bangladesh Agricultural Development Corporation (BADC), is a game-changer. Fertilizer is a critical input for crop production, and ensuring its availability at affordable prices is essential for boosting agricultural productivity.
The optional US$300 million extension further highlights the flexibility and scalability of this initiative, allowing Bangladesh to respond dynamically to future agricultural needs.
This financing package is not just about immediate relief; it’s about laying the foundation for long-term agricultural transformation. By addressing one of the most pressing challenges in the sector-fertilizer availability-Bangladesh is taking a proactive step toward enhancing food security and reducing its reliance on imports. This is particularly crucial in a global context where supply chain disruptions and geopolitical tensions have made food security a top priority for nations worldwide.
Islamic finance, with its emphasis on ethical and Shariah-compliant principles, is uniquely positioned to drive inclusive growth in Bangladesh. Unlike conventional financing, Islamic finance promotes risk-sharing, asset-backed transactions, and equitable wealth distribution.
These principles align closely with the needs of smallholder farmers, who form the majority of Bangladesh’s agricultural workforce. By providing access to affordable and ethical financing, Islamic finance can empower these farmers, enabling them to invest in better seeds, modern equipment, and sustainable farming practices.
The ITFC’s financing package is a testament to the potential of Islamic finance to address systemic issues in the agricultural sector. By focusing on fertilizer imports, the initiative directly impacts the most vulnerable segment of the agricultural value chain-the farmers. This approach not only enhances productivity but also ensures that the benefits of economic growth are distributed more equitably across society.
Bangladesh is one of the most climate-vulnerable countries in the world, with rising sea levels, erratic weather patterns, and frequent natural disasters posing significant threats to its agricultural sector. In this context, the integration of Islamic finance into agriculture offers a unique opportunity to build climate resilience. The ITFC’s financing package, which also supports energy projects, aligns with Bangladesh’s broader goals of sustainable development and climate adaptation.
Islamic finance’s emphasis on ethical and sustainable investments can further strengthen Bangladesh’s efforts to combat climate change. By channeling funds into climate-resilient infrastructure, renewable energy, and sustainable farming practices, Islamic finance can help the country transition toward a more sustainable agricultural model. This is particularly important in the face of global challenges such as water scarcity, soil degradation, and biodiversity loss, which threaten the long-term viability of agriculture.
Bangladesh’s successful integration of Islamic finance into agriculture could serve as a model for other developing nations. The country’s strategic approach-combining multilateral support, government initiatives, and private sector participation-demonstrates the potential of Islamic finance to drive inclusive and sustainable growth. By aligning its agricultural financing initiatives with international ESG (Environmental, Social, and Governance) frameworks, Bangladesh is positioning itself as a leader in the global Islamic finance landscape.
The ITFC’s financing package is just the beginning. As Bangladesh continues to explore innovative Islamic financial solutions, it can unlock new opportunities for agricultural development, food security, and climate resilience. The country’s experience offers valuable lessons for other nations seeking to harness the power of Islamic finance to address their own development challenges.
Bangladesh’s embrace of Islamic finance in agriculture is a bold and forward-looking move. The ITFC’s US$2.45 billion financing package is a testament to the country’s commitment to transforming its agricultural sector and ensuring food security for its people. By leveraging the ethical and inclusive principles of Islamic finance, Bangladesh is not only addressing immediate challenges but also laying the groundwork for a more sustainable and resilient future.
As the global Islamic agricultural financing market continues to grow, Bangladesh’s experience offers a compelling case study for other nations. The integration of Islamic finance into agriculture is not just a financial innovation; it is a pathway to inclusive growth, food security, and climate resilience. For Bangladesh, this is a moment of opportunity-a chance to lead by example and chart a new course for sustainable development.
(Dr. Md Touhidul Alam Khan is the Managing Director & CEO of NRBC Bank PLC and fellow cost & management accountant from Institute of Cost & Management Accountants of Bangladesh -ICMAB. He is also the first certified sustainability reporting assurer (CSRA) in Bangladesh).
