How Islamic finance could fund the future of space exploration

Authentic Islamic finance can unlock large scale investments in outer space infrastructure development and exploration. This uncommon opportunity identified 13 years ago is now ripe for the taking.

While the technical design of the Islamic instruments that can facilitate space investments are fascinating, this article focuses on the main rationale and broad principles that support the above claim.

Our technological ingenuity has already achieved many and great feats in outer space. From Martian rovers, to moon landings, asteroid missions, and space stations, humanity has already demonstrated its ability to build the necessary technological solutions that can extend our reach beyond our atmosphere.

According to the Satellite Industry Association (May 2025), in 2024, record-breaking growth has been achieved with 2,695 satellites deployed via 259 launches, bringing the total number of active satellites to 11,539. According to the European Space Agency, this number is estimated to grow to 100,000 by 2030. In fact, satellites and the downstream services they facilitate on Earth are a critical and significant part of the fast growing ‘space economy’.

One might ask: if we have already achieved all of the above, what, then, can Islamic finance contribute?

Interestingly, much of the fast growing ‘space economy’ is about economic activities that operationalise space-based systems to deliver goods and services on Earth, or to serve national security objectives. Space development and exploration account for only a minuscule fraction of the ‘space economy.’

The Earthbound nature of the ‘space economy’ is a direct consequence of three interrelated factors: 1) high levels of risk, 2) very distant returns, and 3) a time dependent monetary and funding architecture.

The public and private parts of the space sector are directly shaped by the above factors. High levels of risk and distant returns deter a significant proportion of investors. In fact, most conventional financing and investment models are biased against high risks and distant returns. This also explains why Earthbound services and satellites are the largest and fastest growing niche within the ‘space economy’. Their risks are known, timelines are manageable, and their ability to generate cash flows is well tested and proven.

A time dependent monetary and funding architecture refers to the fact that in our current monetary and financial system, all forms of funding and capital allocations to the space sector are inherently linked to calendar time. In the case of the public space sector this dependency is born through yearly governmental budgets and debts, and in the case of the private space sector, through market expectations, regulatory reporting, and performance reviews.

And what is calendar time? A day is the time it takes for the Earth to complete one rotation around its axis, and a year measures the time it takes to complete one revolution around the sun, i.e., Earth’s solar orbit. When our public and private funding architecture is linked to calendar time, the fixed movements of Earth, investing in highly risky projects with distant returns beyond earth’s orbit becomes very challenging.

The whole purpose of outer space development and exploration projects is to build infrastructure and systems that can take us beyond Earth’s orbit. They require massive investments today, for benefits that are inherently uncertain and further in time than most terrestrial opportunities. Indeed, when expanding in outer space, beyond Earth, our calendar time dependent monetary and funding architecture acts as a muzzle. To explore and develop the dimension of space, we need, what I have previously called, ‘timeless’ investments.

Enter Islamic finance, which, given its unique understanding and treatment of time, can help transcend the above discussed limitations. Islamic finance principles require the sharing of risks and profits through real activity and real asset creation. Moreover, the passing of time is not enough for capital to earn a return, which is conditioned by productive activity.

Built upon these principles, Islamic finance instruments, using a combination of structures like Musharakah (partnership financing), Muḍarabah (trust-based financing), and Istisna (asset construction financing), can facilitate investments in outer space infrastructure development and exploration.

The idea is fundamentally built on engineering tailored instruments whose returns are based on real asset creation in space, rather than the passing of calendar time. Such structures, and the principles they are built on, can address and resolve the high risk and distant returns dilemma of outer space development projects.

Sharing risks and profits across space, Islamic finance can revolutionise how we invest in space-based infrastructure development projects. Indeed, from space elevators to lunar habitats and deep space exploration, authentic Islamic finance instruments can catalyse humanity’s most daring ambitions in outer space.

Dr Armen V. Papazian is a Visiting Associate Professor of Space Economics at the American University in Dubai