In a wide-ranging address at the Third Extraordinary Summit of the Organisation of Islamic Conference (OIC), he also called for adopting a conciliatory course in the interest of progress and prosperity of the Muslim Ummah.
Musharraf said the Ummah had options of either a confrontationist course or a conciliatory one to move forward in the comity of nations.
He said the confrontationist course could only lead to further destruction and deprivation and exhorted the need to adopt a conciliatory approach for the well-being of the future generations and the prosperity and progress of the people.
"From this holy city of peace and tolerance, I appeal to all extremists in our society to see reason, and shun the path of violence, which offers no salvation and will only lead to more pain and misery," he stated at the extraordinary moot held to find a way out of problems affecting the Muslim world's development.
The President regretted that the Muslims today remained stuck in a dire predicament, facing formidable challenges on all political, economic and intellectual fronts.
He said most Islamic societies were struggling to evolve stable institutions for governance and remained far removed from the expanding frontiers of knowledge, education, science and technology.
"Our economies remain fragile and mostly dependent on raw material production. Even the rich among us are consumers of the fruits of modernisation and innovation of other advanced nations who are shaping the direction of progress and future of the world."Advocating mandatory contributions, he cautioned that all dreams would remain unfulfilled if not fully backed by collective will and adequate financial resources.
"We must commit to subscribe 0.01 percent of our GDP which will amount to around dollars 180 million or at least 0.005 per cent of our GDP, which works out to be 90 million dollars," the President said.
These finances, he said, will have to be banked and managed efficiently and transparently. For this the IDB will have to be linked with the OIC secretariat, he added.
The President pointing out the weaknesses and vulnerabilities of the Muslim world said, "Our differences and divisions are exploited. Our failure to secure just resolution of disputes such as Palestine and Kashmir has spawned desperation, confusion and extremism."
He said, "senseless acts of terrorism committed by a handful of misguided individuals while claiming to act in the name of Islam, has maligned our noble faith of peace, tolerance and compassion," and added, "We need to look within; we need to search our soul."
"We must condemn and reject all forces of terrorism and extremism, banning organisations which preach hate and violence. We must promote the Islamic values of tolerance and moderation," the President said.
The President called for making a clear choice in either getting permanently marginalized or re-emerging as a progressive society, standing proudly in the comity of nations.
"The answer is crystal clear; we have to break out from this stagnation of centuries."
Musharraf said the Putrajaya summit in 2003 deliberated on the challenges confronting the Islamic world. "It was a summit of reflection, Makkah must be a summit of decision and action."
Underscoring the need for a new charter for the OIC, he said the Commission of Eminent Persons (CEP) be mandated this responsibility. "This draft should be placed for adoption at the next summit," he added.
The CEP has submitted its recommendations, which are wholesome, all encompassing and futuristic. He commended the authors for their clarity and vision.
"We must promote sound macro-economic policies which can accelerate economic growth, poverty alleviation and job creation, through public and private sector investment."
He urged the Ummah to seek knowledge from Quranic injunctions and called for promoting human development, through increased investment in modern education and acquisition of scientific and technical knowledge.
"We should promote full respect of human rights as enjoined by Islam, specially the rights of women and children."
The President said the Secretary General should be more substantially empowered to promote the implementation of the decisions of Summit and foreign ministers conference and called for creating departments to deal with peace and security, trade and investment within the Ummah.
He also called for having a mechanism at the Secretariat for conflict prevention and resolution within member states and suggested closer interaction of OIC with other international and regional organisations so as to play a proactive role in contributing towards peace and harmony in the world.
Musharraf emphasised the need for establishing a network of centres of excellence in science and technology in the Muslim world. "Today, with resolve we can make the Makkah summit a defining moment in our endeavours for the collective good of the Ummah. The challenge is indeed enormous, but failure is not an option."
Reflecting on the past glory of the Muslim rule, he said: "We were the fountainhead of knowledge, civilisation and moderation when most of the world was groping in the dark ages."
He recalled the philosophic accomplishments of Al Ghazali and Ibne Rushd, which gave inspiration to later day western philosophers, to Ibne Seena for writing Al Qanoon Fil Tib that was used for 600 years as the standard book of medicine in the West, to al Beruni who wrote encyclopaedia on medicinal plants, Jabar ibn Haiyan who laid foundations of modern chemistry, Mohammad bin Musa Al Khwarizmi who founded Algebra and modern mathematics and Al-Zahrawi who invented surgical instruments and Omar al Khayyam, the poet and a scientist.
"It is unfortunate that most Madrassas of today insist on restricting education to religion alone," he added.
The President said the Muslims represent one fifth of World population in 57 countries across three continents, having rich natural resources but lag behind other nations.
"We are among the poorest. 17 out of 57 are amongst the poorest in the world. We are among the most illiterate and backward. Our level of socio-economic development is dismal and indeed distressing," he stated.
Later, President Musharraf attended a closed-door session of the OIC Extraordinary Summit and unfolded a number of proposals for steering the Muslim world out of its current turbulence to sustained socio-economic development.
Earlier, opening the summit Saudi Arabia's King Abdullah Bin Abdul Aziz said the world's one billion Muslims were weak and divided.
He appealed to Muslim leaders to unite and tackle extremists who he said have hijacked their religion.
"It bleeds the heart of a believer to see how this glorious civilisation has fallen from the height of glory to the ravine of frailty, and how its thoughts were hijacked by devilish and criminal gangs that spread havoc on earth," Abdullah said.
He called for greater educational efforts to promote tolerance. "I look forward ... to the spread of a moderation that embodies the tolerance of Islam," Abdullah said.
Malaysian Prime Minister Abdullah Ahmad Badawi also struck a solemn note, saying Muslims across the world were in a state of "disunity and discord" which he said was worse than an any time in 14 centuries of Islamic history.
"Muslims of the present age appear hopelessly divided," Badawi, whose country holds the OIC chair, told the opening session."...We can no longer afford to be in a state of denial."
King Abdullah chaired the session. The consensus decisions of the OIC leaders would be reflected in the Makkah Declaration to be issued at the end of the Summit.