SECTOR REPORT
New trends in global Islamic
microfinance
Muslim communities. Several research studies conducted
by international institutions such as International Financial
Corporation showed that almost 20-40% of the poor in developing
prevent sustainability in social and economic development on the
as partnership mode (Mudarabah and Musharakah), trade-based
mode (Murabahah, Musawamah, Salam and Istisnah), rentalbased (Ijarah and diminishing Musharakah) mode as well as
other models like, Qard Hasan, Zakah and Waqf.
evolved over the past few years have proven to be more resilient
of poverty alleviation and economic upgrade.
According to a recent research conducted in 2013 by the World
Such systems are based on the principles of Shariah such as
of the society and suits the needs of both Muslims and nonFebruary 2014
51 conventional counterparts in the MENA region – most of which
21
SECTOR REPORT
worldwide reside in Muslim countries and almost one-half of
the 56 IDB member countries in Asia and Africa are classed as
However, a lack of donor Shariah compliant sources of funds has
been a major challenge. Multilateral agency the IDB has approved
For example, the IDB has been implementing a long-term mega
unemployment and create jobs in order to improve the livelihood
of poor/limited income families in less developed communities;
enterprises and income-generating activities, such as industry,
trade, agriculture, services, or livestock production and be part of
the production cycle and the process of sustainable local socioeconomic development.
Still, there exist some challenges that need to be addressed.
best practices and methods in ways compliant with the Islamic
needs to be considered by African governments and multilateral
windows in banks. The IDB prioritizes poverty pockets in desert
and rural areas, and encompasses groups such as unemployed
youth and laid-off professionals, the retired, female head of
households and conventional small farmers. For example, the
initiatives through the creation of an enabling environment with
poor micro segments. For example, the Egyptian Financial
Supervisory Authority has initiated steps towards the issuance of
and retail products offered to clients across Sudan.
IDB’s projects enhance
financial and institutional
capacities by establishing and
applying microfinance best
practices and methods in ways
compliant with the Islamic
law, intermediate microfinance
institutions and microfinance
windows in banks
the predominance of an NGO or association model. All
institutions) need to be engaged simultaneously to facilitate
institutions by helping them to evolve and develop hybrid
structures that include models such as micro-leasing, and
Waqf. Micro-leasing shall not be developed only by traditional
or micro-lease companies. Leasing has advantages by virtue
of the separation of ownership from possession and economic
use which enables assets owned by one party to come into the
possession, and be employed for economic purposes by some
other person. Thus, it solves the main barrier to investment and
enables poor people to work themselves out of poverty without
needing to own capital resources.
In addition, credit information should improve in quality and
availability throughout MENA, in terms of credit registries and
or have access to them. Finally, credit guarantee systems should
consulting
www.IslamicFinanceConsulting.com
www.IslamicFinanceEvents.com
www.IslamicFinanceNews.com
www.IslamicFinanceTraining.com
www.MIFforum.com
Prof. Dr. Shahinaz Rashad is the vice-chairman of Metropolitan
www.MIFmonthly.com
www.MIFtraining.com
countries have witnessed the world’s most startling growth rates;
Algeria, Morocco, and into other countries of other regions such
as Indonesia, Malaysia, Bosnia and others.
22
www.REDmoneyBooks.com
committee member of Egyptian Financial Supervisory Authority.
She can be contacted at [email protected].
February 2014