How Islamic finance plugs SME fund gap

Despite prominence in economic activity, SMEs face a funding challenge. November 2014 figures from showed that a mere 28% of respondents had resorted to bank financing, while a full 31% were self-funded. This is a gap that Islamic finance offerings can address. Despite this obvious synergy, Islamic finance is still gearing up to effectively service SME needs regionally. The first challenge is one of volume: there are simply not enough Shariah-compliant banks around. This has a chilling effect on SME financing, particularly in those countries where local SMEs won't consider non-Islamic finance. However, the picture is changing for the better as Islamic finance becomes mainstream and is supported by better regulation.