or please link to us
Whether you are an academic or practionner: If you wish to see your paper published on IslamicFinance.de please send us the relevant document along with a confirmation that you hold the copyrights of it and we can upload the work with your abstract provided.
As simple as that!
Michael Saleh Gassner
The second Islamic Microfinance Challenge is now accepting applications from Islamic financial services providers that offer Sharia-compliant products that are not based on the “murabaha” concept of “cost plus markup”. The contest, themed “Beyond Murabaha” for 2013, is sponsored by CGAP (Consultative Group to Assist the Poor), Islamic Development Bank (ISDB), Al Baraka Banking Group, and Triple Jump. The contest is also supported by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. The winner of the contest will be awarded a grant of USD 100,000. The deadline for submitting applications is January 31, 2014, and the application form can be found at the following address: http://www.cgap.org/sites/default/files/islamic_mf_challenge_1.pdf
The Principles for Responsible Investment (PRI) Initiative has announced the launch of a new reporting framework for its signatories that is aimed to increase the transparency of their investment activitie. The framework consists of approximately 220 indicators relating to investment policies and practices. The indicators are grouped into modules based on the following asset classes: listed equities, fixed income, private equity, property, infrastructure and inclusive finance. By mid-2014, approximately 800 of the 1,209 signatories are expected to have used the new framework. PRI will delist members that fail to report by then.
IslamicFinance.de is still edited by myself, Michael Saleh Gassner. In the same time the website became part of the family's publishing house, Al Kitab.
Myself I moved to Geneva for professional reasons, working as Islamic private banker. IslamicFinance.de remains to be a private passion.
Islamic Microfinance is an effective tool for the poverty alleviation and it should be introduced around the globe to state an effective policy for ultimate poverty alleviation from the world, Dr. Fatima Mohamed Yousif Al-Balooshi, Minister (Ministry of Social Development - Bahrain) stated. Dr. Fatima Al-Blooshi was speaking as a Chief Guest in the 3rd Global Islamic Microfinance Forum (GIMF) held on 6th to 8th October, 2013 in Dubai. Muhammad Zubair Mughal (CEO - AlHuda CIBE), said that the involvement of interest in micro financing is one of the major causes behind the increasing poverty in Muslim countries. He said that the forum aimed to streamline the policies for poverty reduction, to promote the Research and Education in Islamic Microfinance industry and to enhance its outreach on global canvas.
The Family Bank took part in the Third Global Islamic Micro-Finance Forum which is organised by the Al-Huda Centre of Islamic Banking and Islamic Economics (CIBE). The two-day forum includes a workshop on "How to Develop, Operate and Sustain Islamic Micro-Finance Institutions", in which a number of experts and consultants are participating. Family Bank, led by the Social Development Minister and Board of Directors Chairperson Dr. Fatima Mohammed Al-Balushi, implements its programmes in cooperation with the Labour Find (Tamkeen). It is the first Islamic micro-finance bank in the Middle East with the prime objective to contribute to poverty alleviation and socio-economic empowerment of the communities by providing sustainable Islamic financial services to the needy.
Islamic microfinance providers represent a growing and important niche within the market of financial services specifically targeting the poor. Over the last decade, the microfinance sector has built up the infrastructure necessary to carry out such analysis. One piece of that infrastructure, MIX Market, provides access to current and historical financial and social performance information on more than 2,100 microfinance institutions serving some 94 million clients worldwide. MIX Market users can track the performance of other institutions and see impacts of policy interventions and other aspects. The microfinance industry as a whole stands to benefit from gathering this relevant, comparable information on Microfinance through MIX Market.
Baittul Maal wa Tamwil (BMT) Microfinance system which is being working in Indonesia should be introduced all-around the globe as the best system to eliminate poverty, Chief Executive Officer of Al-Huda Center of Islamic Banking and Economics Mr. Muhammad Zubair Mughal said. He was speaking at the International conference for “ Empowering SMEs for Financial Inclusion and Growth” held in Indonesia. During his address Mr. Zubair Mughal said, BMT has played an important role for the alleviation of poverty in Indonesia but unfortunately, these methods are being limited to Indonesia only. He stated that new Islamic Microfinance methods of BMT should be available along with Murabaha, Salam, Mudarabah, Qarz-e-Hasna and Waqf to Islamic Microfinance Institutes globally. He further added that Islamic Microfinance is very important along with branchless banking, product innovation and financial literacy in order to achieve financial inclusion for the Muslim population. The Global Islamic Microfinance Forum is going to be held on October 16, 2013 in Dubai, to compile the strategy to strengthen the Islamic Microfinance industry, he ended.
The Islamic Development Bank (ISDB) will disburse a loan of PKR 14.6 billion (USD 146 million) with a 0.5 percent interest rate per year to the Punjab provincial government of Pakistan. The money will be used for a microfinance facility that will provide interest-free loans to small enterprises in the province, which is home to approximately 90 million people. The Punjab government plans to provide an additional grant of PKR 5 billion (USD 49.9 million) to support the facility. The project reportedly is modeled after the Akhuwat Scheme, it will offer loans of the same size, and like the Akhuwat Scheme, this new facility will not accept deposits. As of July 2013, Akhuwat reported to the US-based nonprofit Microfinance Information Exchange (MIX) a gross loan portfolio of USD 15.1 million, approximately 140,000 active borrowers and operations in 162 branches across Pakistan.
The "International Islamic Microfinance Seminar" was held in Abuja, Nigeria on July 1-2, 2013. This event focused on Nigeria’s Islamic microfinance and banking industry including topics relating developing and facilitating business models; poverty alleviation; financial inclusion; accounting and auditing standards; the regulatory and supervisory framework; technology; and opportunities in agriculture, livestock, renewable energy, microenterprises and small and medium-sized enterprises. Green Oasis Associates Limited (GOAL), a Nigeria-based international consulting firm, organized the seminar.
In Sudan, Sharia-compliant microfinance is the government-mandated rule, not the exception. That’s because the country’s banking system went fully Islamic in the 1980s, legislating Sharia principles. In 2007, the Central Bank of Sudan established a dedicated microfinance unit to foster a conducive policy environment, a regulatory framework, and the intellectual, human, and financial capital to provide those services effectively. Moreover, the Central Bank introduced various Shariah-compliant products, such as musharaka, mudaraba, salam financing and istisna, to meet specific needs of potential customers. Banks were required to channel at least 12% of their total loan portfolio toward microfinance clients. Out of this have emerged several exciting programs that are offering early evidence that the country’s strategy is paying off.
The African Guarantee Fund (AGF), reportedly has agreed to guarantee an unspecified portion of KES 100 million (USD 1.2 million) to be loaned by Gulf African Bank (GAB) to SMEs in Kenya. After the signing of the agreement, GAB Managing Director Asad Ahmed reportedly expressed his belief that the deal will help to increase the bank’s financing and risk management capabilities. AGF was established in Kenya in June 2012 with initial capital sufficient to issue partial guarantees of loans totaling USD 50 million. AGF has branches in nine African countries as of March 2013. As of March 2011, GAB had total assets of KES 9.6 billion (USD 112.3 million) and customer deposits of KES 8.2 billion (USD 96 million).
AlHuda Center of Islamic banking and economics (CIBE) Initiated a Islamic Microfinance research study for Yemen Microfinance Network (YMN) in Yemen. This study will be conducted in Yemen's capital Sana'a including Taiz, Adan and Almoukla, so that the Islamic Microfinance products can be examined broadly and further Islamic Microfinance products can be developed with the compatibility of the existing structure. The share of Islamic Microfinance in Yemen's Microfinance sector is approximately 90% and the remaining 10% are also converting their portfolio into Islamic Microfinance. The increased outreach of the Microfinance sector is expected to help eradicate poverty.
Ensuring the provision of financial services to the poor can address the challenge of poverty alleviation. A large portion of the poor population, however, is excluded from formal financial services. Although access to Islamic microfinance is critical to growth and prosperity in many countries it is provided only by a small number of providers covering less than 1% of the total microfinance outreach. Sustainability of Islamic microfinance institutions (MFIs) is also an emerging challenge. Moreover, Islamic MFIs tend to predominantly use murabaha (cost-plus credit sale) and qard hassan (interest free loans). These products have implications related to sustainability and outreach of MFIs as the cost can be higher in the former and the latter does not generate any return. Innovative solutions are needed to develop more comprehensive and efficient instruments which build on sustainable business models and product diversity.
In an effort to foster hope and stability among Yemen’s por, Al-Amal Microfinance Bank is working to introduce a range of Sharia-compliant microfinance products aimed at reaching the unbanked. However, demand for Islamic financial products can far exceed the capacity of existing microfinance institutions to provide them. That’s why institutions like Al-Amal are often forced to limit their suite of Sharia-compliant products to one or more products that are relatively simple to administer and offer a clear return. In Al-Amal’s case, the signature Islamic product is murabaha. The mark-up ranges between 14.5% (for purchases more than $5,000) and 24% (for purchases below $5,000). Further development of Al-Amal’s murabaha offering and the introduction of other Sharia-compliant products, will hinge on the bank’s ability to reach Yemen’s rural poor, who represent some 80 percent of the country’s population
Islamic microfinance is rapidly gaining acceptance in Muslim and non-Muslim countries due to its success in poverty eradication. According to Muhammad Zubair Mughal, Chief Executive Officer of Pakistan’s AlHuda Centre of Islamic Banking and Economics (CIBE), the Islamic microfinance market has reached USD 1 billion. More than 300 Islamic microfinance institutions are offering their services to 1.6 million clients in almost 32 countries, he added. There is research needed so that new Islamic microfinance products can be introduced. At present, Murabaha alone has 80 percent share of total Islamic microfinance market.
The report “State of Social Performance in Nepal” from the US-based Microfinance Information Exchange (MIX) examines the social performance (SP) of microfinance institutions (MFIs) in Nepal. The report notes that the biggest SP management challenge facing the 37 Nepali MFIs is that of tracking outcomes related to institutions’ development goals. The report “Trends in Sharia-Compliant Financial Inclusion” presents an analysis of recent advancements in Sharia-compliant financial inclusion as well as challenges inhibiting its further expansion. Finding sustainable Islamic models could be the key to providing financial access to millions of poor Muslims. In the report “Private Sector Development Solutions – Jobs”, the International Finance Corporation (IFC) argues that good jobs provide a clear pathway out of poverty. Because 60 percent of the developing world’s current jobs are in micro-, small and medium-sized enterprises, the authors highlight the need for enhanced access to finance to allow for more investment and growth.
Ethica Institute of Islamic Finance in Dubai interviewed Pakistan-based Akhuwat, a microfinance program that has given loans to over 1 million people, without charging interest. Akhuwat-founder Dr. Muhammad Amjad Saqib explained that they rely on 4 core principles: giving up interest, volunteerism, localization, and empowerment. Akhuwat started a decade ago with a $100 loan, and until now has dispersed $30 million. 99.8% of the loans were paid back in full. Dr. Saqib said that financial institutions began their activities on the basis of doubt, but they started their activities on the basis of trust.
An estimated 1.28 million clients around the world use Sharia-compliant microfinance services, a four-fold increase since 2006. The number of providers offering these products has doubled since 2006. Ninety-two percent of Sharia-compliant loans are concentrated in East Asia/the Pacific and Middle East/North Africa regions. Indonesia is home to the largest outstanding portfolio at $347 million. Despite this growth, the sector is limited in terms of the number of service providers, product offerings, and overall outreach. Experts say the most important factor is to drive down costs so that clients don’t have to choose between their religion and their wallet.
Technical report for free download regarding the Agricultural Development Fund (ADF), the first lender to the agricultural sector in Afghanistan in over 25 years, which was initially designed to be a wholesale lender utilizing existing financial institutions as conduits to reach farmers.
While the original design did not emphasize on the provision of Islamic financial products, there was the implicit assumption that with the help of technical assistance and grants some financial intermediaries would do so.