Middle East’s SME sector faces Islamic financing gap: IFC

According to a recent IFC study on Islamic banking opportunities across small and medium enterprises in Mena, there is potential gap of up to $13.2 billion for Islamic SME financing across nine countries in the region. The study, carried out in Iraq, Pakistan, Yemen, the Kingdom of Saudi Arabia, Egypt, Lebanon, Morocco, Tunisia and Jordan, shows that approximately 35 per cent of SMEs are excluded from the formal banking sector because of the lack of Islamic products, despite huge demand. A high level of risk aversion by banks, poor regulatory environments, differing perceptions of Islamic finance, and a lack of relevant products have been identified as lack of bank funding to SME sector in the region.