overcoming the financial challenges facing islamic microfinance dr ajaz ahmed khan, 3 rd global...
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Overcoming the financial challenges facing Islamic microfinance
Dr Ajaz Ahmed Khan, 3rd Global Islamic Microfinance Forum, Dubai, 6th October 2013
Blue Mosque, Istanbul, Turkey
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Why is Islamic microfinance not more widespread?
• Profit sharing involves high transactions costs
• Requires high level of transparency - the difficulty associated with calculating profits and losses
• Low institutional technical capacity, established policies and procedures and guidance
• Authenticity and what is really ‘Shari’ah Compliant’?
• Lack of fundingImam Mosque, Isfahan, Iran
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How can we overcome the lack of funding?
• Provide more services than just credit (savings, takaful, money transfer, etc.).
• Establish better links with the Islamic finance industry and encourage them to downscale.
• Establish better links with Islamic institutional donors.
• Establish specialist Islamic microfinance investment funds.
Sana’a, Yemen
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P2P lending: the lendwithcare experience• Raised more than $5 million in capital, and growing
exponentially - raising more than $300,000 per month• More than 13,000 individual lenders (95% from the UK)
and attracting 500 new lenders each month• 98% of lenders re-lend• Making microfinance affordable for anyone anywhere
Badshahi Mosque, Lahore, Pakistan
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Why not create an Islamic peer to peer lending/donation platform?
Would offer several advantages:•Generate new capital•Secure, steady, long-term funding for MFIs – much cheaper than commercial sources and independent of the whims of institutional donors•Outlet for sadaqah and zakat•Making microfinance affordable•Ensuring the focus remains on improving poor peoples lives.
Timbuktu, Mali
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192 Ahmad Block, New Garden Town, Lahore - Pakistan.Ph: (92-42) 35913096 - 98, Fax: (92-42) 35913056
Email: [email protected]
www.alhudacibe.com