Islamic Microfinance Conference Lahore

2nd National Islamic Microfinance Conference Lahore, Pakistan – November 2-4, 2012
Venue: University of Veterinary and Animal Sciences, Lahore

The conference aims to unite, network, train and create capacity-building opportunities for professionals engaged or planning to engage in the Islamic Microfinance industry. The conference intends to explore different possibilities for low income groups to achieve self-reliance through interest-free microfinance products and halal investment opportunities.

The three day activity will feature keynote speeches, interactive panel discussions, workshops and case studies. The conference program is designed for Islamic Microfinance professionals, researchers, and practitioners, corporate and financial sector executives, governmental and civil society representatives.

Topics: Discussions
• Islamic Microfinance Sector: Roadblocks and Opportunities
• Bridging the Capital and Capacity Gap in Islamic Microfinance
• Technology Issues and Challenges
• Halal Investment Opportunities in Agriculture and Livestock
• Legal and Shariah Compliance and Audit: Best Practices Overview
• The role of state banks in promoting Islamic Microfinance
• Unlocking The Potential of The Islamic Banking Sector to Promote Prosperity
• The Musharkah Impact (case studies )
• Asset-based Financing (case studies)
• Shariah Compliant Savings (A Success Story )

Workshops
• How to start and run an Islamic microfinance institution?
• Marketing and Management of Islamic Microfinance Fund
• Islamic Microfinance Product Development
• Livestock Mudarbah
• The Actual Murabaha
• Monitoring and Evaluation
• Developing Shariah Compliant Contracts

For Registration and Inquiries:
Website: http://www.farzfoundation.org
E-mail: conference@farzfoundation.org
Phone: +92 321 446 8216+92 321 446 8216 | +92 423 529 1301

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IDB exploring microfinance options in UK

May 31, 2012 by Microfinance Africa

The Islamic Development Bank (IDB) is exploring social and financial inclusion opportunities in the UK including the provision of community-based microfinance, SMEs (small-and-medium-sized enterprises) financing and technical assistance programs.

An IDB delegation, led by its President Dr. Ahmed Mohammed Ali, participated in a roundtable here Monday with financial institutions, law firms, corporates and community organizations and leaders.

Dr. Ali said that in addition to the direct assistance to microfinance institutions, initial discussions have taken place with the UK’s Department for International Development (DFID), World Bank and CGAP to start some pilot projects in various common member countries and eventually develop a global Islamic microfinance facility.

In the UK, there are several initiatives aimed at helping small business start-ups and young entrepreneurs and to promote financial inclusion. These include Community Development Financing Institutions (CDFI), the Enterprise Capital Fund, and regional ones such as Bolton Business Ventures.

On Monday, Lord Young, the former Conservative cabinet minister, announced the launch of a GBP85 million initiative to help young people in the above respect. The reality is that the UK is facing a multi-billion pound funding gap for small businesses.

One microfinance initiative that is seeking to cooperate with the IDB is GLEOne London, whose CEO Nicholas Nicolaou, revealed that the entity is working on a program to assist Muslim immigrants starting up small businesses and becoming entrepreneurs.

In fact, City law firm Norton Rose; Gatehouse Bank, one of the five UK-authorized Islamic banks; and international auditing firm and consultancy KPMG have been cooperating with GLEOne London to develop an Islamic microfinance product based on the Mudaraba (trust funding) concept.

According to Farmida Bi, Partner at Norton Rose, the product is ready to roll out and addresses the various tax and legal issues especially under the Consumer Credit Act, which protects the rights of customers.

Dr. Ali reiterated IDB’s support for various microfinance initiatives. He stressed that the Islamic banking industry registered a year-on-year growth of 35 percent in 2010 to 2011. Within OIC countries for instance, Islamic financial institutions are becoming major economic players in an increasing number of these countries.

In Indonesia, for instance, a recent Central Bank of Indonesia report has indicated that the industry is growing very fast at a rate of 35 to 40 percent per annum and is expected to capture up to 20 percent market share of the total banking industry in the next few years.

“If this trend continues the Islamic financial industry will become a major industry with an important role to play in global finance. London being the gateway for Islamic banking in Europe, needs to be prepared for this tremendous growth of this industry,” he said.

Dr. Ali also held talks with the Lord Mayor of the City of London, Alderman Ian Luder; the Sheriff of the City of London, Alderman Alan Yarrow; the British Consul General in Jeddah, Mohamed Shokat, and Richard Thomas, CEO, Gatehouse Bank, at Mansion House, the official residence of the Lord Mayor.

The IDB president’s visit was at the invitation of the Lord Mayor who earlier this year visited the bank’s headquarters in Jeddah.

Dr. Ali also met Andrew Mitchell, UK Secretary of State for International Development, to review progress on the implementation of the Memorandum of Understanding (MoU) signed by the two parties in Jeddah in March whereby the UK and the IDB agreed to cooperate in co-financing projects in IDB member countries aimed at generating youth employment and reducing poverty.

Alderman Luder stressed the close and historical relations between the City of London and the IDB and the GCC countries, in particular, Saudi Arabia. The City of London, as a premier international financial center, has much to offer not only in innovation, but also in education and training and also in the growing phenomenon of Islamic finance.

Dr Ali emphasized that the visit was a testament to the IDB’s partnership with the UK and specially with the City of London. “We have worked together to further some areas of our common interest. This visit also provides IDB with the opportunity to support the development of Muslim communities in the UK,” he said.

IDB’s Medium Term Note Program amounting to $6.5 billion for sukuk issuance is registered with the Financial Services Authority in UK and is listed on the London Stock Exchange.Under this program, IDB has made several issuances in US dollars, as well as pound sterling denominated private sukuk issuances have been made.

As far as the money market placements are concerned, the IDB has over the years increased its exposure to the UK’s financial institutions and IDB stands ready to do more in this regard when appropriate opportunities are identified.

The IDB is working with such recognized institutions as the Prince of Wales’ Prince’s Charities and has contributed just under $1 million to help young people in the inner cities to start up projects or small businesses.

The IDB has also been providing assistance for economic and social empowerment to UK citizens as part of IDB’s special assistance program for cooperation with Muslim communities in non-member countries. To date IDB has approved a total of 19 projects for the UK and further projects are being planned. These projects are mainly in the field of education, social welfare and research.

In the wake of the global financial crisis, economic recession and the impact of the eurozone debt crisis, the issue of embedded inclusiveness especially of the financial services industry is increasingly important. Not surprisingly, the IDB President appealed to the financial institutions to help in this respect.

“Achieving sound and sustainable socio-economic development is not simply a financing issue. It is a much broader endeavor,” said Dr. Ali, adding: “It is not within the bandwidth capacity of a single institution or even a single country. It requires strong commitment to reform the socio-economic system and its institutions. All stakeholders, including the government, private sector, civil society and donor community, have to play an active role and align their priorities and activities to achieve this common goal. Due to the strong banking traditions in the UK, it can contribute significantly to this endeavor.”

This, he added, is a once-in-a-lifetime opportunity and called upon all the Institutions to pull together and work towards building “an equitable, just and stable financial system which is capable of providing sustainable growth with employment creation for our own future. IDB would be happy to cooperate with initiatives in this regard.”

A key delivery vehicle for inclusiveness which the IDB has been promoting is through SME financing and microfinance programs aimed at generating employment, especially youth employment, and economic growth.

Due to the recent changes in the MENA region as a result of the Arab Spring, there has been a demand for funding of SMEs. In this context, the Bank has launched the IDB Youth Employment Support (YES) Program for which the IDB’s Board of Executive Directors approved $250 million to help empower Financial Institutions, Employers, Education and Vocational training organizations in the Arab Region to reduce youth unemployment.

Dr. Ali revealed that the targeted countries include Tunisia, Egypt and Morocco and that the first disbursements have started with Tunisia. However, he pointed out that it is up to the receiving countries to come up with project proposals to access the funding.

Furthermore, the Islamic Solidarity Fund for Development has allocated $500 million for Islamic microfinance and a similar amount for vocational literacy programs (VOLIP). The IDB Islamic Microfinance Development Program was established to strengthen the Islamic microfinance institutions and develop the overall enabling environment for them.

According to the IDB, the French Development Agency (AFD) and the Consultative Group to Assist the Poor (CGAP) are also collaborating with the IDB in the development of Islamic microfinance.

source: http://microfinanceafrica.net/news/ukidb-idb-exploring-microfinance-options-in-uk/

Islamic microfinance: a tool to cut poverty

Wed, 21/03/2012 – 2:01am | by priyodesk

Islamic microfinance can be an effective tool to eradicate poverty if it ensures distributive justice to the downtrodden people, analysts said yesterday.

Poverty has multi-dimensional aspects: it means not only a lack of money but other issues such as poor access to clean water and sanitation, inadequate physical security, lack of voice, insecurity, powerlessness and exclusion.

They spoke at a roundtable on “Islamic Microfinance: An Instrument for Poverty Alleviation” at Radisson Hotel in Dhaka.

Malaysia-based WIEF Foundation and Bangladesh-based SEACO Foundation co-organised the programme in collaboration with the Bangladesh Federation of Women Entrepreneurs, Bangladesh Malaysia Chamber of Commerce and Industry and the High Commission of Malaysia in Dhaka.

Mohammad Abdul Mannan, managing director of Islami Bank Bangladesh, said conventional microfinance failed to benefit the poor as it runs in an exploitative manner. “So, Islamic microfinance can be a role model.”

There is a philosophical difference between conventional banking and Islamic banking, he said. “Conventional banking is fully based on individual greed, while Islamic banking is based on universal brotherhood and distributive justice.”

The banker said Islamic microfinance can be an effective tool to satisfy the financial needs of the poor as it focuses on a credit-plus integrated poverty alleviation scheme.

“It means we not only provide credit rather we integrate other issues such as zakat (compulsory transfer), waqf (an inalienable religious endowment), and kaffara (atonement),” he said.

Speaking as chief guest, Atiur Rahman, governor of Bangladesh Bank, said Islamic banking has been thriving in the vibrantly growing Bangladesh economy and accounts for a fifth of total banking sector assets and liabilities.

In Bangladesh, compliance of banks and financial institutions with Islamic Shariah principles is being overseen by their Shariah boards, while Bangladesh Bank oversees their soundness, solvency and capital adequacy, he said.

The governor urged the Islamic banks and the Islamic windows of conventional banks in Bangladesh to pursue vigorous promotion of Islamic micro and SME financing, in line with the country’s efforts for faster poverty eradication with deeper, wider financial inclusion.

As a panel discussant, Dadang Muljawan, senior economic researcher of Islami Development Bank in Saudi Arabia, said Islamic financing would grow further as it is gaining popularity in Muslim and non-Muslim countries.

He said Shariah-based banks emphasise the development of the poor as it not only provides funds, but also transforms people’s life.

Datuk Hajah Zabidah Ismail, managing director of Amanah Ikhtiar Malaysia, said Shariah-based microfinance can be an alternative tool to eradicate poverty as it promotes a balance of equitable growth

Abul Hasan M Sadek, vice chancellor of Asian University in Bangladesh, said microfinance is only a part of Islamic banking. It can be an effective model to eliminate poverty as the conventional system charges higher interest.

source: http://news.priyo.com/business/2012/03/21/islamic-microfinance-tool-cut-48472.html

Bringing Islamic Microfinance to the Women of Rural Cameroon

August 13, 2012 by Microfinance Africa

Sharia, Islamic law, prohibits usury, the collection and payment of interest, as well as investing in businesses that are considered unlawful. But with some modifications, microfinance can be made Shariah-compliant, opening up access to credit and poverty alleviation services to many Muslims.

The department of Noun, in western Cameroon, has a population of 1 million, of which 85 per cent are Muslims, compared to 22 per cent of the total Cameroonian population. While the area has many mosques and Muslim educational institutions, until recently there was no microfinance institution operating under Islamic law. Thousands of Muslims who wanted to stay faithful to Islamic banking laws had no way to store their savings or access credit.

“Muslim followers had been financially abandoned in this region of the country,” says Fifen Issah. “To start a business, lack of starting funds is a major obstacle. This is more evident in sub-Saharan Africa than anywhere else. But when it comes to an Islamic project, this barrier can easily be transformed into an impenetrable wall.”

No cooperative or any other microfinance institution, Islamic or not, existed in the area. “Without a system of savings and credit the cycle of poverty would certainly continue in this area,” said Fifen.

So in May 2008, Fifen launched the country’s first Islamic microfinance programme, based in the village of Foumbot. The Islamic Saving and Credit Cooperative of Cameroon (ISCCC) is the first Shariah-certified, social-performance-based poverty alleviation organization, with a unique and innovative Islamic microfinance model and business design. The organization has been formed as an ideological cooperative with the guiding principle of “partnership with the poor and profit and loss sharing.”

Operating only on the basis of contributions from members, the cooperative already has 750 members, both Muslims and non-Muslims. Its target is poor rural women, who make up 89 per cent of its members. The ISCCC provides members with “Productive Zakah” (donations) and “Qarz-e-Hasna” (interest-free loans) to start their businesses or buy agricultural inputs after giving them the basic business training. The cooperative is also working on health awareness.

The ISCCC has decided to follow the methodology of Pakistan’s Farz Foundation, and has been applying it since October 2011, with free technical assistance from the foundation.

“We believe that to effectively fight food insecurity in Cameroon and sub-Saharan Africa, it is necessary to develop more human microfinance programs, like Islamic microfinance, finance the chain value of agricultural production and fight against disease and ignorance,” said Fifen. “The Farz model integrates these concerns.”

 

source: http://microfinanceafrica.net/news/cameroon-bringing-islamic-microfinance-to-the-women-of-rural-cameroon/

While still limited in its operations, the cooperative is seeking partners and funding so that it can expand and become more stable and sustainable. “In short,” said Fifen, “everything that can enable our cooperative to take off to the delight of thousands of poor rural families of our beloved and beautiful country.”