Microfinance Programmes Reaching out to Muslim Women
Dubai, United Arab Emirates, November, 04 2008 -
The International Finance Corporation (IFC), a member of World Bank Group, has dispersed almost $600 million (Dh2.2 billion) in the greater Middle East region, while working with 11 microfinance institutions (MFIs).
IFC has invested $72 million in the institutions based in countries in the region that have low access to finance, especially Morocco, Pakistan and Afghanistan, according to Momina Aijazuddin, programme manager of Microfinance.
The institutions have provided microfinance to 1.25 million clients.
"Most people have not had access to financing before. In the case of Muslim countries, almost 60 per cent of the clients are women," Aijazuddin said.
While there is a great need for financing, an estimated 72 per cent of people living in Muslim-majority countries do not use formal financial services, according to Michael Tarazi, senior regulatory specialist at the Consultative Group to Assist the Poor (CGAP), a microfinance researcher, housed at World Bank.
CGAP conducted a survey on Islamic microfinance, gathering information from over 125 institutions and experts from 19 Muslim countries.
Surveys in Jordan, Algeria and Syria reveal that 20 to 40 per cent of respondents cite religious reasons for not accessing conventional microloans, according to a report called Islamic Microfinance: An Emerging Market Niche.
While Islamic microfinance has the potential to overcome the barriers that keeps Muslims from approaching financing, it has an estimated global reach of 380,000 customers and accounts for only an estimated half of one per cent of total microfinance outreach.
In the past 30 years, the Islamic finance industry has developed to over 500 Sharia-compliant institutions, reaching out to 75 countries.
Today, the industry's total assets are estimated at $500.5 billion, reports say. Of the total, 36 per cent is located in the Gulf Cooperation Council (GCC) countries, 35 per cent in non-GCC Southwest Asia and North Africa and 23 per cent in Asia (primarily in Malaysia, Brunei and Pakistan).
Edward Greenwood, country director of Finca Jordan, an institute that provides microfinance said that surveys in Jordan, showed that 32 per cent of the people preferred Islamic microfinance.
However, Islamic MFIs have not been successful in the area. He says this is due to two reasons: the preceding success of conventional microfinance and the more expensive cost of Islamic microfinance.