Tuesday, March 4

Islamic Microfinance.

The article titled “Islamic Microfinance: An Ethical Alternative to Poverty Alleviation”, written by Abdul Rahim Abdul Rahman, sets out to show the potential of Islamic financing schemes for micro-financing purposes. According to the author, Islamic finance plays an important role in contributing for furthering socioeconomic development of the poor and small (micro) entrepreneurs without charging interest (riba’). The various ethical schemes and instruments that can be adapted for the purpose of microfinance which is offered by the Islamic finance are intensely conversed in this article. The author argues that the main objectives of microfinance schemes to alleviate poverty and to enable the poor to empower themselves are inline with the four Islamic ethical principles and the economic principles of justice.

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“Creating an Islamic Microfinance Model - The Missing Dimension” by Sajjad Chowdry, looks on microfinance and Islamic finance as two separate issues before adding it up together. The author first deeply wrote on how the use of microfinance has changed the development of the poor worldwide. The similarities between Islamic finance and microfinance were briefly put into the article before the author moved on to the missing dimension in Islamic microfinance. According to the author, Islamic finance principles are still not widely adopted by the conventional microfinance and microcredit institutions as the principles are difficult to implement. Nevertheless, the author declared that Islamic finance is a natural fit in microfinance, both debt and equity based.

Alberto Brugnoni affirmed that the Islamic microfinance is still in its infancy with less than 1% of total global microfinance outreach in his article “Islamic Microfinance Model Needs Changing”. The author argues that the challenges in reaching a sustainable scale are mainly due to the not-for-profit culture of the Islamic microfinance intermediaries. Alberto claims that the Islamic microfinance should shift from a charity-based, donor-dependent approach to a market-based, for-profits approach. An Islamic microfinance international fund to help bridge the gap between pent-up demand and possible investors is proposed in this article by the writer. It is declared that the key to providing financial access to millions of poor Muslim is by unlocking the potential of Islamic microfinance.

Hasta la vista. Adios.
See you later. Goodbye.

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