A National Experiment: Sharia-Compliant Finance in Sudan

In Sudan, Sharia-compliant microfinance is the government-mandated rule, not the exception. That’s because the country’s banking system went fully Islamic in the 1980s, legislating Sharia principles. In 2007, the Central Bank of Sudan established a dedicated microfinance unit to foster a conducive policy environment, a regulatory framework, and the intellectual, human, and financial capital to provide those services effectively. Moreover, the Central Bank introduced various Shariah-compliant products, such as musharaka, mudaraba, salam financing and istisna, to meet specific needs of potential customers. Banks were required to channel at least 12% of their total loan portfolio toward microfinance clients. Out of this have emerged several exciting programs that are offering early evidence that the country’s strategy is paying off.