Inspite of the extraordinary potential of the country, financial institutions in Pakistan are still not taking Islamic micro financing seriously.
According to Al Baraka Bank Chief Operating Officer Ahmed Shuja Kidwai, Islamic micro finance is notably important for Pakistan because it’s a developing economy and has a huge untapped market. He added that he was one of those managers who believe in learning the fundamentals of a market and analyzing how to make it into a success.
He gave as examples the following countries: Italy, Iran, India and Malaysia, which have grown their industries through micro financing in just 10-15 years.
The BlueOrchard Private Equity Fund (BOPE Fund) recently obtained a 20% stake in US-based CHF Development Finance International, a holding company established by development organization CHF International to own and manage CHF’s commercially-oriented microfinance subsidiaries.
The transaction empowered CHF Development Finance International’s capital structure and allows it to have seed capital to access new countries and expand its services.
The World Congress of Muslim Philanthropists (WCMP) and Pakistan’s Islamic microfinance institution Farz Foundation have singed a Memorandum of Understanding to further empower their partnership.
The two will work together in developing Shariah compliant, need based and market driven innovative products. They will also design the strategies to carry out the products' operations to kick start the Halal income generating cycle.
WCMP will copy Farz Methodology in Pakistan and outside, especially in the less developed Muslim countries.
State Bank of Pakistan (SBP) has issued Guidelines for Islamic Microfinance Business by Financial Institutions.
This report has been prepared to assist the International Development Law Organisation (IDLO) in
understanding the basic Islamic law (Shari'a law) principles governing the provision of Islamic
finance products and services, the processes typically involved in obtaining Shari'a approval for
Shari'a-compliant financing transactions and products and the relationship between Shari'a law and
secular law in certain jurisdictions. This report also summarises the results of our research into the
state of Islamic microfinance in certain Middle Eastern, South Asian and Southeast Asian countries.
The information included in this report is derived from a combination of our experience of advising
on Shari'a-compliant financing transactions and publicly available sources and materials. We have
not independently verified the information obtained from external sources that we used and make no
representations as to its accuracy or completeness. In addition, we did not undertake an exhaustive
search of all information or materials which are publicly available in relation to Islamic microfinance
SHAMROCK Conferences International has announced that the 5th Annual Pakistan Micro-finance Country Forum 2011 is going to be held on 24th of November, 2011 in Karachi.
The theme of the forum is named “Stretching out to the unreached” and will contain case-study discussions and face-to-face deliberations.
Hansonwade’s Summit on scalable business models for Islamic Microfinance will take place from January 30 to February 1, 2012 in Istanbul, Turkey.
The focal point of the summit will be on identifying the potential business models available and their challenges. At the summit Tijara, USAID, Akhuwat, Al-Amal Microfinance Bank, Tanzania eco-Volunteerism and CWCD will share their projects.
Event Website:
http://islamicmicrofinance-summit.com/
At the International Conference on Islamic Microfinance, held in June in Islamabad, Pakistan participated over 500 industry experts, practitioners and stakeholders from 20 countries trying to promote Islamic Microfinance and chart its future growth.
Mr. Ahmad, Chief Executive Officer of Pakistan’s Microfinance Network, presented the challenges facing the industry and offered plausible solutions.
Mr. Christopher Candland, Associate Professor Department of Political Science and Director South Asia Studies Program, Wellesely College, USA, revealed that major researches on commercial microfinance show how the growth of microfinance has far defeated its effective alleviation of poverty.
The third Islamic microfinance organisation to implement Farz methodology, after the NGO World Foundation and AAS Foundation Bahawal Nagar Pakistan is Islamic Saving & Credit Cooperative of Cameroon.
Islamic Saving & Credit Cooperative of Cameroon is dedicated to reach out to the poor of Cameroon through Islamic financial products developed by Farz Foundation.
The 2nd Quarter 2011 issue of the Malaysian ICM quarterly bulletin published by the Securities Commission Malaysia (SC) is now available online at:
http://www.sc.com.my/eng/html/icm/11_2Q_msianicm.pdf
The study ‘’ Non-Productivity of Microfinance Loans in Pakistan” by Mazhar M.“analyzes the productivity of microfinance loans in Pakistan. It is based on field work with foundations and bank clients, and data received from MFI and microfinance bank employees. It discusses:
Principles and objectives of microfinance;
• Challenges faced by Pakistan’s microfinance sector;
• Principles and methodologies of microcredit;
• Microfinance programs in Pakistan;
• Comparison of microfinance methodologies in Pakistan;
• Principles of Islamic microfinance;
• Difference between productive and non-productive loans;
• United Nations Millennium Development Goals.
NGO World has closed an agreement with Shariah certified Islamic microfinance institution ‘Farz Foundation’ to replicate its Islamic Microfinance Methodology in poverty alleviation programs.
Together they will make and raise awareness for Shariah compliant finance products by conducting training sessions, workshops with the poor community.
A challenge has appeared for practitioners, professionals and scholars of Islamic Microfinance and that is to draw a standard Islamic Microfinance Model’s out line, which could encircle the needs and issues of the social and commercial both modes of poverty alleviation.
The real requirement of the industry is a sustainable faith-based microfinance model.
In case of a faith based model the situation is very interesting because it is not totally depended on product development experts, who have prooved their expertise by developing poverty alleviation products in the recent past.
Microfinance is compatible to work with any model of icrofinance and it presents the alternative to all the products of conventional system.
Zubair Mughal, Chief Executive Officer of AlHuda Centre of Islamic Banking and Economics Pakistan, underlined the fact that Islam has given the best system for poverty alleviation and both Muslims and non-Muslims will have the possiblity to benefit from it.
http://www.dailytimes.com.pk/default.asp?page=2011\07\15\story_15-7-2011_pg5_4
A seminar was organized by Al-Huda Centre of Islamic Banking & Economics (CIBE) and AKHUWAT in order to come up with a plan of poverty alleviation on national and international scale to lessen poverty, social welfare and to tackle other problems pertaining to it.
Delegates from Malaysia, Yemen, Kazakhstan, Indonesia, Mauritius and other countries participated in the event who spoke on various topics of Islamic microfinance i.e. methodology of poverty reduction, Zakat, Shariah implications, Dard-e-Hasna, Waqf models, latest trends of Islamic microfinance, technological application of poverty alleviation and usage of Islamic microfinance in non muslim societies.
The “International Conference on Islamic Microfinance” is going to be held on June 13 in Islamabad. The organiser is AlHuda Centre of Islamic Banking and Economics Pakistan.
Nowadays more than 300 Islamic microfinance organisations are working in Indonesia, Kenya, Afghanistan, Bangladesh, Sri Lanka, Yemen, Egypt, Sudan, Tanzania, Mauritius, South Africa, Malaysia and Pakistan.
HSBC Amanah Shariah wants to allocate USD 2.12 million through PT Permodalan Nasional Madani (PNM) for the development of micro-, small and medium-sized enterprises (MSMEs).
The funds from HSBC to MSMEs will be chanelled through its Shariah-based microfinance branches.
The Farz Foundation recently hosted the first National Islamic Microfinance Conference in Lahore, Pakistan, in an effort to develop solutions for the microfinance industry in Pakistan.
Among the ideas proposed to move away from lending practices that “create overindebtedness and violate the principles of customer’s ethic” is the Farz Methodology, a microfinance model promoted by Farz. The methodology, based on Islamic principles, offers free business and health education to clients, prior to offering funding, in deference to Sadqae Jariah (social responsibility). Farz offers loans to clients for the purchase of assets, such as real estate and business equipment. The loans, called murabaha, are interest-free but stipulate that the lender be entitled to a 24-percent profit on the proceeds from the asset.
Al Amal Microfinance Bank of Yemen has been awarded US$104,000 under the Islamic Microfinance Challenge 2010, a partnership launched to encourage the reach of Islamic financial services to micro-entrepreneurs.
CGAP, Deutsche Bank, Grameen-Jameel Pan Arab Microfinance, and Islamic Development Bank partnered to sponsor this global competition to uncover viable business models that provide microfinance products compatible with Islamic law, or Shariah.
The first National Islamic Microfinance conference was held on 29th of January 2011 in the Lahore Chamber of Commerce and Industry . The conference was attended by Iftikahr Malik, Vice Presiden Sarrc Chamber of Commerce and Industry, Tahir Malik, Chairman Trafco Group of Companies , Mr. Zulfiqar Khokhar Additional Direcroe Islamic Banking & Finance Department State Bank of Pakistan, Mufty Iftikhar Baig, Sharia Advisoe of Albaraka bank Mufty Mahmood, Sharia Advisor Farz Foundation , Tariq Shafi, Regional Chairman FPCCI.and Ms Humera Awais Shahid, member Provincial Assembly.