Midi de la Microfinance, 14 December, Luxembourg
Islamic microfinance: A solution to expand financial inclusion?
14 December 2016, Luxembourg
The global Muslim population counts more than 2 billion people but over 70% of them, living in Muslim majority countries such as Indonesia, Malaysia, Pakistan, Bangladesh or Sudan, do not use formal financial services. Despite the expansion of institutions providing credit and loan services in developing countries, only 0.5% of global microfinance institutions offer services and products responding to Islamic financing principles. In the context of an evident huge demand for the expansion of these financial products and services, why the development of Islamic microfinance is still in its infancy? As this tool can reach more people with adapted financial services, that classic microfinance couldn't reach, why this sector can't take off?
Islamic financing is unique and essentially different from conventional microfinance. The sector seeks to provide an economic empowerment tool for poor or disadvantaged people following the Islamic finance methods that avoid interest. A mission which can seem impossible, but therefore the sector focus on profit and loss sharing based on the principles of the religion. The development of the regulatory and legal framework is also a key factor to encourage the diversification of financial niche products. Indeed, capital markets, banking and the insurance sector of Islamic financial industry need to play complementary roles in providing innovative solutions. These can be the main fields to work on to improve the interest of the stakeholders, including policy makers and investors.
The experts invited to the 37th Midi de la microfinance, Mohammed Kroessin, Head of Global Islamic Microfinance Unit, Islamic Relief Worldwide (UK), and Fadoua Boudiba, Senior investment officer for MENA and Africa, Triodos (Netherlands), will discuss about the development and the contribution of the Islamic microfinance to the financial inclusion. The speakers will explain the main principles of the Islamic microfinance, as well as challenges it copes with today and the opportunities of its expansion. They'll also explain how the sector adapts the social performances standards, woman empowerment and rural development.
David Demulier, from a French public financial institution, will moderate the discussion.
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