Challenges and Opportunities in Scaling Islamic Microfinance
Explore the challenges and opportunities in scaling Islamic microfinance, including myths, competition with conventional financial institutions, and the Islamic vision of community empowerment. Delve into the concept of Islamic microfinance and its role in poverty alleviation, questioning why larger scale social investment has not been seen despite the significant growth of the Islamic finance industry. Discover the academic-practitioner gap and the need for operational research in the field.
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Presentation Transcript
Scaling of Islamic Microfinance, Challenges & Opportunities Fahad Liaquat AZM Foundation - Pakistan December 11,2019 9thGlobal Islamic Microfinance Forum Lahore-Pakistan
Conventional Microfinance Myth about Islamic Microfinance Making the Riba Halal is known as Profit And Converting the mode of interest is known as Profit The Holy Quran says and do not conceal testimony, and whoever conceals it, his heart is surely sinful.
Islamic Financial Intuitions (IFIs) are facing immense challenge due to competition from Conventional Financial Institutions (CFIs), excessive presence of complex financial instruments and a typical asset-liability structure.
Islamic Vision "Islamic" part of it is related to: o financing structures, but also to the idea of building community through empowering people. o Customers don't have to be Muslim. o It is also (we hope) good public relations to have an "Islamic" organization involved in economic development.
Where We are With the Islamic finance industry pushing $1.5 trillion (IFSB) in 2008 and will increase up to $ 6.5 trillion in 2020 (IFSB-Khaleej times), why we have not seen larger scale social investment? Should Islamic finance innovative ways to alleviate poverty? Because an institution is Islamic does this mean it has a particular obligation to invest in economic or community development? How does the concept of Islamic microfinance operate to serve the goal of poverty alleviation? innovation include
Where We are A clear gap line between the Academic Institutions and the practioners. Academics are limited to academic research but never be a part of Operational research ( very few) Replication of models and technical support at Grass root level Operational research and dissemination is one of the main challenges
Scaling Up With the Islamic finance industry pushing $6.5 trillion by 2020, why have we not seen larger scale social investment? The IMFs are not having the share of it because Islamic Finance industry development and awareness Lack of Financial support Attention to business ethics Attention to human capital Is available in developing world Needs support from developed economies
Special obligation? Because an institution is Islamic does this mean it has a particular obligation to invest in economic or community development? Social and human development goals of IF, but Corporate social responsibility Does Islamic refer only to financial structures? Not everyone agrees
Few Thoughts 1. (Immersion visits)Important is to travel into each other country to learn their experiences at their working areas. 2. Operational & Academic research shall be the integral part of this forum
