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Towards Inclusive Islamic Microfinance

8 June 2015, Maputo

Atilla Yücel

Promotion of the Microfinance Sector

in the MENA Region

10th IDB Global Forum On Islamic Finance

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Outline

• Report: Towards Inclusive Islamic Finance

• Research: Qard Hassan Loans & Financial

Inclusion

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www.microfinance-mena.org

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Needs for Action towards Inclusive Islamic Microfinance

Regulatory environment Cost efficiency and

standardization

Capacity bulding,

financial literacy Product development

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Research: Qard Hassan & Financial Inclusion

• Benchmark: application of QH, usage of Zakat / Waqf

or commercial funds, for financial inclusion and SME

development

• QH: charity vs. commercial applications

• Sample: Egypt, Jordan, Morocco, Saudi Arabia,

Sudan, Tunisia, Yemen

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Overview: QH Markets by Country

Country Market Overview

Focus of products Government

Intervention

National

Strategy MSMEs Social

Needs

Egypt - Informal; mostly NGOs Low High No No

Jordan - Informal; e.g. QH for union members Low High No No

Morocco - Informal, unregulated Low Low No No

Saudi Arabia

- Formal & informal channels

- High average loan size

- Backed by government, partly private

High High Yes Yes

Sudan - Backed by government & zakat authority High High Yes Yes

Tunisia - Informal, unregulated, low scale Low Low No No

Yemen - Informal; NGOs, banks;

- Single ministerial initiatives & zakat authority Low High Low No

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Sample: QH Applications by Provider & Product (cont’d)

Institutional Data Qard Hassan Application Source of Funds

Country Name Type SMEs BDS Social Target Group Zakat/

Waqf Gov Others

Saudi

Arabia

Al Zamil Program NGO Youth/SMEs - - Corporate

The Centennial Fund Gov

Charity - Youth/SMEs Donations

Saudi Credit & Saving

Bank Gov Bank Youth/SMEs Corporate

Bab Rizq Jameel NGO Youth/SMEs - - Corporate

Sudan

Social Development &

Saving Bank Gov Bank Limited income - -

Sudanese Women

Association NGO - -

Productive

women - Donations

Yemen

Social Welfare Fund Gov Org SWF

Beneficiaries Deposit return

CAC Bank Gov Bank - - Bank Clients - - Bank Budget

Cooperative Foundation NGO - - IDPs (Females) - - Donations

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Summary

• Application of QH

• Largely no national committees and strategies;

• Decentralized, non-systematic approaches;

• Unclear regulatory environments

Constrains public and private efforts in financial inclusion and economic development

• Zakat

• Generally not for QH funding

• Covers operational & administrative costs

• Only corporate/private Zakat used for QH

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The Role of GIZ

Research

Technical Assisstance

Policy,

Regulatory

Advise

Dialogue,

Knowledge

Sharing

Training Financial

Education

Catalyzer

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As a federal enterprise, GIZ supports the German Government in

achieving its objectives in the field of international cooperation for

sustainable development.

Published by

Deutsche Gesellschaft für

Internationale Zusammenarbeit (GIZ) GmbH

Registered offices, Bonn and Eschborn, Germany

Promotion of the Microfinance Sector in the MENA Region (MFMR)

Deutsche Gesellschaft für

Internationale Zusammenarbeit (GIZ) GmbH

P.O. Box 926238

11190, Amman

Jordan

E: atilla.yuecel@giz.de

I: www.giz.de

Responsible

Hayder Al-Bagdadi, Matthias Range

Author

Atilla Yuecel

Implemented by

Thank you for your attention.