Economic Empowerment Via Islamic Microfinance

Maputo June 2015

Engineer: Anas AL-Hasnaoui

15 June 2015 1
 Economic Empowerment Concept

Questions answers by the presentation

1. Does Microfinance contribute in fighting Poverty?

2. Does Microfinance contribute in solving self-employment problems?

3. Does Microfinance assist in solving development issues in Africa ?

4. What Are the Qualities of Islamic Microfinance?

 Principles in Islamic Microfinance

What are the needs of the Poor to be out of poverty circle

◊ Need Sufficient Income to satisfy his daily requirements

◊ Can be achieved through two ways:
 Sustainable efforts……………………………..…generally impossible
 income generation Enable activity
◊ Poor do not need cash enabling
◊ But need Economic Empowerment
 Economic Empowerment Concept
Field Information
1. Micro-Finance has a high cost, and must find solutions (1) Through selecting best business opportunities (2)
Security & Profitability (3) Better Management to the basic economic Operation (4) Not to increase interest rate.
2. Poor are regularly produce to poor or to limited market, must open more markets to them
3. Cost is not the most important: Poor do not concern to the finance cost but to the returns of the projects and
how the financier is socializing/solidarity with them
4. Necessary of finding smart Partnerships: Poor need someone to partner with him in his project to secure value
chain Process
5. Weak Infrastructure: poor needs basic Services to success and develop his projects
6. Participative group finances are mostly success and with lower cost.
7. Weak environment: legal framework & supportive funs ..etc (Zakat, Waqf, Collaterals ..etc)
8. Poor needs are many & diversified, so finance instruments must be diversified to obtain and access to more
poor markets.
 Economic Empowerment Fundamentals
Economic Empowerment Concept
 Economic Empowerment is a full merging method through Islamic Finance (Eliminates no one), developed by IDB to
invest and do business with the poor and marginal categories with using Islamic Modules:

1. Comprehensive method offers complete solutions for all obstacles ( Business Opportunity, Partnership,
Finance, Supportive Investment ..etc. and not only cash solutions
2. Applied in many countries and resulted with encouraging results ( more profit low risk )

3. Does not only target micro-projects but medium & larges business scale owned by weak categories
4. Profitable for all parties ( Financier, beneficiaries & Partners)

5. Successful in reducing poverty & social security and sustainable development

6. Based on Mutual interest through solidarity Partnerships. ( Government, Private Sector & Beneficiaries)
7. Its economic Projects more stable and more resistance
 Economic Empowerment Concept
Six problems must be defeated
Specialized
Consider The poor as Business Département
real partner not only Opportunity for Business
consumer or client Engineering
Smart with Poor
Market Access
Partnerships

It is impossible to empower the poor or self-employing un-

employed unless we solve 6 problems ?!!
Infra-Strucure & Create
17 experienced Enhance Self- Commercial
Supportive
Islamic Employment & Economic
Modules with Investment Partnership
Economic Data-
Base
Appropriate
Finance
 Ideological Based: Poor Do produce generally for Poor or for
limited Market

Targets 4 Types of Customers: Comprehensive Consider The poor as real

Individual, Individual-Groups, Method in Doing
partner not only
Solidarity Groups & Sustainable Business With
Poor consumer or client
Communities
Rich
Poor

Economy
Empowerment Not necessary be micro-
Approach projects can be investment
in million availed by Groups
of poor
Poor Market Market of Rich
 Economic Empowerment Concept

Qualities of Islamic Finance

Services to customers Economic Empowerment Via Islamic Finance Conventional Finance

Access to Business & Projects Development & ideas Yes No

Access to full business technical & Feasibility study Yes No

Access to projects’ assets & infrastructure finance Yes No

Access to projects operation expenses finance Yes Yes

Access to business partners for technical support

Yes No
for quality of products and marketing of products

Depends on targeted groups projects profit ( win-

Profit Rate Fix rate
win)/ except Murabaha

Savings Yes/linked with incomes Yes/linked with repayments

Solidarity Groups of families /co- operatives Sharing

Yes No/Groups with Individual Finances
one projects
 Islamic Microfinance In Africa
Specialties In Africa

1. Large number of poor and un-employed

2. Massive Number business of Business Opportunities
3. Infrastructure needs Rehabilitation
4. Need for Resources
 Economic Empowerment Approaches
We need innovations in Projects & Organizing Beneficiaries

Individual-Solidarity
Groups Individual Finance
Beneficiary is a group of individual Beneficiary is the individual or the
with a certain mutuality ( Similar family
business, Same education..

Community Sustainable
Groups Solidarity
Development
Beneficiaries are one solidarity group
Proposed solution for comprehensive in the same one business
development
Applications: Successful Practice
Abu-Halima Greenhouses Project (Sudan)
Applications: Successful Practice
Majhool Plantation in Palestine for More Than 15000 Families
Business Modules “ Development Waqf “
Reforming un-performed lands
Financial & Organization Structure of the Project
Economic Empowerment Institution
Society Contribution

Musharaka & Mudaraba

Diminishing Musharaka

Fellowship & Training

Poor Beneficiaries Strategic Partner

 Economic Empowerment Practices
Solidarity Groups
• Capacity Building For The Families
• Establish supportive institution for quality control “
Provide inputs, packing, marketing & E-Trade
• Encourage & support from Fair Trade Organization
The Practice Remained Limited despite excellency
Development Waqf Institution will Target:
• Expand the practice and open new market
• Finance all the operations through Sallam
• Plenty of families may avail from the practice (more than 1500)
 Economic Empowerment Practices
Sustainable Village Finance
A resident compound with appropriate secured durable cost houses, governed by
sustain development program.
Inclusive infra-structure for healthy living standards and according to substitute pure
economy technologies.

Public Landscapes & areas for incubating Productive, social & culture activities.

Rehabilitation and beneficiaries support program for job opportunities creation &
small, micro firms

village executive firms program support

Village Development Fund

Actual interaction of population in community building & development.

Practice In Economic Empowerment
Sustainable Communities
15 June 2015 18
 Contacts of the presenter Contacts of IRTI
Website: www.irti.org
Anas Alhasnaoui
Phone: +966 (0)
IBF & 4US Islamic finance solutions
director-IDB consultant 126466377

Fax: +966 (0)

00212661208286
126378927 ​ ​

Anasse.elhasnaoui@gmail.com P.O. BOX 9201 - Jeddah

21413

Kingdom of Saudi
Arabia​​

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