Potential ofSharī’ahcompliant microfinance in alleviating poverty in Nigeria

Purpose - This paper aims to explore the option ofSharī’ah-compliant microfinance as a viable alternative to many previous approaches adopted by the Nigerian State in tackling the menace of poverty in the land. In spite of many poverty alleviation policies and interventions of the past three decades, millions of Nigerians still live in abject poverty, while thousands of university graduates roam the streets looking for jobs. Many unemployed Nigerians with good business ideas are usually discouraged by the alarmingly high interest rate charged on start-up capitals by local banks. Design/methodology/approach - To achieve its objective, this paper used both analytical and qualitative methods after thoroughly examining many relevant literature and empirical works. The study explores fourSharī’ahtools for the implementation of the proposed scheme, to wit:musharakah, mudharabah, zakat andwaqf. Findings - The study finds that the suggestedSharī’ahtools are viable and sustainable in lunching microfinance projects in the Nigerian context. The paper further argues that exploring Islamic non-interest microfinance options will guarantee the financial inclusion of a large percentage of Nigerians, pursuant to the Constitutional provision on economic rights of the entire citizenry (s.16 of the 1999 Constitution of the Federal Republic of Nigeria, as amended). Originality/value - The paper identifies a yet-to-be explored viable option, with great potential not only in enhancing government policies for poverty alleviation but also in assuring a large percentage of the citizens of financial inclusion.