Islamic Nano-Finance for the Very Poor by Women: Hopes for Addressing the Islamic Microfinance Gap

Poverty is the fruit of unequal distribution and has become a market for loan sharks. Financial inclusion for all is the key for creating a distributive justice. Islamic finance should be a solution to eradicate poverty. Inability of the Islamic financial institutions to complete the missions of the Islamic finance to bridge the financial and real sectors, to distribute the wealth and to manage the lack and excess of liquidity may also create distributive injustice. This chapter believes that Islamic nano-finance can be an answer to cope with the Islamic microfinance gap in financing the very poor. The existence of conventional microfinance institutions in some countries that focus on nano-finance should be a reflection for Islamic finance to engage in this society. Microfinance actually helps poor households by empowering women to contribute to the economic growth and sustainable livelihoods of their families and communities. Some studies also confirm that women in general are a better credit risk for microfinance institutions throughout the world. But, in the absence of banking facility, the very poor frequently borrow money from the loan sharks and microfinance institutions that come to help these people by charging an interest rate. So, this chapter is intended to: (1) Describe the profile of microfinance for women in some countries; (2) Compile a working model of nano-finance activities in the world; (3) Propose a model of Islamic nano-finance for women by integrating the Islamic finance and Islamic philanthropy to finance the poor in meeting their immediate needs, especially to avoid them from the trap of loan shark.