Success of Islamic Modes in Microfinance: The Experience of the Family Bank (Sudan)

Many scholars and theorists in the field of Islamic Finance consider Microfinance as the best method to achieve the core goals of Islamic finance to realizing redistribution of wealth and opportunities. Microfinance meets the needs of poorer segments of the population who are outside the scope of access to official financial services. It also works to include these segments among the beneficiaries of this important and vital sector to achieve what is known as the principle of Financial Inclusiveness. In contrast, many practitioners in the field of microfinance claim that Islamic finance has achieved very modest success in the Islamic microfinance, especially in comparison with the Conventional microfinance. The reason in this aspect is the Islamic Modes of microfinance as it represents the essence of the difference and disagreement between conventional microfinance and Islamic Microfinance. Practitioners believe that some of these Modes have obstacles that hinder the possibility to actually be applied on the floor, others involve high costs which reduce the feasibility of their use in the delivery of microfinance services to the target groups.