Islamic Microfinance: Lessons from Good & Bad Practices التمويل الإسلامي الأصغر: دروس من التطبيقات الجيدة والسيئة

Microfinance and Islamic finance have much in common. As concepts, both emphasize the good of the society as a whole. Both advocate entrepreneurship and risk sharing and believe that the poor should take part in such activities. Both focus on developmental and social goals. Both advocate financial inclusion. Both involve participation by the poor. It is also an interesting coincidence that both ideas( ) witnessed their fruition around the same time, in the 1970s. In terms of practice, once again there have been striking similarities. Over the last four decades of their existence, both are largely believed to have experienced a “mission-drift” with most players ignoring the financial needs of large sections of the ultra-poor. While mainstream Islamic financial services industry is largely observed to cater to the needs corporate and high-networth clients, the microfinance industry has focused on financing the economically active and not-so-poor. The call for enhancing financial inclusion has coincided with the birth of the Islamic microfinance that involves not just a marriage between conventional models, best practices and Shariah-compliant for-profit modes of finance, but a rejuvenation of the institutions of Islamic philanthropy, cooperation and not- for-profit modes of finance. --