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15 June 2015 1
Economic Empowerment Via Islamic Microfinance Maputo June 2015
Engineer: Anas AL-Hasnaoui
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?
Economic Empowerment Concept
Questions answers by the presentation
◊ 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
Principles in Islamic Microfinance
What are the needs of the Poor to be out of poverty circle
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.
Field Information
Economic Empowerment Concept
Economic Empowerment Concept
Economic Empowerment is a full merging method through Islamic Finance (Eliminates no one), developed by IDB toinvest 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 categories4. Profitable for all parties ( Financier, beneficiaries & Partners)
5. Successful in reducing poverty & social security and sustainable development6. Based on Mutual interest through solidarity Partnerships. ( Government, Private Sector & Beneficiaries)7. Its economic Projects more stable and more resistance
Economic Empowerment Fundamentals
Business
Opportunity
Smart
Partnerships
Infra-Strucure &
Supportive
Investment
Appropriate
Finance
Enhance Self-
Employment
Market Access
It is impossible to empower the poor or self-employing un-employed unless we solve 6 problems ?!!
Consider The poor as real partner not only
consumer or client
Six problems must be defeated
Economic Empowerment Concept
Specialized Département for Business Engineering with Poor
Create Commercial & Economic Partnership
17 experienced Islamic
Modules with Economic Data-
Base
Ideological Based: Poor Do produce generally for Poor or for limited Market
PoorRich
Poor Market Market of Rich
Economy Empowerment
Approach
Consider The poor as real partner not only
consumer or client
Comprehensive Method in Doing
Business With Poor
Targets 4 Types of Customers: Individual, Individual-Groups,
Solidarity Groups & Sustainable Communities
Not necessary be micro-projects can be investment
in million availed by Groups of poor
Qualities of Islamic Finance
Economic Empowerment Concept
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 for quality of products and marketing of products
Yes No
Profit Rate Depends on targeted groups projects profit ( win-
win)/ except MurabahaFix rate
Savings Yes/linked with incomes Yes/linked with repayments
Solidarity Groups of families /co- operatives Sharing one projects
Yes No/Groups with Individual Finances
Specialties In Africa
Islamic Microfinance In Africa
1. Large number of poor and un-employed2. Massive Number business of Business Opportunities 3. Infrastructure needs Rehabilitation4. Need for Resources
Economic Empowerment Approaches
We need innovations in Projects & Organizing Beneficiaries
Individual-Solidarity
Groups
Beneficiary is a group of individual
with a certain mutuality ( Similar
business, Same education..
Individual Finance
Beneficiary is the individual or the
family
Community Sustainable
Development
Proposed solution for comprehensive
development
Groups Solidarity
Beneficiaries are one solidarity group
in the same one business
Abu-Halima Greenhouses Project (Sudan)
Applications: Successful Practice
Applications: Successful Practice
Majhool Plantation in Palestine for More Than 15000 Families
Reforming un-performed lands Financial & Organization Structure of the Project
Business Modules “ Development Waqf “
Musharaka & Mudaraba
Society Contribution
Diminishing Musharaka
Fellowship & Training
Economic Empowerment Institution
Strategic PartnerPoor Beneficiaries
• 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
Solidarity Groups
Sustainable Village Finance
Economic Empowerment Practices
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.
Sustainable Communities
Practice In Economic Empowerment
1815 June 2015
Contacts of the presenter Contacts of IRTI
Website: www.irti.org
Phone: +966 (0)
126466377
Fax: +966 (0) 126378927
P.O. BOX 9201 - Jeddah
21413
Kingdom of Saudi Arabia
1915 June 2015
Anas Alhasnaoui
IBF & 4US Islamic finance solutions director-IDB consultant
00212661208286