2. The global Islamic microfinance industry: a vision for going forward
Dr Mohammed Kroessin
Head, Islamic Microfinance
Islamic Relief Worldwide

3. Topics IR’s microfinance portfolio Reviewing our progress
Profile of the Islamic microfinance industry: supply & demand

4. Islamic Relief’s i-mf portfolio

5. Geographical spread Bosnia Palestine Russia (Chechnya) Kosovo Mali
Chad
Malawi
Kenya
Bangladesh
Pakistan
China
Yemen
Sri Lanka
Sudan
Ethiopia 1
xxx

6. I-MF Programme overview
Start year: 1994 (Bangladesh)
Total clients: +50,000 (since inception)
Total beneficiaries: +170,000 (since inception)
Active clients: 14,289
Active loan portfolio: $ 5,640,143
Avg .recovery rate: >97%
Status: Q3/2015
IRW turn-over 2014: $277m

7. I-MF delivery Delivery mechanism Client relationship
Direct project-based: Palestine, Sudan, Bangladesh, Mali
SHG/village bank: Sudan, Bangladesh
Collaboration w. commercial banks: Kenya (FCB) , Sudan (SSDB) & Pakistan (Meezan)
Subsidiaries registered as MFI, NBFI: Kosovo, Bosnia, Russia. Palestine, Bangladesh & Pakistan currently transforming
Client relationship
Group lending: Bangladesh, Sudan, Kenya, Mali, Yemen, Kenya
Individual: Pakistan, Bosnia, Kosovo, Chechnya & Palestine

8. Reviewing our Progress

9. I-MF at the cross-roads
Competition from crowd-funding & fin tech
Insufficient scale (capital & business model)
Not attracting & retaining talent
Thursday, 15 November 2018

10. 4th GIMFF resolution Sharia-compliant financial inclusion & the SDGs
Transforming the Islamic microfinance
Active co-operation and collaboration of all stakeholders
Embracing the variety of financial and socially sustainable business models
Adapting existing and new capital mobilisation mechanisms
Conducive regulatory and policy environment for Sharia-complaint financial inclusion
donors should focus on capacity building of I-MFIs
I-MFIs collectively develop comprehensive global standards
Launching a global Islamic microfinance campaign
With the international community currently drawing up the new development agenda post-2015, we believe that Sharia-compliant financial inclusion can truly unlock sustainable and equitable development outcomes for poor communities around the globe.
Transforming the still nascent Islamic microfinance sector is therefore absolutely critical and is both a huge challenge but also an even greater opportunity.
Achieving sustainability and outreach of Sharia-compliant financial inclusion requires the active co-operation and collaboration of all stakeholders, including international finance institutions such as the Islamic Development Bank (IDB), their research and training institute IRTI, bi-lateral donor agencies from the Muslim world, the private sector including Islamic banks and Islamic microfinance institution the world over.
We welcome and embrace the variety of financial and socially sustainable business models that the sector has to offer to provide the poor with not just loans but also savings, insurance, food security, business advice and value chain support services.
Establishing a successful and thriving Sharia-compliant microfinance sector also means embracing and adapting existing and new capital mobilisation mechanisms such as equity from social and financial investors and crowd-funding.
Governments in countries with significant Muslim majorities are called upon to create an enabling and conducive regulatory and policy environment for Sharia-complaint financial inclusion that incentivises civil society organisations and the private sector to engage.
Similarly to the thriving conventional microfinance industry international donors should focus on capacity building of I-MFIs.
Islamic Microfinance institutions should collectively undertake to develop comprehensive global standards to measure and disclose their performance—both financially and socially.
To launch a global Islamic microfinance campaign to establish a working relationship with all concerned parties such as multi-lateral organisation, governments in preparation for the 5th Global Islamic Microfinance Forum in Malaysia in 2015

11. Profile of the Islamic microfinance industry: supply & demand

12. IF, MF & I-MF Reference points: Conventional microfinance sector
Islamic finance industry
$ 90 BILLION (portfolio outst.)
$ 1.5 TRILLION (AuM)
Phase 1
Experimental
Phase 2
Replication of good practice
Phase 3
Expansion and full commercialisation
Rural credit Mit Ghamr Dubai IB Grameen MiX Sovereign Sukuk Compartamos
Thursday, 15 November 2018

13. The Islamic finance industry
US$ 750bn
Over 70% of people living in Muslim majority countries do not use formal financial services
Islamic microfinance accounts for only 0.5% of global microfinance despite a global Muslim population of about 1.2 billion
CGAP survey (2008)
AuM 2014 (est. )
Active loan portfolio 2014 (est. )
Jan 2015

14. The challenge: the demand side
What do poor people want?
inclusive finance (outreach, depth)
finance for consumption smoothing, investment & emergency expenditure
flexible products
affordable (values vs. wallet?)
ethical finance (compatible with their faith)

15. Global trends: The supply side
CGAP : Trends in Sharia-Compliant Financial Inclusion (2013)

16. Global trends: The supply side

17. Global trends: The supply side

18. Clients & products

19. Global trends: The supply side

20. Challenges: The supply side
Low institutional technical capacity, policies and procedures
Scalable models
Outreach & depth
High transactions costs
Economies of scale
Efficiency vs. welfarist model
Capital mobilisation
‘Shari’ah Compliance’? (AAOIFI - local mufti)

21. Going forward

22. Future prospects: Opportunities
Although there is an estimated 1.28 million clients in 19 countries using Sharia-compliant microfinance services, Islamic microfinance represents less than 1% of global microfinance programmes (CGAP, 2008)
Likely to increase significantly in the future because:
Growth of worldwide Islamic finance industry - mainstreaming
Growth of ‘Muslim’ institutional donors (IDB, IRW etc.), philanthropists and social investors
Market saturation & competition opens up new fields
Conventional Microfinance profitable (Compartamos)

23. Crossroads 2015 Business model? Charity (Akhuwat)
For profit/social enterprise (IBBL)
Scale/ Outreach?
National – global
Local – GSLA
Impact?
RTC evidence from convention MF 0 or –
I-MF?

24. A platform for future action
Support services
Conducive policies, incentives & regulation
Invest and collaborate with social development agencies
Promote & facilitate economic growth
Savings mobilisation
Put values first
Local poor communities
Development agencies
Governments & multi-laterals
Islamic financial institutions
IF literacy
Social performance
Financial performance
Thursday, 15 November 2018

25. AlHuda Center of Islamic Banking & Economics - Pakistan
AlHuda CIBE FZ LLE - U.A.E
P: ,
AlHuda Center of Islamic Banking & Economics - Pakistan
Ph: (92-42) , Fax: (92-42)
Website: