1. Prof. Dr. Mohamed Aslam Haneef Dr. Aliyu Dahiru Muhammad Prof. Dr. Ataul Huq Pramanik Asst. Prof. Dr. Mustafa Umar Mohammed Br. MD. Fouad Bin Amin

2.  Introduction  Objectives of the Study  Methods used  Research Findings from quantitative data  Research findings from qualitative data  Implications and Concluding Remarks Outlines

3. Other issues discussed: Lack of Takaful Coverage lack of shariah compliance Human Resource Development Limited products and lack of Takaful coverage Hence the proposed IWIMM Overcoming Primarily problems of High cost of financing and Lack Human Resource Development

4. Country YearPopulation Land Mass (36 States plus Abuja) GDP Per Capital GDP Muslims population Economic Growth Nigeria2014168.8million923,8000Squ arekms 244.trillion USD (2012) 1400US D Approximatel y 55% 7% (2013) Some Facts and Figures about Nigeria.

5. Country Year Population below 1.25$ per day (%) Poverty Gap at 1.25$ per day (%) Population below 2.0$ per day (%) Povert y Gap at 2.0$ per day (%) Resource Shortfall under 1.25$ per day (as % of GDP Nigeria201468.833.784.550.2Appr.4.5 Some Facts and Figures Source: WDI, 2014 Note: Resource shortfall was calculated by the researcher

6.  The study focused on Kano, Nigeria, a commerce centre in the federation with large number of micro-entreprenuers as well as the most densely populated Muslim community in the country.  The state has population size of around 10 million people which is the largest in the country  The sample size used is 248. ◦ 148 from Zakah and Hubsi Commission ◦ 100 from Grassroot Microfinance Bank, Kano

7. Demographic VariableFrequencyPercent Gender  Male 6325.4  Female 18574.6 Age Group  15-29 years 6325.4  30-44 years 11044.4  45-59 years 5923.8  60-64 years 166.5 Marital Status  Single 2510.1  Married 15763.3  Widowed 4919.8  Divorced 166.5  Single parent 10.4 Family Size  Below 5 10241.1  5-7 7128.6  8-10 4819.4  Above 10 2710.9 Profile of The respondents

8.  About 75% are women  About 68% at the age of 30-59 years  63% married while 20% single mothers.  30% have family size of 5-7 and 30 % with 8 and above. Profile of The respondents

9. Level of Education  Informal education 10.4  Islamic schools/Madrassa 12952.0  Primary school 249.7  Secondary school 5421.8  Diploma/college 72.8  Tertiary institution 52.0  Others 2811.3 Have you taken any vocational training  Yes 4618.5  No 20281.5 Education and Training

10.  About 52% have considered themselves as products of Islamic schools (madrassa) either because they only underwent such schools or the effect on them dominates.  Only 10% and 21% undergo primary and secondary schools respectively  As far a s vocational training is concern, more than 80% have not taken it. This requires more from the microfinance institutions for effective poverty reduction Profile of The respondents

11.  The Study was conducted between February to April, 2014.  Given the experiences in the previous studies in other countries, the instruments were fully developed and slightly modified with Prof. Shirazi and the IIUM team  Profile of The respondents

12.  5 Research Assistants were trained in 3-4 sessions for a better understanding of the instruments and techniques of collecting data from the respondents  After the training, each enumerator was asked to go and find a respondent as a trial for improvement. Profile of The respondents

13.  The total number of sample size was 248, and data were collected from different places in Nigeria. Hence, this number of sample size followed the rule of thumb for determining sample size which should be larger than 30 and less than 500 (Roscoe, 1975;Bougie and Sekaran, 2010). This demographical profile included gender, age, marital status,family size, level of education, and vocational training. Profile of The respondents

14.  According to Malhotra (2010), reliability refers to the extent to which measurements of the particular test are repeatable. Hair et al. (2010) says, reliability is an “assessment of the degree of consistency between multiple measurement of variables”. In other word, reliability is the degree of uniformed results on repeated trails given by an instrument measure (Bougie and Sekaran, 2010).  Profile of The respondents

15.  The most popular method of testing the reliability of questionnaires is internal consistency, or Cronbach’s alpha (Hilton et al., 2004).  Cronbach’s alpha was used to test internal consistency of 16 items for all dimensions.  Table 2 illustrates the Cronbach’s alpha for six dimensions of integration of Waqf and Islamic microfinance in Nigeria. The alpha values ranged from 0.808 to 0.980, exceeding the minimum requirement of 0.70 Cronbach’s alpha. Thus, all research items and overall instruments were considered highly reliable. Profile of The respondents

16. DimensionNo. of items Cronbach Alpha Islamic Microfinance070.917 Project Financing070.934 Takaful Financing090.808 Waqf Resources060.980 Human Resource Development110.933 Poverty Reduction060.832 Reliability of the Constructs

17. Fit Indices/Variables CMIN/DFCFIRMSEA Waqf 2.51 (5) 0.99 (0.95) 0.078 (0.08) Islamic Microfinance 2.38 (5) 0.93 (0.95) 0.075 (0.08) Takaful 2.51 (5) 0.99 (0.95) 0.078 (0.08) Project Financing 2.04 (5)0.99 (0.95) 0.066 (0.08) Human Resource1.64 (5) 0.99 (0.95)0.051 (0.08) Poverty Reduction1.51 (5) 0.99 (0.95) 0.046 (0.08) Figures in parentheses are the benchmarks acceptable for each indicator Fit indices for the Variables

18. Full Fledge Structural Equation Model for IWIMM

19. Fit IndicesCut-offObserved Value Decision CMIN/DF5 2.897 Accept the goodness of fit of the model CFI0.900.915Accept the goodness of fit of the model NFI0.95 Accept the goodness of fit of the model RMSEA0.080.088Accept the goodness of fit of the model Overall Fit indices for the Model

20. Hypothesized paths Coefficient (β) P-value (sig.)Remarks H1Waqf Resources → Islamic Microfinance 0.315 0.001Supported H2 Islamic Microfinance → Project Financing 0.324 0.001Supported H3 Islamic Microfinance → Takaful Financing 0.202 0.001Supported H4Islamic Microfinance → Human Resource Development 0.527 0.001Supported H5 Project Financing → Takaful Financing 0.735 0.001Supported H6Takaful Financing → Poverty Reduction 0.373 0.001Supported H7Project Financing → Poverty Reduction -0.231 0.035Supported H8Human Resource Development→ Poverty Reduction 0.548 0.001Supported Hypotheses Tested

21.  As illustrated in Figure 1 above the R square values for the five dependent (endogenous) variables were poverty reduction = 0.40, takaful financing = 0.67, human resource development = 0.27, project financing= 0.10,and Islamic microfinance investment = 0.10 which indicated that dependent (endogenous) variables moderately explained by the independent (exogenous) variables.  Based on the SEM analysis it was observed that all eight hypotheses were supported in the SEM model at 1% and 5% significant level. However, project financing have negative influence on poverty reduction in Nigeria through integration of waqf resources and Islamic microfinance investment.  This may be due lack of its application in the microfinance sector in Nigeria Hypotheses

22.  For the qualitative data, 8 interviews were conducted with the followings  For the focus group about 15 participants were invited, though attended by more than that.  Summary and extract were provided below. Qualitative Findings

23. S/NNameDesignationInstitution 1Alhj. Baffa SalehDirector Operations Zakah and Hubsi Commission Kano State 2Farida TahirCEOGrassroot Microfinance Bank, Kano 3Dr. Azeez AsifDirectorAl-Hayat Microfinance 4Rabiu M. Yar`aduaManager Development Finance Central Bank of Nigeria 5AbdulRahman Wacchiko Deputy Director Social Safety Nets NAPEP 6Alh. Amusa Bhadmus ChairmanAl Barakah Multi- purpose Co-operative Society Limited 7Ibrahim KantuduDirector, ZakatZamfara Zakat and Endowment Board 8Sani MuhammadDirector, WaqfZamfara Zakat and Endowment Board

24.  R1: “The idea of supporting microfinance with bank, I mean, waqf is really a welcome idea. To me, I feel it will really alleviate the sufferings of the needy and develop people.” Baffa Saleh  R2: This fund may come in as low cost to the bank because they will come in the form of donation, some will come in form of grant. If you have such fund then it will reduce the high cost of fund that the conventional microfinance banking sector is suffering from.” Farida Tahir Microfinance and waqf fund

25.  R5: “The major problem is lack of integrated model like this. That is a very creative and reliable sources of supportive funds which is very critical in micro-financing because if you only based on equity fund, shareholders who are after gain... financing your projects.. it will be really difficult to achieve poverty alleviation targets from that angle where there is no supportive funds.”Bhadmus Microfinance and waqf fund

26.  R1: “Honestly, I don't support the idea of it will make someone to be idle and lazy. Honestly, the system will definitely, instead of, making somebody to be lazy, it will even make him to be productive, as a Muslim.” Baffa Saleh  R2: “I don’t think it is going to encourage laziness because in dealing with our clients we do verification. We give this loan those who are qualified.” Farida Tahir

27.  R5: “I don't believe that. I believe that you see, microfinance is supposed to be for the people in the grassroots. It is the people with many activities. It is not a major component so to speak and this set of people, I think what is most important is the training.” Wachiko  R6: “Yes. Actually it can be. In this regard we should know who are really in business. there is a parameter of analysis those who have been working for last 5 years even we take a year, we can check their records, if we see actually they are doing we can well know by statistics and rigorous assessment.” Bhadmus Microfinance and waqf fund

28.  R2: “Because they don’t have alternative. You know, this category of business people or client, they are lacking adequate financial literacy. So, once they understand that would be better off, that would make them to create wealth, definitely they will ignore the only option they are forced to.” Farida Tahir  R5: “What I think that will be already a partnership in the sense that the cooperatives go to the microfinance banks and giving access to deposits that are using it for economic activities it is already a partnership between the cooperative and microfinance banks.” Wachiko

29.  R6: “Microfinance cannot really work in partnership because most of the clients are needy and they are operating in non-skill manner, they don't keep proper record of transactions. they are free to take capital from their business anytime they want....

30.  R2: “Well, I think there are so many options that IsMF can offer project financing like istisna. I have just mentioned now and then there is musharaka contract.” Farida Tahir  R5: “, I think it is already a partnership Microfinance banks can contribute to business.. cooperative also can engage in different activities that is the way I see it” Wachiko  R:6 “Setting of business but if financial institutions would like to give, they are expecting to change their attitude. The only way we can do is to give them loans. Only Islamic financial product like Murabaha is workable here.” Bhadmus

31.  R1: “First and foremost we have to enlighten the wealthy individuals, the government, and the entire people of the state. the importance attached to the integrated model” Baffa  R2: “Well, the challenge number one we don’t have a complete legal framework, or you can say approved legal framework for our operation…awareness, attitude…” Farida Tahir

32.  R5: “Well. The model is okay except that like I said earlier on the model is based on a lot of interfaces, a lot of interactions between the people who are going to benefit and those who are going to give the funds…people have to e educated to avoid seen it as a national cake…”Wachiko  R6: “The challenges are: one is ‘lack of legal framework’ everybody is sharing this view. The second challenge is ‘lack of manpower’. People still don’t know what IMF is all about...shortage of funds” Bhadmus

33.  R1: “We introduce the system of empowering the needy one. the system of empowering needy in the sense that we train them, we get them training, you know, on a profession like, you know, a very simple especially to the widows.” Baffa Saleh  R2: “It is going to help a great deal…but if you don’t train them, they don’t know how to collect the money and how to manage them. So don’t blame them.” Farida Tahir

34.  R5: “If they go to training and see that as beneficial and they learn the basic aspects of book keeping how to record profit and loss. How to improve the quality and quantity of their produced goods. I am telling you everybody will be happy. It is going to be win-win for all the parties.” Wachiko  R6: “MF supposed to be targeted upon to improve the skill of the clients. Because popular saying is ‘Knowledge is life and power’. So those who have power, courage, they can take initiatives... Let them know how they can keep their records. In this regard, there will be a lot of institutional mechanism..” Bhadmus

35.  R1: “I honestly support the idea where giving them training before collecting the fund. Yes, it is a welcome idea.”Baffa Saleh  R2: “Exactly. It should be a strong condition because in fact according to Central Bank of Nigeria (CBN) regulation, pre-disbursement training is very very important. It’s a condition” FT

36.  R5: “That’s the best way to go about it because if a person does not go to any training, he will not understand what we are trying to introduce, but once they have been trained…” Wachiko  R6: “Yes, of course. You can do that. Before MF to operate and properly function, we need to train our clients. In fact, we train our clients. We gave them various training for some time in order to improve their skills. After training, we see the affects are different.” Bhadmus

37.  R1: “…in the course of the payments at least we can equally tell them that they should give us some sort of sadaqah so that we can also meet the demand of those who are in need of money desperately.” Baffa Saleh

38.  R2: “It is very fantastic. In fact, in this bank we have come up with something called Base Banking. Base Banking involves promotion of togetherness. People living together in the same community. They don’t have to come to the bank to access financial assistance. We try to encourage them to work as group among themselves... We have made it compulsory for them to have common saving in terms of social welfare; which they contribute on weekly basis.” FT

39.  R5: “People, Muslims as well as non-Muslims, are in our ??. Muslims give sadaqah, Christians give tithe. This is already established in Nigerian culture that people are willing to give something to charity... we should motivate people to willingly donate some part of their profits they have generated to improve their community, to improve the livelihood of other people

40.  R6: “Immediately when they start to feel that they are okay, they can also accommodate others... So give them spiritual training.” Bhadmus

41. S/NIssueRemarks 1Waqf to subsidize microfinance Desirable 2Attitudunal Problem due to subsidy Most likely not 3 Project Financing as a preferenceGenerally not preferred; loans more commonly used 4Musharakah Mudharabah, Ijaraah etcPossible with cautions 5Challenges of the Proposed ModelAwareness, training, attitude, funds availability, Regulation 6Human Resource TrainingVarious types of training as a must 7Pre-Disbursement TrainingCompulsory 8 Takaful and supporting othersHighly desirable and humanly Summary Table

42.  Waqf Based Islamic Microfinance model is applicable in Nigeria as some elements are already on ground such as waqf (GRMB has RM260,000 to disburse from 2 philanthropists)  Comprehensive Regulatory framework is needed for effective application of IWIMM  Awareness constitute a major area of emphasis for stakeholders particularly on partnership issue  For the implementing institutions, screening and pre-disbursement trainingbecome very important  For the funding agencies, collaborations with other agencies is very crucial to achieve the goal of poverty reduction

43.  Waqf (plural awqaf) as an Islamic endowment can significantly play a greater role in poverty reduction in Nigeria  IWIMM will be more effective if regulatory framework is strengthened to allow Non-Interest microfinance just as there is Islamic banking regulatory framework  Human resource development for all stakeholders including the clients and providers need to be enhanced.  For clients, capitalizing on the CBN pre- disbursement training requirement could improve the performance of Islamic microfinance. Conclusion

44. During the Focus Group session

47. During the Data Collection

48. At Zakah and Hubsi Commiss on