Islamic microfinance offers solutions to world poverty

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SHAFAQNA - Islamic Finance is an Ideal tool of financial inclusion and can address the poverty issues in East Africa effectively, it was stated by Mr. Zubair Mughal, the Chief Executive Officer of AlHuda Center of IslamicBanking and Economics (CIBE) while addressing with eminent gathering of Banking and Financial industry of Tanzania in Dar-es-Salaam during a Islamic Banking and Finance event, which was organized AlHuda CIBE yesterday. The overall objective of the event was to create awareness, knowledge development and sharing the best practices of Islamic Bankingand Finance with local financial market, so that Tanzanian Islamic Financial market could be established with solid footing using Shariah & technical expertise as concrete.

He inaugurated the event and delivered keynote address to the participants and said that Poverty is increasing in the Muslim world at rapid pace and consequently about half of the world poverty has been confined to Muslims world which is definitely an alarming figure. The amalgamation of interest in banking and finance industry is one of the major reason behind this phenomenon and that’s why Muslims hesitate to avail financial or microfinance products and remain excluded from financial access as interest is strictly prohibited in Islamic, If we want to include them into the financial inclusion, then there is an immediate need to design such financial product which will be according to the religious and social beliefs of Muslims toinclude them into the financial inclusion, he said If Islamic Microfinance is not introduced to resolve poverty issues from the Muslim world then world’s poverty will increase extraordinarily. 

He mentioned that Islamic Microfinance is a system, it is not a religion and it can be utilized/operated by Muslims or Non-Muslims for social development & poverty alleviation, but for Muslim, they have extra benefit that it is according to their religious belief but for Non-Muslim it is an ideal mechanism to fulfil their financial needs. He agreed that poverty do not have any religion but it can be addressed through different guidance of Islam. He mentioned that the total population of East African Community is about 157 Million, among them 35% – 40% are Muslim but unfortunately Muslim are mostly financially excluded due to un-availability of Islamic Financial products.

He also presented a detailed presentation on Islamic Banking and Islamic Microfinance which discussed about; Basic Principles of Islamic Microfinance, Source of Islamic Micro Finance Product Products, Compatibility of Islamic Microfinance Products with Conventional Microfinance Models, Islamic Microfinance Products, Need Assessment of Islamic Microfinance, Opportunities & Challenges Faced by IMF Sector, he also emphasized the importance of Takaful in Tanzania and discussed the benefit of takaful , modalities of takaful, re-takaful and its international perspective and highlighted the future prospects for the takaful in Tanzania.

Another eminent scholar, Mr. Muhammad Zubair Usmani, Chairmen of the Shariah Supervisory Board of UBL and Habib Bank, touched upon the basic principles of the Islamic Banking and available modes of Islamic products. He highlighted the Islamic Banking model, role and responsibilities of Mudarib and Musharik as ameen in the Islamic finance system.

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