Islamic microfinance: Unlocking new potential to fight rural poverty
This paper (PDF) by the International Fund for Agricultural Development (IFAD) highlights the role of Islamic microfinance as an instrument in tackling rural poverty in Muslim countries. It describes key features of Islamic microfinance and describes Islamic microfinance contract modalities in Sudan, the Syrian Arab Republic, and Bosnia and Herzegovina that are being tested in IFAD-supported operations in the Near East and Europe. The paper argues that specific terms and conditions (Sharia-compliant finance) make Islamic microfinance products favorable and accessible to the most vulnerable populations, these include risk-sharing, profit-sharing, fixed repayment rate, transparency, social welfare and justice. According to IFAD, these conditions make Islamic finance products a viable alternative to conventional lending.
Source: IFAD; November 2014