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

Anasse.elhasnaoui@gmail.com