Islamic Microfinance

This research aims to determine the impact of the microfinance loan program on the lives of Gambian. Concentrating on RFS loan program called women finance WF. This study is qualitative research using an interview, the research extract information from the 45 women loan clients and 5 Reliance Financial services loan officers. And to identify the ways to improve the program for sustainability. The research used interviews with both women and RFS Credit officers from RFS to obtained information. The study intends to assist RFS and other microfinance institutions in the Gambia to know the impact of the loan program and make recommendations for its sustainability by extracting problems from the clients and suggesting how to mitigate those problems for the sustainability the program. The research makes the following findings. The women finance program has empowered women in The Gambia. Many could start or expand their businesses, which is now benefitting them and their families, but some have not felt its impact. The main contributions of this study extend the literature of
microfinance in the Gambia; besides, the study hopes to assist RFS in taking relevant steps that can help improve the women finance loan programs.

Commitment needed to maintain a balance between financial performance aspects of the operational aspects of social performance in microfinance institutions (MFI's). In this article the author conducted a literature study, by dividing the discussion of three main parts, namely: the solutions to the phenomenon of ethics violations by MFI's; Shariah principles on Islamic MFI's in accordance with ethics violations solutions; challenges to the implementation of Reviews These solutions. Based on this, the authors found the similarities of the MFI's commitment to the principles of sharia platform to implement ethical MFI's operations. In this article the author suggests four main pillars of ethical commitment as an indicator that the MFI's / MFI's sharia, implementing operational aspects equally between financial performance and social performance.

LKMS is a financial institution that is oriented towards improving the welfare of members and society. Despite growing rapidly, LKMS is still experiencing many obstacles in its development. There are still many problems faced by this institution both from internal and external side. This study attempts to identify the causes and factors that are dominantly an obstacle in the development of LKMS in Indonesia, using IFAS EFAS Matrix and SWOT approaches, along with the solutions offered. Based on the IFE analysis that the highest rating of the power of small and medium enterprises (MSMEs) is followed by high local initiative. While the weakness rating is the cost of human resource training and enterpreneurship training followed by the cost of licensing. The results of EFE analysis that the highest ranking of the opportunities that are financed sector is very flexible followed by the public interest factor toward sharia transaction is getting bigger. While the highest ranking of threats is competition followed by weak regulation and legality LKMS. It is expected that there will be joint commitment from various parties either from policy makers or academics and practitioners in supporting and encouraging the development effort of sharia finance industry especially in this case LKMS.

Poverty prevalence dates back to the existence of human being and today it has occupied foremost place on human development agendas of virtually all countries of the world. In the Republic of Somaliland it has been a main challenge since the restoration of independence in 1991 and its alleviation is in the first pillar of the National Development Plan (NDP) and National Vision 2030, and also one of the country’s strategic goals to achieve MDGs by 2015 to fight poverty and improve the standard of living of underprivileged population. Nonetheless, actual achievements are still limited.

Islamic Microfinance which involves Shari’ah-compliant way of financing and providing credit without collateral or any property for guarantee to the marginally poor (too poor to have access to banks) for their business, is one of the most popular tools employed as part of a poverty reduction strategy, empowering and increasing the productivity of poor, giving social benefits to them in a sustainable way, and aiding economic development. However, in Somaliland it still remains fairly the same effect over the years due to misconceptions in Shari’ah-compliance, the institutions lagging behind and the like.

This study determined the role of the Islamic microfinance in poverty alleviation efforts in Somaliland and how this role can be enhanced. It was intended to establish and recommend Islamic microfinance and its principles that could raise poverty reduction and economic development in the country. This was in view of the fact that conventional microfinance that charges the prohibited interest cannot be used by and for the Somaliland population which are 100% Muslims.

The study was conducted through descriptive survey research design; data was collected in April 2012 to June 2012, using questionnaire, interview and document review techniques from two Islamic Financial Institutions of Kaaba Microfinance Institution and Salaam Financial Services, data was analyzed using descriptive quantitative methods and presented in tables and figures.

The paper finds that the two institutions have envisaged, as their prime objectives, to serve to the vulnerable poor and to have positive impact on their incomes. However, it concludes that the institutions partially address in practice the issue of financial exclusion of the poor.  They do not tap the wide variety of financial products and services which comply with Islamic law for the benefit of their clients particularly the hardcore poor and limited attention is paid to targeting the poor with their needs of financial services and products.

This research recommends that the government should establish an enabling framework for the institutions providing Islamic microfinance, and K-MFI and Salaam Financial Services should intensify their contribution to poverty alleviation by incorporating new pro-poor financial development policies and by expanding their financial activities into rural areas. Donor agencies including UN and other INGOs to make their income-generating activities in line with Shari’ah and comply with national policies in improving the standard of living of the poor people.

تشكل المشروعات الصغيرة العصب الرئيسي لاقتصاد أي دولة، حيث تعتبر من أهم روافد عملية التنمية الاقتصادية والاجتماعية في جميع دول العالم عامةً وفي الدول النامية خاصة،  فهي لا تعمل على توفير فرصٍ عمل وبالتالي مصدرٍ دخل لقطاع عريض من الأفراد فحسب، بل تشكل أيضاً دافعاً رئيسياً للمزيد من الابتكارات والتكنولوجيا وتنوع الصادرات، لذلك أصبح الاهتمام بهذا النوع من المشروعات توجهاً استراتيجياً لدى العديد من الدول.
وقد اعتمدت العديد من الدول على المشروعات الصغيرة في عملية البناء الاقتصادي،  واستطاعت من خلالها العبور من دائرة الدول الفقيرة لتدخل في مصاف الدول الغنية الكبرى.
والأمثلة على ذلك كثيرة ومتعددة على جميع المستويات؛ فتلك النوعية من المشروعات هي صاحبة الفضل الأساسي في نمو وتقدم وازدهار دول شرق أسيا، كما أن الهند والصين لكل منهما تجربة ناجحة مع تلك المشروعات، حيث استطاعت من خلالها تحقيق أكبر معدلات في التنمية الدولية.
إلا أن هناك مجموعة من المشاكل التي تقف عقبة أمام قيام ونمو هذه المشروعات، وعلى رأسها مشكلة التمويل، فأصحاب هذه المشروعات عادة ما يكونون من المهنيين ولا تتوافر لديهم  مدخرات تمكنهم من إقامة مشروعاتهم ، كما لا يوجد لديهم من الضمانات التي يمكن تقديمها للمصارف للحصول بموجبها على قروض - فالمشروعات الصغيرة تعتبر من أوجه الاستثمار عالي المخاطر لذلك فالمصارف تطلب عادة ضمانات يعجز أصحاب هذه المشروعات من توفيرها- هذا بالإضافة إلى وجود عدد لا بأس به ممن يجتنبون مطلقاً الاقتراض من المصارف التقليدية لأسباب دينية.
وهنا يبرز دور المصارف والمؤسسات المالية الإسلامية في تنمية وتطوير المشروعات الصغيرة بما تمثله من أهداف وخصائص - وذلك من خلال تقديم التمويل اللازم لها و بما يتوافق مع أحكام الشريعة الإسلامية، باعتبار أن بعض صيغ التمويل التي يقوم بتقديمها تناسب طبيعة المشروعات الصغيرة.

Islam is a practical way of life for humanity with its own systems in every aspect of life whether cultural, social, political or economic. In the economic sphere, Muslim societies around the globe have inherited mostly interest-based feudal, capitalist or socialist economic systems. As there was no working model, Muslim economists and scholars made considerable efforts to develop their own Shari’ah-compliant economic model and financial institutions. Since 1960’s, the Islamic finance industry has grown exponentially to surpass the USD 2.1 tln mark end 2014. The Islamic banking and Sukuk sectors dominate the Islamic finance industry (approximately 80% and 15% respectively) while Islamic microfinance has less than 1% market share. Islamic financial institutions are often criticized of operating or mimicking the capitalist mode and offering nothing more than a modified conventional loan. It is also questioned whether Islamic financial institutions have indeed contributed to achieve the objectives of Islamic economics alongside a healthy and growth-oriented economy where the necessities of life and spiritual peace are available to society at large. The purpose of this paper is to propose an inclusive financial institution model (Islamic Credit Union), based on cooperative and Islamic financial principles, which is a community-based institution. Such a model has so far received only sporadic attention in the market. The paper also presents the status of Islamic Credit Unions worldwide and discusses the legal and operational framework and opportunities of the Islamic Credit Union model.

Keywords: Islamic Credit Union, inclusive model, financial needs, legal and operational framework, opportunities

Helpdesk Question:
What does the literature indicate are the barriers and opportunities for eradicating poverty in Iraq?

Summary:
Despite being an oil-rich, lower-middle income country, poverty remains prevalent in Iraq. This rapid review looks at the recent literature on poverty in Iraq and identifies the barriers to, and opportunities for, poverty reduction and eradication.

The literature indicates that:
◾3.9 per cent of people in Iraq are living in extreme poverty (2012). 18.9 per cent live below the national poverty line (2012), with greater rural poverty than urban poverty. 11.6 per cent of people in Iraq are multi-dimensionally poor (2011).
◾Poverty is significantly higher among larger households, those with less educated heads, women and the young.
◾There are high poverty headcount rates in remote, rural, and sparsely populated areas, although urban and semi-urban areas are often host to more poor people than the poorest parts because of the population size.
◾There are large spatial differences in poverty across, and within, the governorates of Iraq.
◾Poverty reduction has been spatially uneven, falling more in rural than in urban areas in 2007-2012.
◾The wider impact of the current crises is unknown but in the Kurdistan Region of Iraq they have increased poverty in from 3.5 per cent in 2012 up to 8.1 per cent in 2014.

Barriers to poverty eradication include the current financial, security and humanitarian crises, legacies of violence and insecurity, corruption, the brain drain, trade barriers restricting levels of trade and investment, high unemployment and lack of education.

Opportunities for poverty eradication include the use of accurate data to inform poverty policies, ending conflict/peacebuilding, diversifying the economy and strengthening the links between growth, employment and earnings, better targeted social safety nets, improving labour income, shari’ah-compliant and accessible microfinance and growth in the agriculture sector.

This thesis paper aims to study microfinance operations in Bangladesh. Besides, the study examines Islamic microfinance activities in general. Qualitative methods and secondary data have been used in this study. Since independence, Bangladesh has seen many ups and downs in its economy. In this context, it is notable that the country's per capita income has exceeded around two thousand US dollars in recent years. All the indicators of GDP growth are going upward.  The overall economic growth is more than 7% consistently. This study has found that, with the development of microfinance services in Bangladesh since the 1980s, the poverty rate has been decreased, and significant results have been observed.  The poverty rate declined gradually since 1991, which was 57% in 1991, decreased to 21% until 2018. Microfinance has an essential place in the economic growth of Bangladesh. By the end of 2018, microfinance institutions have $ 7.17 billion in outstanding annual loans and collected 10.46 billion in the form of paid loans within approximately 31.20 million members. Over the past two decades, Islamic microfinance (IMFs) has been a socio-economic development approach along with traditional microfinance in many countries. This thesis paper concludes that Islamic microfinance plays a vital role in poverty reduction with aid financing tools such as zakat and charity. Islamic microfinance institutions also offer micro-credit by means of various mechanisms based on the principles of sharia such as Karz-i-Hasan, Murabaha, Mudaraba, Takaful, Ijarah, and Salam. Moreover, Islamic microfinance is supporting the strengthening of the economy by financing entrepreneurs and sharing possible risks. Therefore, there is a significant potentiality for Islamic microfinance in achieving the 2030 SDGs.

Purpose - The failure of interest based programmes, such as micro-finance and anti-poverty programmes, in assisting the destitute, eradicating poverty and reducing income inequality encouraged the authors to study in depth the alternative financial institutions to interest/riba that can solve such problems rather than harming individuals, communities, societies and countries. This raises the question of whether the different Islamic financial institutions can provide microfinance with zero-interest to eradicate poverty and reduce inequalities
This paper attempts to propose a hybrid model integrating four religious financial institutions to eradicate poverty within a very short period of time in a just manner and in a sustainable way for generations to come. We shall use both primary sources including text from the Quran and the Hadith, and data collected from secondary sources including books, articles, and journals besides World Bank reports from the web sites. 
The paper intends to create awareness of the meaningful approach of religion in terms of eradicating poverty, reducing inequalities and creating a fair and just society for all, rather than following man-made system which hurt all societies.  Moreover, this paper is also intended to open the door wider for more researchers and postgraduate students to explore their knowledge in depth on these religious institutions and to adjust them according to the current needs of the different societies. We hope to revitalize four neglected Islamic financial institutions and integrating them into a hybrid model for a promising way to eradicate poverty in a just and ethical manner.

Many small business enterprises (SBEs) in Somaliland borrow capital from the microfinance institutions (MFIs) to enhance the operation of their businesses. Majority of the micro MFIs do not provide training to the SBE. This study aimed to determine the effect of micro-financing projects on the growth of SBEs in Hargeisa Somaliland.

Specifically, the objectives were: (I) To determine demographic characteristics and traits of respondents (II) To determine the level of microfinance projects in Hargeisa Somaliland (III) To explore the level of small business growth in Hargeisa (IV) To Explore the significant relationship between microfinance projects and small business growth and (V) To determine the difference impact between microfinance projects and small business growth in Hargeisa Somaliland. This study was conducted through a descriptive survey research design. The target population was 90 consisting of registered and licensed SBEs financed by MFIs and microfinance operators in Hargeisa Somaliland.
Sampling methods were used to select 73 respondents from small scale business enterprises and microfinance officers to be used in the current study. Structured, unstructured questionnaire and interview schedules were developed, pre-tested were used for collecting quantitative data for the study from the small-scale business entrepreneurs. There were two types of data generated in this research. Quantitative data from credit accessed was analyzed using the Statistical Package for Social Science (SPSS) software to compute frequencies and percentages. The qualitative data in this study was obtained from interviews. Such data was analyzed by descriptive statistics.

The study strongly displays that MFIs have an important role in promoting the running of SBEs. More regulatory frameworks and capacity building training should be put in place to ensure that small-scale entrepreneurs access to credit to finance the venture.

LKMS merupakan lembaga keuangan yang berorientasi pada upaya peningkatan kesejahteraan anggota dan masyarakat. Lahirnya lembaga keuangan mikro syariah di Indonesia merupakan salah satu jawaban melihat perkembangan perbankan syariah yang masih terpusat kepada masyarakat menengah ke atas. Faktanya, LKMS telah tumbuh menjadi alternatif pemulihan kondisi perekonomian di Indonesia, khususnya sebagai partner para pengusaha kecil dalam penyediaan modal.

Walaupun tumbuh dengan pesat, namun LKMS masih mengalami banyak kendala dalam pengembangannya. Masih banyak permasalahan yang dihadapi oleh institusi ini baik dari sisi internal maupun eksternal. Penelitian ini mencoba untuk mengidentifikasi penyebab serta faktor-faktor yang dominan menjadi hambatan dalam pengembangan LKMS di Indonesia, dengan pendekatan metode BOCR Analytic Network Process (ANP), termasuk solusi strategis yang diusulkan.

Berdasarkan urutan prioritas, maka alternatif aspek menunjukkan bahwa aspek technical menjadi aspek prioritas, selanjutnya diikuti oleh aspek legal/structure, pasar/komunal, dan SDM.  Penguraian solusi secara keseluruhan menghasilkan urutan prioritas 1) Pembinaan/ sosialisasi/pendampingan masyarakat menjadi prioritas utama, selanjutnya diikuti oleh 2) inovasi produk, 3) lokasi strategis, 4) kerjasama dengan LKS lainnya, dan 5) menjadikan elemen eksternal sebagai pusat informasi dan media sosialisasi.

Sedangkan prioritas strategi yang dianggap dapat meningkatkan pengembangan LKMS di Indonesia terdiri dari: 1) mengoptimalkan peran pemerintah dalam pendanaan, 2) melakukan koordinasi dengan PINBUK, dan 3) linkage program LKMS-BMT-BPRS-Bank Umum Syariah.

Keywords : Lembaga Keuangan Mikro Syariah, BMT, ANP-BOCR

This study tries to review the research around Islamic microfinance institution. It uses descriptive statistical analysis based on selected 100 journal publications or paper related to Islamic microfinance institution, both national and international journal. The entire sample journal publications have published for ten years from 2007 to 2016. The Results show that Islamic microfinance institute research is still dominated by the discussion about Islamic microfinance institution (54%), followed by eradication of poverty (25%), then financing the poor societies (11%) and the last is about management of Islamic microfinance institution (10%). In addition, Indonesia, Malaysia and Pakistan are being the highest of Islamic microfinance study area, while the majority of publications area are from Indonesia, United States and United Kingdom. Furthermore, the comparison of quantitative research and mixed methods are still less than the qualitative approach.

This paper shades light on the ‘loan repayment pressure’, which is allegedly exerted by the Micro-Finance Institutions (MFIs) on their borrowers in Bangladesh. A qualitative study was carried out to assess the experiences of the borrowers, who are engaged with Building Resources Across Communities (BRAC), Grameen Bank (GB) and Association for Social Advancement (ASA). The observations and findings from the in-depth interviews highlight the effects of repayment pressure imposed on the borrowers. This pressure pushes the borrowers into a vulnerable economic condition while disharmonising their social and family lives. Thus, this study provides a deeper understanding of repayment issues. So far, very few studies have been carried out in Bangladesh on this particular topic. Findings of this study can add value to the current literature by providing insights on the forced loan recovery technique and its negative effects.

Purpose – The main purpose of this paper to review the conventional microfinance concept which based on riba and replace it with Islamic microfinance through Koperasi incorporated with Islamic bank in Indonesia. Design/methodology/approach – The paper is based on comprehensive review of conventional microfinance with the objective to propose a new Islamic microfinance model that based on Shariah. Findings – This paper reviewed the concept of microfinance base on the traditional financial intermediary. Moreover, other than building human capacity through social intermediation and designing group-based lending programmes are proven to be among the effective tools to reduce transaction costs and lower exposure to numerous financial risks in relation to providing credit to the rural poor in many countries especially in India (Gramen Bank). This paper also suggests to trained the group regarding to management and business and the concept of 'Ashabiyyah and Ta'awun (cooperative among the members) also given to strengthen the model. Therefore, this paper suggests to Islamic bank to use Koperasi as a partner as one of the possible alternatives to finance the potential poor. Research limitations/implications – Islamic bank may benefit from different sources of fund, not only from the bank, but also from Infaq, Sadaqah, and Zakat to finance the potential poor. The use of Koperasi in this model is to revive the BRI concept of Koperasi who had ever advanced in the past by adding Shariah values in the model. Originality/value – The analysis is valuable in drawing the attention of Islamic banking practitioners to the fact that this model can be implemented without compromising the institutional viability, competitiveness and sustainability. This is evident from Koperasi intermediation model where they can always monitoring the group and each group members monitoring other members.

The purpose of this paper is to explore the possibilities of adapting Islamic microfinance into a complex situation such as international refugee crisis while reviewing the nature and practices of Islamic microfinance. The methodology of this paper consists of critical review and examination of existing literature and experiences. The results indicate that Islamic microfinance has huge potential to address the refugee crisis but the practice is relatively very few. The study witnessed few experiences but mostly limited and short lived as well as focused only on one or two financial contract mainly Murabaha mode of financing. The experiments show that the practice in refugee camps is highly risky due to number of reasons including geographical, political, and legal and other unsolvable obstacles. Yet, the demand is increasing due to increased high volume of refugees around the world and their idleness inside the camps. On the other hand, United Nations, international humanitarian and charitable organisations including Zakah and Waqf funds spend huge amount to provide assistance to refugees. The main purpose of this thesis is to connect these two realities while providing long term and sustainable solutions.

In order to provide financial services effectively to almost 1.21 billion people, India has adopted a comprehensive financial system governed under a number of financial regulations. These regulations, through regular amendments, are kept updated and inclusive of modern financial concepts that emerge in national and international markets. Islamic finance is one of such modern concepts emerged at global level. Growing with an annual growth rate of 15-20 percent the Islamic finance industry is holding total assets, value estimated to be more than USD 1.6 trillion. Hence, the authors, in this paper tried to study the feasibility of providing Islamic financial services in India, especially in the areas of Retail banking, Microfinance, Venture Capital financing. The objective of this paper is to identify the major regulatory challenges facing Islamic finance and to propose the possible solutions so as to make this emerging industry an internal part of the Indian financial system.

One of the most devastating economic challenges facing the Muslim world
is the increasing rate of unemployment, which has devastated the youth and
has become alarming. The phenomenon of unemployment has reached level
that threatens the future of this generation which is seen as the pillar and key
factor for the growth of the entire Ummah. There are many ways to curb the
disease of unemployment; however, the discussion in this research focuses
on the role of small business due to its global merits and achievement in
reducing and eliminating unemployment. The paper would approach it in a
new dimension stressing more on the role of the Prophetic (Sunnah) tradition
in the administration and financing of small businesses. The paper initiates its
discussion with a theory which states that: there are some acts reported in the
Sunnah that can contribute to reduction of unemployment and can be harnessed
to finance and administer small businesses. This research aims at compiling
hadith related to administration of small business and ways to financing it. It also
derives fundamental basis which can be easily neglected in contemporary deals.
The paper also attempts to proffer practicable proposal to guide small business
in light of Sunnah. In order to actualise the very of objectives of the paper and to
address its challenges, it has been categorised into three, namely: small projects,
Sunnah guidance for employers, financing of small projects/businesses in line
with Prophetic requirements. The research finds multiple results among which
are: the Prophet (May Allah bless him) (Sunnah Amaliyyah) gives directions
in his tradition on strategies for financing small businesses as means to combat
unemployment.
.Keywords: Small businesses, Sunnah

Islamic financial intermediaries play a vital role in mobilising and circulating funds in the society, from the haves to have-nots. Since an Islamic financial intermediary is the focal point of equitable financial redistribution at the basic level, it is imperative to undertake the study of socioeconomic effects of such institutions in the given area of its operation. Therefore a comprehensive assessment of their socioeconomic impact on the beneficiaries with respect to the nature of the institution is necessary. This works aims to utilize social capital theory to assess both, the institution and its performance in terms of self-sufficiency, outreach and performance as well as the impact on beneficiaries in terms of social and economic indicators.

Microfinance has a mission to alleviate poverty through two bottom line namely financial intermediation and social intermediation. Nevertheless, there has been mission drift from poverty reduction through the provision of microcredit services to the poor to a commercial mission to pursue profitability, leaving the poor in their activities; in addition, there has been a trade-off between the outreach to the poor and financial sustainability. This paper is a literature review that aims to obtain an effective conceptual model of Islamic keuangan mikro institution in Indonesia by using an intermediation approach. The results of the literature review showed that the triple intermediation approach (i.e. social, financial and spiritual intermediation) conducted simultaneously by Islamic keuangan mikro institutions (Baitul Maal wattamwil) can be an effective model for keeping Islamic keuangan mikro institutions on the mission to alleviate poverty by providing micro-finance services to even the poorest customers, keep their business profitable, and also remain true to Islamic principles

Microfinance has been recognized by the World Bank as an approach to address poverty and income inequalities, where the social and economic problems of developing communities raised a global challenge to carry the mission of poverty alleviation. Recent researches argues that many elements of microfinance are considered to coincide with the Islamic banking broader goals, and thus, Islamic banks can be a more effective and efficient provider of financial services to the poor. The paper investigate the Islamic finance nexus with microfinance program and initiates a consideration which triggers and motivates further research and debates exploring more potential for Zakah and Waqf integration in microfinancing schemes. An application of a not for profit based microfinance model is more convenient and more befitting the ultimate and conclusive goal of microfinance according to the paper, several arguments standing in support of this believe will be discussed. Statistics shows that in 2014, 15% of the Turkish population was below poverty threshold, leaving the participation banks in Turkey with a responsibility to comply with the social objective of Islamic Finance and positively contribute as an efficient and dynamic provider of microfinance services and serve the mission of poverty alleviation. A Joint venture between the participation banks in Turkey is proposed with a strategic partnership with reputable charity institutions, in which a collaboration to establish a separate not for profit based institution to provide microfinance services.

Microfinance has become one of the most sustainaeffective tools in the fight against global poverty. Islamic microfinance has the potential to not only respond to unmet demand but also to combine the Islamic social principle of caring for the less fortunate with microfinance’s power to provide financial access to the poor.

• Islamic banking in the microfinance system is holding a center role in developing the relationship and networking between finance institutions and intrepreneurs.

• Microfinance is globally acknowledged as an effective  instrument in alleviating poverty  refers to finance services such as financing, savings, insurance provided for low-income people or widely called economically active poor.

• Indonesia microfinance development role is hold by government. Unfortunately, that it is not sustainable. The people consider it as grant so that sometimes it is not repaid.

• Microfinance system and micro enterprise system are connected and promoted by networking among each others,  through a group of micro entrepreneurs established by  each member.

• The Islamic banks in the microfinancing very much relly to the role of the social network, consists of religious groups, social leaders, and local leaders, to get information, support and entrust before the banks lend the loan to the borrowers. It is known as the Network Triangle.

Despite growing rapidly, but Islamic cooperatives are still experiencing many obstacles in its development, both from the internal, external and regulatory side. This study attempts to identify the factors of needs, activities, and objectives in the development of sharia cooperatives in Indonesia, using the Interpretative Structural Modelling (ISM) approach. The results of this study provide some conclusions include: (1) Elements of the needs of the key key in sharia cooperative development strategy in Indonesia to improve SMEs is the need for strong support on the legal aspects of sharia cooperatives, (2) Elements of activities that are key to Shariah cooperative development are to conduct training and certification programs for shariah cooperative management and members, and (3) Elements of actors/institutions that are key in sharia cooperative development strategy in Indonesia to improve UMKM is sharia financial institution. Abstrak: Walaupun tumbuh dengan pesat, namun koperasi syariah masih mengalami banyak kendala dalam pengembangannya, baik dari sisi internal, eksternal maupun regulasi. Penelitian ini mencoba untuk mengidentifikasi faktor-faktor kebutuhan, aktifitas dan tujuan dalam pengembangan koperasi syariah di Indonesia, dengan pendekatan metode Interpretative Structural Modelling (ISM). Hasil penelitian memberikan beberapa kesimpulan, antara lain: (1) Elemen kebutuhan yang menjadi kunci utama dalam strategi pengembangan koperasi syariah di Indonesia untuk meningkatkan UMKM adalah perlu adanya dukungan yang kuat pada aspek hukum koperasi syariah, (2) Elemen aktifitas yang menjadi kunci utama dalam pengembangan koperasi syariah adalah mengadakan training dan program sertifikasi bagi manajemen koperasi syariah dan anggota, dan (3) Elemen pelaku/lembaga yang menjadi kunci utama dalam strategi pengembangan koperasi syariah di Indonesia untuk meningkatkan UMKM adalah lembaga keuangan syariah. Kata Kunci: Koperasi Syariah; Lembaga Keuangan Mikro Syariah (LKMS); Interpretative Structural Modelling (ISM).

Five important things can be concluded from this study. First, sukuk has been practiced by Gapoktan in Indonesia as a local wisdom to find an alternative financing for working capital of the farmers. In this context, sukuk has been a microfinancing instrument for their community. Second, the sukuk linkage program developed by Islamic banks and IMFIs through proposed models can reinforce the Islamic microfinance for the poor, low-income people or micro-enterprises. The important thing why sukuk should be presented is to convert the debt financing orientation to equity financing orientation. Third, sukuk has an ability to be a bridge linking financial sector and the real sector and encourages Islamic banking to be more grounded and can substantially assist the needs of the community. This proves that sukuk can position as tool for managing the lack and excess of liquidity. Forth, IMFIs need support from government, especially OJK, to assist a regulatory framework for Islamic microfinance, to support policy makers to ensure an enabling policy framework conducive to the development of Islamic microfinance, to build an effective alliance and forum of Islamic microfinance providers and other stakeholders. Fifth, reconciling Islamic banks to IMFIs is one answer to overcome the problem of liquidity in the respective institutions. This is also the answer to the challenge of how to convert the debt into equity financing orientation and encourage Islamic banking can meaningful assist the micro sector.

The paper takes on board lessons from ILO's projects on bonded labour, in India, Nepal and Pakistan; and projects that work with bonded labour and extreme pooor by other donors in these countries.  The lessons show how microfinance products and services may be designed to be useful to extremely vulnerable and socially excluded groups.  The limitations of microfinance are elaborated, too, with emphasis on asset transfers and other means of providing support till the bonded labour and extreme poor are able to avail of credit services.

Islamic microfinance has been widely recognized as an effective development tool for poverty reduction and wellbeing development, especially among those who are deprived of accessing to conventional credit services. The interested things about Islamic microfinance is the fairness of this scheme in which win to win strategy which is the main principle in Islam Sariah. On other word, this model argues that poor people have the right to enjoy with credit that is off interest and the bank share both profit and loss with the borrowers. This offers new insight in how to steadily combat poverty. However, despite its advantages there are challenges that constrain its development. In addition, many studies have conducted to explore how microfinance combat poverty in many countries. Yet, the Islamic microfinance has not received adequate attention. Therefore, this study is a review paper discusses the concept of Islamic microfinance and how it differs from others. It also shows the challenges that surround Islamic microfinance development either in sustainability or outreach

Keyword: A review, Paper, Islamic, Microfinance, Features, Opportunities, Challenges.

This paper attempts to elucidate the micro financing products and business models of micro finance in
Baitul Maal Muamalat (subsidiary of Bank Muamalat Indonesia). During 2010 Bank Muamalat has been
distributed the social fund through BMM as much as Rp 22.8 billion. The funds are distributed in the form
of the micro financing program for economic empowerment through LKMS and KUM3 program. LKMS
program is channeling fund to Islamic Micro Finance Institutions (IMFIs) through linkage program. While
KUM3 program is channeling micro financing to 24 cities that are consist of 183 mosques and 4647
Mustahik (poor recipients). This program encourages Mustahik to increase their business line with modern
business management. The program mission are to facilitate the micro business community through the
utilization of ZIS (Zakat, Infaq and Sadaqah) funding, to build organization quality of the mosque as a
basis of development and strengthening the quality of brotherhood as the basis for the establishment of
micro enterprises, encourage the habit of giving, and create awareness of modern business management and
ensure the business activity free from Maysir, Gharar, and Ribā. There are three kinds of financing
program of KUM3 which are Aqh Model, second, Qard model and the third is Musharakah model. The
KUM3 financing model is Sharīcah based model that use a variety of Islamic contract such as profit and
loss sharing system between participants. In addition, BMM arranged the curriculum model of financing
through the KUM3 program.
Keywords: Baitul Maal Muamalat, Micro financing, Business Model

This report offers an overview of how the Self-Help Group (SHG) approach has been used in the Afghan urban context, with a focus on its three main components — social development, economic development and institutional stability. The research was conducted in November/December 2017 commissioned by People In Need (PIN) to gain an understanding of how various approaches have been implemented and which have been most successful. The study covers the urban centres of Kabul, Herat, Mazar-e Sharif, and Jalalabad where the SHG concept has been rolled out by PIN or other relevant actors.

Self-Help Groups are voluntary (financial) saving associations comprised of a small homogenous group of people in a local community. The basic idea is for a small group of people to come together at regular intervals (weekly, bi-weekly or monthly) and to contribute a small amount of money collectively (for example 20, 50 or 100 AFN per person) to a commu- nal fund. This money is kept in a saving box, recorded in a ledger and can be loaned out to members of the group with agreed upon conditions.

The central idea behind the Self-Help Group approach is to tackle poverty, enable social and economic empowerment and support the advancement of gender equality.

Despite being heralded as an acclaimed method for poverty reduction worldwide, the key aspects of traditional microfinance have created a sociological as well as psychological barrier in the Muslim social and intellectual hegemony in Bangladesh. The high interest-based loans, encouraging the poorest population for a shortcut but unstable route for development and the overwhelming focus on women as the beneficiaries of microfinance are few of the many aspects of the problem. The question regarding the effectiveness of microfinance as a tool for social justice is also under serious scrutiny worldwide. At the same time, the concept of Islamic microfinance is slowly taking shape in some Muslim countries including Bangladesh, aiming to solve the strategic problems with microfinance. By rectifying the ideas of microfinance with the general tools of Islamic financial mechanisms in the grass root level with a proper management of the Zakat can accelerate the process of poverty alleviation in Muslim countries. Finding Shariah accepted solutions for the shortcomings of mainstream microfinance and effective implementation of those approaches will be an effective tool for ensuring sustainable development as well as establishing social justice in Muslim world.

ABSTRAKSI Upaya pengentasan kemiskinan dapat dilakukan antara lain dengan memutus mata rantai kemiskinan itu sendiri, diantaranya adalah dengan pemberian akses yang luas terhadap sumber-sumber pembiayaan bagi Usaha Kecil dan Mikro (UKM) yang dilakukan oleh lembaga-lembaga keuangan bank maupun lembaga mikro. Lembaga keuangan mikro yang saat ini sedang fenomenal adalah Grameen Bank (GB) yang diprakarsa Muhammad Yunus di Bangladesh. Setelah Yunus mendapat Nobel Perdamaian dari PBB, Grameen kemudian mendunia. Tulisan ini mencoba untuk menelisik lebih jauh tentang Model Pemberdayaan Masyarakat Grameen, dampak positif-negatif hingga pandangan Ekonomi Islam tentangnya. Hasil penelitian menunjukkan bahwa beberapa sisi positif GB nampak jelas terlihat, meski beberapa hal tidak sejalan dengan prinsip ekonomi Islam: bunga yang relatif tinggi dan womensentris.

Despite the impressive score card of the
Millennium Development Goals (MDGs), it goes to suggest
that the Sustainable Development Goals (SDGs) requires
targeted efforts in reaching the most vulnerable people
worldwide. In Muslim societies, Islamic Micro-finance has
been regarded as an important tool for the empowerment of
poor people especially women, towards developing micro
enterprises. The main objective of this study is to explore the
conceptual framework on the relevance of Islamic Microfinance
in achieving the SDGs. This study identifies different
products of Islamic Micro-finance used to address diverse
deprivations, leading to individual’s personal development,
increased productivity and income, and participation in
economic and social life. The methodology of this study is
based on analysis of relevant literatures. The finding of the
study indicates that Islamic Micro-finance is a growing
market niche with potentials to develop human capabilities
towards empowerment, knowledge and skills, self-reliance
and social cohesion. The empowerment enables the clients to
manage their economic life effectively and reduce stress.

Abstract
This study aims to examine the effect of Service Quality on the satisfaction of the SMEs owners on the Islamic Microfinance Products. Due to the increasing importance of Islamic banking and financing system, the concern
is to what extent this system can satisfy the consumers and contributes to the overall economic development. The
model of this study was developed to examine the effectiveness of Islamic banking and financing system. To test
the hypothesized model, the data were collected from the SMEs owners in Yemen through a self-administered
questionnaire. Out of 250 distributed questionnaires, 151 were returned and were used for data analysis. The
results of this study shown the significant effect of Service Quality on the SMEs owners’ satisfaction and the
perceived benefits obtained through their dealing with Islamic Microfinance system. In addition, the results of
this study confirmed that the perceived benefit partially mediates the relationship between Service Quality and
SMEs owners’ satisfaction. However, the moderating effect of perceived benefits on the relationship between
service quality and satisfaction was not confirmed.
Keywords: Islamic banking and finance system, Islamic micro-finance system, service quality, customer
satisfaction, partial least squares, SMEs/Yemen

This paper designs a conceptual model of Islamic microfinance and reha-bilitation by using the waqf funds for the slum and floating population. It analyzes both the primary and the secondary data on the current status of Islamic microfinance cover-age (in thirteen countries), waqf estates (in seven countries), and the slum and floating population in thirty five Muslim countries of the world. The primary data was accumu-lated on 150 microfinance borrowers and 100 non-borrowers of Bangladesh. This pa-per presents a multifunctional structure of an autonomous waqf management institution to execute the model of this paper. This institution will be formed by the joint venture of the government, the national, as well as international Islamic agencies. Furthermore, this model will be implemented through five stages, the revival and registration of the waqf estate, accumulation of funds, initiating the Islamic microfinance and rehabilita-tion for the slum population, and finally, forward linkage that may help the slum people to contribute to the society
Keywords: Waqf, Islamic Microfinance, Rehabilitation, Slum population, Muslim countries.
JEL Classification: G21, O21, Z12 KAUJIE Classification: E23, H15, S4

This research paper provides in-depth discourse on how justice can be operationalising in different Islamic financial institutions to achieve the objectives of the Islamic moral economy. The current financial institutions claiming to be Shari'ah compliant are more and more reflecting the behaviour of conventional financial institutions in terms of their impact on society. The paper proposes development of new Islamic financial institutions to endogenise the concept of justice based on the teaching of Qur'an and Sunnah. This will allow actualizing an ideal Islamic society based on equality, cooperation , and welfare with overall objective of the welfare of human beings through development of non-banking-financial institutions such as Islamic social banking, and zakah and awaqf based institutions and eventually promoting economic development. Furthermore, development of such institutions will also contribute to the financial inclusion of society.

After 2008 world economic crises, banks and other financial institutes move towards Islamic financing not only in Muslims countries but also in non-Muslim countries of the world. In view of this, some micro financial institutions also introduce Islamic micro financing products in Pakistan. The present study was conducted to analyze the role of Islamic microfinance to alleviate poverty in Pakistan its impacts, people satisfaction level and assess the future of it in Pakistan. An Empirical approach has been adopted due to lack of knowledge to clients about products, technical terms, lack of time, and we come to know the changing improvement in the eyes of those people who directly involve in this system. Questionnaire was used as a tool for data collection. The qualitative data was quantified and chi-square test was applied to test the association of attributes by 5% level of significance. Our analysis concluded that Islamic microfinance playing an important role to improve the living standard, per capita income, awareness level (Educational level), ethical values, profitability, sustainability, infrastructure position, employment level in the society, helpful to control the inflation and unequal distribution of wealth. People are more interested due to religious prospective and prohibition of riba in Islam as well as in Christianity but there should be proper regularity authority to control over it in order to get fruitful results through an implementable model.

Abstract
Purpose
This paper aims to identify the intersection between Islamic microfinance (MF) (IsMF) and Takaful in high-risk economies and propose a model for the sustainable application of IsMF. The word Takaful, although used to refer to Islamic insurance, means solidarity and is used as such in this paper.

Design/methodology/approach
The paper used a descriptive and analytical method to present findings derived from secondary data collected from the Palestinian Central Bureau of Statistics and primary data from semi-structured interviews.

Findings
Need in the Palestinian household is very high, and the performance of Palestinian MF institutions (MFI) was found to have deviated from the spirit of MF. A significant shortcoming by MFI lies in the Palestinian law that focuses on organizing MFI’s operations as financial institutions only. With a deviated purpose and generalized laws, the paper proposed a model of IMF. The model consists of three stages covering mission and market-based financing for the economically incapable and those better off. Finally, enacting laws to protect micro-enterprises and cooperation between institutions that operate at each stage is necessary.

Originality/value
This research contributes to the literature on MF and IsMF, especially in high-risk countries. Furthermore, this study proposes a model for IsMF best practices based on the spirit of MF where it is most needed.