Islamic microfinance a key tool for financial inclusion, poverty alleviation

Ghana has yet to roll out an Islamic Finance system but the sooner that is done the better for financial inclusion and poverty alleviation in general.

This is the view of Professor Binta Tijani Jibril, a Nigerian academic and Director of the International Institute of Islamic Banking and Finance of the Bayero University, Kano. IIIBF-BUK.

She made her submissions during a monthly webinar series hosted by the Islamic Finance Research Institute of Ghana, IFRIG. She spoke on the topic: “Islamic Micro-Finance: A Vehicle for Inclusive Growth and Poverty Alleviation.”

“Islamic finance could provide asset-backed, equity-based financing to farmers and Small and Medium Enterprises. In particular, products of microfinance institutions are most suitable for startups, SMEs and agribusiness.

She added that the suitability was: “because the conventional deposit money banks are reluctant to serve this category of people, (because) they consider them risky. Globally, this category of entrepreneurs turn to microfinance institutions.

“The goal of micro finance is to give impoverished people an opportunity to become self sufficient,” she stressed.

The IIIBF-BUK director, however, cautioned that micro finance should not be seen as a silver bullet to poverty alleviation but that a concerted effort was needed to ensure that all stakeholders work to ensure its fruition.

“Islamic Micro Finance is in summary, partnership for enterprise growth; partnership between the institution and the client. Once this is achieved, several advantages are enjoyed. Enhanced savings, investment and growth in an inclusive manner,” she added.

She tasked IFRIG to incrementally ensure that its activities are geared towards coordinating the drive to achieve Islamic finance.

Her co-panelist on the webinar, a Ghanaian consultant and financial literacy campaigner, Hajia Amina Sammo; also spoke on the topic: “Understanding Riba (interest) In The Contemporary World And The Need for Islamic Finance.”

The free webinar series is part of IFRIG’s activities geared at advancing the gospel of Islamic banking and finance in Ghana. According to the institute’s Director General, they are engaging with relevant stakeholders – public and private – to work towards establishing Islamic banking and insurance in Ghana,

“For us, the dream to establish Islamic Finance is the topmost priority for short, medium and long term. As we approach our second year anniversary, we have chalked a lot and we have even more to do but we are upbeat of achieving set goals God willing,” Shaibu Ali said.

Source: Ghanaweb