scholarly journals The Need for Introduction of Sharia Microfinance Program in the Gambia

2021 ◽  
Vol 1 (3) ◽  
pp. 153-164
Author(s):  
Saikou Gassama ◽  
Hamidah ◽  
Erina Sudaryati
Keyword(s):  
Interest Rate ◽  
Foreign Aid ◽  
Human Development ◽  
The Gambia ◽  
Muslim Country ◽  
Microfinance Institutions ◽  
For Profit ◽  
Study Find ◽  
Rural And Urban ◽  
Islamic Microfinance

The Gambia is a 95 percent Muslim country that is located in the western part of Africa. The population of the country is around 2.5 m. The Gambia is largely dependent on Agriculture, tax, tourism, and foreign aid and is ranked 178, in the Human Development Index 2019, the Gambia is classified as a country with medium human development. The paper used the literature review method. Currently, there is various microfinance program that has been existing for years, but none of them are having Islamic microfinance loan products until recently when two are lunched, as a result, some did not take their loans and even those who take it is hard to change their lives because it is purely for profit-making and also the higher interest rate for some of them. Islamic Microfinance would be the best development instrument for the population of Gambia. The microfinance institutions in The Gambia are very well expanded, they are the main source of credit to the Gambian population both rural and urban. Therefore it will be very important if microfinance institutions in the Gambia can introduce sharia microfinance. The objective of this paper is to suggest ways to introduce sharia microfinance in The Gambia and the benefits of sharia microfinance. The results of this study find out that Islamic microfinance is a viable loan product that can work in the Gambia, there are various kinds of Islamic microfinance products that can work for the poor in the Gambia, such as farmers, gardeners, and market vendors or SMEs. And Islamic microfinance could be the best way of eradicating poverty in the Gambia, since it is not based on the predetermined interest rate and have various suitable loan schemes, if well implemented can change lives.

scholarly journals Islamisation of Microfinance program in The Gambia

2021 ◽  
Vol 4 (1) ◽  
Author(s):  
Saikou Gassama
Keyword(s):  
Interest Rate ◽  
Foreign Aid ◽  
Human Development ◽  
Human Development Index ◽  
The Gambia ◽  
Microfinance Institutions ◽  
For Profit ◽  
Rural And Urban ◽  
Islamic Microfinance ◽  
The Government

The Gambia is a 95 percent Muslim that is located in the western part of Africa. The population of the country is just around 2.5 m. The Gambia is largely dependent on Agriculture, tax and foreign aid and is ranked 178, in the Human Development Index 2019, the Gambia is classified as a country with medium human development. Currently there are various microfinance program that has been existing for years, but none of them are having Islamic microfinance loan products, as a result some did not take their loans and even those who take it is hard to change their lives, because it is purely for profit making and also the higher interest rate. Islamic Microfinance would be the best kind of development instrument for the population of Gambia. The microfinance institutions in the Gambia are very well expanded, they are the main source of credit to the Gambian population both rural and urban. Therefore it will be very important if microfinance institutions in the Gambia can introduce Islamic microfinance. The objective of this paper is to suggest ways to Islamize microfinance in The Gambia and the benefits Islamic microfinance. It is anticipated that the outcome of this paper would complement efforts by the government and NGO in the fight to eradicate poverty in the Gambia.

scholarly journals Cost Components of Interest Rate Charged By Indian Self Help Groups Financed By Not-For Profit Microfinance Institutions

2013 ◽  
Vol 9 (4) ◽  
pp. 302-322
Author(s):  
NAVEEN KUMAR
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Operating Cost ◽  
Microfinance Institutions ◽  
For Profit ◽  
Not For Profit ◽  
Self Help ◽  
Self Help Groups ◽  
The Cost ◽  
Cost Components

Although, interest rate charged by microfinance stimulate of lot of ethical debate. Very few studies in microfinance detail the cost components of interest rates paid by the borrowers. Setting the optimal interest rate with a dual goal of financial sustainability and fighting against poverty is a complex task for microfinance lending. In this backdrop, this paper examines the various cost components of interest rate changed by Indian Self-Help Groups (SHGs) that are financed by not-for profit Microfinance Institutions (MFIs). The study uses neo-classical framework for the analysis of interest rate determinants like cost of funds, administrative (operating) cost, opportunity cost, travel costs and some margin to sustain the business. The data have come from a survey of 106 women SHGs in ten villages in the state of Karnataka, India. The study finds that the cost of fund and other costs associated in microfinance significantly influence the rate of interest and the SHGs need to reduce efficiently other costs associated with writing and maintaining the accounts, auditing, and hospitality offered, through innovative cost management methods of lending. As a result, there would be a welfare gain for the borrowers through reduced interest rate on loans.

Enhancing food security with Islamic microfinance: insights from some recent experiments

2015 ◽  
Vol 75 (2) ◽  
pp. 142-168 ◽  
Author(s):  
Mohammed Obaidullah
Keyword(s):  
Food Security ◽  
Capacity Building ◽  
Financial Support ◽  
Business Development ◽  
Rural Poor ◽  
Microfinance Institutions ◽  
Agricultural Finance ◽  
Content Type ◽  
For Profit ◽  
Islamic Microfinance

Purpose – Islamic microfinance institutions (IsMFIs) have used diverse models and tools, as they seek to provide financial and non-financial support to the farming communities. A majortity of IsMFIs focus on provision of micro-credit to farmers alone as a means to enhance food security, following an approach similar to that of the conventional microfinance institutions. Others adopt a “finance-plus” approach and provide support in a multitude of areas other than finance, such as, technology, production, marketing, business development, capacity building, and thus, ultimately steering the project to success. The purpose of this paper is to examine the models and tools of Islamic agricultural finance for the rural poor that display major variations and draw lessons from a policy perspective. Design/methodology/approach – The study undertakes a comprehensive review of the principles, modes and models of Islamic agricultural finance targeted at small-holder farmers. It uses a case study method to review several winning initiatives by IsMFIs across the globe. It highlights the various risks and challenges confronting the projects and how the same are sought to be mitigated. Findings – Islamic agricultural finance for the rural poor involves a range of modes, mechanisms and institutional structures. Credit-based and sharing-based modes work well under specific conditions and there is no one-size-fits-all solution for financing the rural poor. Case studies of successful initiatives reveal that composite models involving the integration of philanthropy-based, not-for-profit as well as for-profit components may provide ideal solutions. Additional factors critical for success include provision of safety nets, involvement of community, non-financial support in a multitude of areas other than finance, such as, technology, procurement, production, marketing, business development and institutional capacity building. Originality/value – The paper addresses a fundamental issue in financing the poor farmers in Muslim societies – whether to opt for a credit-based approach that would ensure greater outreach or to go for a holistic intervention involving financing of the entire value chain. The findings are based on personal interaction of the author with professionals directly involved in the projects.

Financial and social efficiency analysis of Islamic microfinance institutions

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Marwa Fersi ◽  
Mouna Bougelbène
Keyword(s):  
Capital Structure ◽  
Credit Risk ◽  
Risk Taking ◽  
Negative Impact ◽  
Microfinance Institutions ◽  
Social Efficiency ◽  
Content Type ◽  
Islamic Microfinance ◽  
The Impact ◽  
The Relationship

PurposeThe purpose of this paper was to investigate the impact of credit risk-taking on financial and social efficiency and examine the relationship between credit risk, capital structure and efficiency in the context of Islamic microfinance institutions (MFIs) compared to their conventional counterparts.Design/methodology/approachThe stochastic frontier approach was used to estimate the financial and social efficiency scores, in a first step. In a second step, the impact of risk-taking on efficiency was evaluated. The authors also took into account the moderating role of capital structure in this effect using the fixed and random effects generalized least squares (GLS) with a first-order autoregressive disturbance. The used dataset covers 326 conventional MFIs and 57 Islamic MFIs in six different regions of the world over the period of 2005–2015.FindingsThe overall average efficiency scores are less than 50%, where CMFIs could have produced their outputs using 48% of their actual inputs. IMFIs record the lowest financial (cost) efficiency that is equal to 28% on average. The estimation results also reveal a negative impact of nonperforming loan on financial and social efficiency. Finally, the moderating effect of leverage funding on the relationship between credit risk-taking and financial efficiency was confirmed in CMFIs. However, leverage seems to moderate the effect of risk-taking behavior on social efficiency for IMFIs.Originality/valueThis paper makes an initial attempt to evaluate the effect of risk-taking decision and its implication on efficiency and MFIs' sustainability. Besides, it takes into consideration the role played by the mode of governance through the ownership structure. In addition, this research study sheds light on the importance of the financial support for the development and sustainability of these institutions, which in return, contributes to a sustainable economic development.

scholarly journals UJRAH SUMBER PROFITABILITAS PADA ISLAMIC MICROFINANCE INSTITUTIONS (BMT)

2020 ◽  
Vol 3 (1) ◽  
pp. 39-57
Author(s):  
Eny Lathifah ◽  
Ahmad Zuhril Kalam
Keyword(s):  
Microfinance Institutions ◽  
Islamic Microfinance

Tujuan penulisan ini adalah untuk mengetahui ujrah sebagai sumber profitabilitas pada Islamic Microfinance Institutions (BMT Maslahah) dalam opersionalisasi pada akad-akad berbasis ujrah. Metode penelitian ini adalah penelitian kualitatif dengan pendekatan deskriftif atas studi kasus pada BMT Maslahah. Analisis yang digunakan dalam penelitian ini menggunakan triangulasi data yang bersumber dari dokumentasi, observasi dan wawancara yang langsung kepada responden demi mendapatkan data yang sebenarnya. Hasil penelitian ini adalah ujrah sebagai sumber profitabilitas pada islamic microfinance institutions berasal dari beberapa aspek operasional usaha, yakni pada produk tabungan, pembiayaan, jasa, dan sarana investasi syariah bagi anggota. BMT Maslahah memiliki keunggulan ujrah dengan spesifikasi yang menunjukkan nilai profitabilitas yang sangat tinggi dan bersifat tetap, bagi anggota tabungan biasa mendapatkan bisa bonus saldo yang besarannya tidak tetap dan apabila BMT mengalami kerugian usaha, anggota tidak perlu menanggung kerugian tersebut, dan bagi anggota investasi saham bisa memperoleh bonus dalam jumlah yang besar dan tetap setiap tahunnya dan kekurangan akad yang berbasis ujrah ialah dalam sisi pembiayaan dan investasi saham, besaran keuntungan yang didistribusikan tidak mengikuti laba usaha.

scholarly journals Alleviating Poverty through Islamic Microfinance: Outreach and Efficiency (Study on BMT and Islamic Cooperatives in Indonesia)

2020 ◽  
Vol 16 ◽  
pp. 1362-1376
Author(s):  
Purwanto Purwanto ◽  
Ina Primiana ◽  
Dian Masyita ◽  
Erie Febrian
Keyword(s):  
Coefficient Of Determination ◽  
Data Envelopment ◽  
Strong Positive Correlation ◽  
Microfinance Institutions ◽  
Social Efficiency ◽  
Qualitative Approaches ◽  
The Social ◽  
Dependent Variables ◽  
Islamic Microfinance ◽  
The Impact

The involvement of Islamic Microfinance Institutions (IMFI) in building the national economy is paramount to help the poor. However, provision of access and services to lower-level households can potentially conflict with the sustainability of the institutions. This study analyses the social outreach factors that determine financial and social efficiencies. To reach the set goal and solve this issue, we used mixed methodology combining quantitative (statistical instruments, such as Data Envelopment Analysis (DEA) and multivariate analysis) and qualitative approaches (interviews to clarify or deepen the existing information). The assessment of the dependent variables is influenced by proxies of depth, breadth, length, scope, and cost. The results showed that the average loan instalments and the number of offices and branches significantly influence financial and social efficiency. The age of the institution only has an effect on financial efficiency. Simultaneously, profit orientation, the amount and type of financing and the amount and type of savings only have a high impact on social efficiency, whereas the impact of fund collection and cost per borrower is insignificant. There is a strong positive correlation between the two dependent variables. The influence of independent variables on financial and social efficiency is significant with the coefficient of determination 23.1274 % and 53.2941 %, respectively.

scholarly journals KONSEP PEMBIAYAAN BERBASIS AKAD JUAL BELI PADA BAITUL MAAL WAT TAMWIL PAHLAWAN TULUNGAGUNG

2020 ◽  
Vol 6 (7) ◽  
pp. 1434
Author(s):  
Ike Nofita Nurohmah ◽  
Irham Zaki
Keyword(s):  
Data Collection ◽  
Qualitative Methods ◽  
Financial Institutions ◽  
Study Strategies ◽  
Microfinance Institutions ◽  
Descriptive Case Study ◽  
Islamic Financial Institutions ◽  
Islamic Microfinance

Financing using a sale and purchase contract is one of the most dominant financing in Islamic financial institutions. One of the Islamic microfinance institutions namely baitul maal wat tamil has two types of sale and purchase agreements on its financing products, namely the contract of sale and purchase of murabahah and bai bithaman ajil. This study discusses the concept of financing based on the sale and purchase contract, namely murabahah and bai bithaman ajil on baitul maal wat tamwil (BMT) Pahlawan Tulungagung. The things that need to be reviewed in the practice of the ajabahah and bai bithaman contract are adjusted to the points in the DSN-MUI Fatwa on murabahah financing. This study uses qualitative methods with descriptive case study strategies. Data collection through interviews with four respondents consisting of financing managers, managers and two members of the financing of buying and selling financing and documentation. Interpretation and conclusions are made by linking between data obtained in interviews and documentation. The results of the study show that the concept of financing murabahah and bai bithaman ajil in BMT Pahlawan is not fully in accordance with the DSN-MUI Fatwa regarding the purchase of goods. However, this is still tolerated because of the limitations of BMT to purchase goods which then applies the Al-hajatu tunazzilu rule, manzilata al-dharurah, which is a requirement or need to occupy an emergency position so that the purchasing system is allowed.Keywords: Financing, Murabaha, Bai bithaman ajil, DSN-MUI, BMT Pahlawans

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