Integration of waqf-Islamic microfinance model for poverty reduction (original) (raw)
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Waqf has generally been related to the religion and the socio-economic system of Muslim societies. It has played a vital role throughout Islamic history. On the other hand, Islamic Microfinance (IsMF) is expanding rapidly in the Muslim countries. The IsMF is considered as a key instrument for providing funds to poor micro investors. Since both waqf and IsMF emphasize sustainability, and since waqf can assist to reduce the cost of capital in operation of IsMF, the research aims to develop an integrated waqf based microfinance model applicable in some Muslim countries. This will ensure utilisation of the combined resources of Waqf and IMF institutions in alleviating poverty, an objective that both the two institutions share. The present study focuses in in Kuala Selangor, Malaysia, using 102 sahabat (clients) from Amanah Ikhtiar Malaysia (AIM). Structural equation modeling is adopted to examine the relationship among the five constructs i.e., Waqf Resources, IsMF, Takaful, Human Resources and Poverty Alleviation. While the reliability and validity were established, the structural relationship between the constructs reveals that the model has to be modified. Specifically, the result shows only takaful has significant impact in reducing poverty while others are found to be insignificant. This suggests that the model as well as the instrument should be further developed.
An Integrated Approach to Islamic Microfinance for Poverty Alleviation in Bangladesh
Üniversitepark Bülten
The study critically examines the state of the Islamic Microfinance sector of Bangladesh to find its role in addressing poverty. The study constitutes linkage between Islamic Microfinance and Poverty Alleviation. It is a desk-based and libraryoriented research relying on secondary data, structured on research objectives. Islamic microfinance organizations have not yet developed to the expected level in Bangladesh and thus Muslim citizens are compelled to borrow from conventional interest-based lending sources, but many underprivileged and small-scale entrepreneurs feel unable to access funding due to their religious ideology. Islamic concern for the disadvantaged makes it crucial to ensure Islamic microfinance services include their participation in the production process. Due to a lack of Islamic microfinance institutions in Bangladesh, the integration of Islamic microfinance with NGOs, NPOs (non-profit organizations), Zakah, Waqf, and capacity-building institutions to facilitate small-scale financial services to the poor can internalize them into the market mechanism and thereby work as a powerful tool for poverty eradication. This study proposes a new framework that directly addresses Islamic Microfinance and Poverty alleviation in Bangladesh.
Integrated Cash Waqf and Islamic Microfinance to Poverty Alleviate
El-Barka: Journal of Islamic Economics and Business
Cash Waqf is a trust fund established with money to support services to humankind on behalf of Allah SWT. Efforts to maximize the use of cash waqf funds have the potential to improve the welfare of the community, especially in alleviating the poor. One of the institutions in this field is the Islamic microfinance institution. These Islamic microfinance institutions include Baitul Maal (social funds) and Baitu Tamwil (commercial) and cooperatives. This Islamic microfinance institution is a facility for the poor to develop their business. The research method used in this research is a literature survey of more than 20 articles. Not only analyzing empirically and comparatively but also provide recommendations and suggestions with several theoretical works. The results of this study indicate that cash waqf has been widely practiced and could become a financing facility for MSMEs to alleviate poverty.Wakaf Tunai adalah dana amanah yang didirikan dengan uang untuk mendukung layanan kepada...
Going ( Beyond Microfinance ) : Enhancing Islamic Microfinance Programmes in Bangladesh
Islam and Civilisational Renewal, 2014
Microfinance programmes have been operating in Bangladesh since the early seventies. With the Bangladesh Rural Advancement Committee (BRAC) and the Grameen Bank (GB) as the pioneers, many other Non Governmental Organizations (NGOs) and Microfinance Institutes (MFIs) have grown up to provide banking services to the 'bankless' poor of the society. Most of these MFIs disburse cash loans, and in most cases at a high rate of interest. Of course, interest as riba is among the gravest of prohibitions in Islam. Besides, a majority of the clients who take such microfinance loans often live below the poverty level, and have their own priorities to meet before investing the loan in a profit-bearing investment. As a result, the loans turn out to be consumption loans without resulting in any profit to pay the interest therefrom. In the long run, the clients fall into the 'debt-trap' and get poorer. This paper suggests that if instead of disbursing cash facilities, the clients were provided with employment under specific projects of which some portions could also be sold to them after the project has recovered its capital, poverty eradication ought to become an easier task. This then goes 'beyond microfinance' facilities.
Effectiveness of Islamic Microfinance in Alleviating Poverty: Empirical Evidence from Bangladesh
International Journal of Science and Business, 2021
Islamic Micro-finance (IMFc) is an evolving technique to empower the deprived and needy population. The present study was intended to investigate the effect of the IMFc on the resources of individuals borrowing from an Islamic microfinance institution and their poverty status. The prime intention of this paper is to justify the effect of IFMc for poverty alleviation. The study reveals that IMFc programs have introduced a positive result on significant numbers of poor. Islamic microfinance has significant impacts on income, savings and expenditure levels of the household. The analysis shows that in general, the Islamic micro finance is an instrument that can help to accumulate savings and income and finally assist to alleviate their poverty. But still it is not only the instrument that can alleviate poverty but it is the vital component that can help to the poor people for standard living levels. Our analysis shows that after taking Islamic finance there is a significant change in the respondents' income savings and expenditures. IJSB
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.
Waqf-Based Microfinance: An Alternative Solution to Poverty Reduction
This paper intends to determine the scope and opportunity of waqf-based (Islamic endowment) microfinance by applying financial schemes and models to alleviate poverty in the society. The paper is a review-based conceptual piece of work in nature. Waqf-based microfinance model is designed and proposed as a solution to ensure an improved livelihood for the people of the Islamic countries through a comprehensive literature review and provide descriptive data to present its main notion. The development of micro-entrepreneurs integrating waqf-based microfinance will reduce poverty in Islamic countries. This paper proposes a distinct poverty alleviation model which will help generate income and employment for socioeconomic development. The study does not address the regulatory and operational issues of the waqf in detail. Moreover, the study endeavours to integrate the waqf as a source of funding for the microfinance operation which is found to be constraining hence, an empirical model to be analysed in the future is proposed in this paper. The purpose of waqf is to ensure potential economic contribution and equality among the poor segment in the society through a noble charitable effort. This paper will also contribute to the existing literature in the field of poverty reduction. The integration of waqf in Islamic microfinance will make Microfinance Institutions (MFIs)' sustainable with an available source of funding. The MFIs' will fund the available capital to the micro-entrepreneurs and at the same time, innovative micro-financing models incorporating waqf will bring peace in the society by eradicating poverty significantly.
Islamic Microfi nance As a Tool of Financial Inclusion in Bangladesh
Though Bangladesh has achieved worldwide recognition as a star performer in interest based conventional microfinance programs, she is lagging behind exploring full potentials of Islamic microfinance to promote financial inclusion among unbanked people aiming at poverty and inequality reduction. The experience of poverty programs of NGOs during the last three decades reveals that they have, in general, been successful in serving the moderate poor but failed in reaching the extreme poor mainly due to higher rate of interest and operational cost, lack of customized products and reluctance of religious people to participate in interest based programs. Given this, the present paper focuses on concepts and models of Islamic microfinance and its effectiveness as a tool of financial inclusion in Bangladesh. The paper suggests necessary policy options for combating challenges in order to build a vibrant Islamic microfinance market to cater the demands of all categories of poor, extreme poor in particular.
Development of Islamic microfinance: a sustainable poverty reduction approach
Journal of Economic and Administrative Sciences, 2019
Purpose-Though microfinance has been working for many years as a tool to eradicate poverty from its root, most of the least developed and developing countries are yet to significantly alleviate it from the society. The purpose of this paper is to focus on Shariah-based microfinance products in the context of sustainable poverty alleviation approach and provide them financial benefits to enhance their livelihoods. Design/methodology/approach-Here, this qualitative study critically analyzes the basics of the sustainable Islamic microfinance to exterminate the level of poverty. Findings-Islamic microfinance is a more ethical practice than the traditional motives of profit maximization, and it encourages extending the time of repayment if the debtors are in hardship. In some case, it suggests to give charity if the creditor has capability. Research limitations/implications-Most importantly, research scholars and experts have already criticized the concept of conventional microfinance on the basis of various points, especially for its high rate of interest. Social implications-Islamic microfinance is provided with a view to fulfill two tools simultaneously, i.e., social and financial inclusion. In this case, credits and Zakah can be given to the extreme poor people for satisfying basic needs. In terms of social responsibility, Islam encourages the people to be soft in case of collecting the lending money. Originality/value-The study discoursed that sustainable Islamic Microfinance (IM) may be a promising future option to draw the attention of the religiously sensitive people toward the Shariah-based microfinance which can, in turn, mitigate the poverty level.
2011
Microcredit initiative is widely acclaimed as an approach to alleviate poverty and bring about development, but recently the effectiveness of the Microcredit programs has been appeared to be a focus of debate in finance and economics literature. The controversy surrounds mainly on the impact of these programs on poverty, ultra-poverty and further overall socioeconomic development. An exploratory survey was conducted to analyze the microfinance members’ evaluation about the microfinance schemes adopted by different microfinance institutes (MFIs) in Bangladesh. The study also explores the possibility of establishing IMFIs as an alternative to the conventional MFIs. This study covered only three MFIs such as Grameen Bank (GB), Bangladesh Rural Advancement Committee (BRAC) and Association for Social Advancement (ASA). The data were collected from Gazipur, Savar and Narayanganj located around Dhaka city. The respondents (members of those three MFIs) were asked to evaluate their judgments...