Post on 25-Mar-2018
STATISTICAL, ECONOMIC AND SOCIAL RESEARCH AND
TRAINING CENTRE FOR ISLAMIC COUNTRIES (SESRIC)
Mazhar Hussain, Senior Researcher
Economic and Social Research Department
101 102
3734
2005 2014
World
OIC
# of Countries Reported Data
10911046
384
267
2005 2014
# of MFIs Reported Data
2005
384 MFIs in 37 OIC countries accounted for 35% of the total MFIs reported data
2014
267 MFIs in 34 OIC countries accounted for 26% of the total MFIs reported data
# of MFIs Reported Data
47
106
25 27
2005 2014
Active Borrowers - Millions
World
OIC
18
88
5
16
2005 2014
Gross Loan Portfolio –Billions$
2005
25 million active borrowers (53% of the total) with a gross loan portfolio of USD 5 billion (29%)
2014
27 million active borrowers (26% of the total) with a gross loan portfolio of USD 16 billion
(18%)
Active Borrowers- Millions Gross Loan Portfolio- Billion USD
Bangladesh
64%
Pakistan6% Nigeria
6%
Azerbaijan4%
Morocco3%Indonesia2%
Egypt2%
Kyrgyzstan2%
Uganda1%
Tajikistan1%
Rest of MCs9%
Bangladesh
33%
Azerbaijan24%Uzbekistan
7%
Morocco4%
Tajikistan4%
Pakistan3%
Nigeria3%
Uganda3%
Kyrgyzstan2%
Benin2% Rest of
MCs15%
Top-10 countries accounted for 91% of the
total active borrowers of all MFIs in OIC
countries in 2014 …with Bangladesh alone
accounting for 64%
Top-10 countries accounted for 85% of
gross loan portfolio of all MFIs in OIC
countries in 2014 …with Bangladesh alone
accounting for 33%
Distribution of Active Borrowers, 2014 Distribution of Gross Loan Portfolio, 2014
64%
28%
5%2%
1%
EAP MENA SA SSA ECA
225IMFIs in
19 Countries
225 IMFIs in 19 countries as of
March 2013 compared to 126
IMFIs operating in 14 countries
IMFIs are highly concentrated in
East Asia and Pacific and MENA
regions… accounting for 92% of
the total IMFIs in 2013
Source: CGAP Focus Note 84, March 2013
Active Clients
35%
33%
14%
18%
Bangladesh SudanIndonesia Other
1.28 million
Clients
IMFIs provided sharia-compliant
products and services to 1.28
million clients in 2013 compared
to 0.3 million clients in 2008
82% of total clients are living in
three OIC countries: Bangladesh
(35%), Sudan (33%) and
Indonesia (14%)
Despite an upward trend
still….accounting for only 5% of
OIC and 1% of world total in
2014
Loan Portfolio
IMFIs were managing 625
million$ worth of fund portfolio in
2013 compared to 198 million$ in
2008
91% of total portfolio is
distributed in three OIC
countries: Indonesia (55%),
Lebanon (21%) and
Bangladesh (15%)
55%
21%
15%
9%
Indonesia Lebanon
Banglades Rest
625Million $
worth of
portfolio
Supply of Islamic Microfinance
accounts for a tiny fraction
(0.7%) of the world and 4% of the
OIC total MFIs loan portfolio
66.1%
25.0%
6.4%
0.3%2.7%
Murabaha Qard Hasan Musharka/Mudarba Salam Other
Murabaha and Qard Hasan are the most widely offered Shari’a-compliant
financing by IMFIs…accounting for over 91% of the total portfolio
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Regulation and supervision of microcredit portfolios Formation of regulated/supervised microcredit institutions
Formation/operation of non-regulated microcredit institutions Regulatory and supervisory capacity for microfinance
Regulatory framework for deposit-taking
0
0.5
1
1.5
2
2.5
3
Accounting transparency Client Protection: Transparency in pricing
Client Protection: Dispute resolution Credit bureaus
Policy and practice for financial transactions through agents
65% of respondents have stated that the higher cost of
microfinance drives beneficiaries into severe debt. This
indicates that the operations and transactions costs of
microfinance need to be reduced in order to better serve
the needs of the poor.
There should be a more standardized framework for
microfinance in order to increase effectiveness in
helping the poor.
Most survey respondents have stated that the way to
ensure Shariah compliance in microfinance is through
oversight by the Shariah boards. Good governance is
also essential so that operating costs will be formed on
the basis of pricing.
72% of respondents consider volunteerism to be an
important part of microfinance, as it will enable
microfinance institutions to reduce operating costs and
will also build relationships with the community and the
poor to further reduce financial and societal exclusion.
The establishments of skills empowerment centers that
ensure clients are given adequate training prior to being
provided financing as well as financial services.
Microfinance institutions continued to face two
primary challenges; access to affordable finance
and inadequate human resources confronted both
by the providers and recipients of services. Existing
models have largely failed to adequately overcome
all the challenges.
In order to address these two primary challenges,
this study aims to develop an Integrated Waqf-
based Islamic Microfinance (IWIM) model, which
comprises six components, namely Waqf, Islamic
microfinance, human resources, Takaful, project
financing and poverty alleviation, and validate and
test the IWIM model in the three selected countries.