Islamic microfinance..microtakaful A brief discussion on challenges

Ahmed Rostom

Financial Sector Specialist

East Asia and Pacific Finance and Private Sector Development

(EASFP)

The World Bank

November 2012

Global Picture

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MENA dominates in terms of number of financing clients, EAP dominates in terms of portfolio size

Financing outstanding amounts (USD millions)

More MFIs/rural banks but volumes driven by commercial banks

Global Picture

Institutions covered, by type of institution

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Vast majority are small institutions

Institutions covered, by # active financing clients

Global Picture

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Global PictureStill a subsidized business

Financing products: strong focus on Murabaha and Qard hassan

Portfolio, by type of product (USD million)

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Challenges remain…

• Increasing transparency among providers• Allowing more institutions into the market• Offering More solutions• Understanding of demand• Scaling up P&L products• Standardizing models for sustainability• Sharing lessons and models• Regulating the industry• Increasing consumers awareness• Morale hazard• Adverse selection• Flexibility• And Affordability

Challenges

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