Muslim Aid

Islamic banking; an innovative solution to helping people out of poverty

11 July 2008

“Microfinance is a useful weapon in tackling poverty. Muslim Aid has changed the lives of tens of thousands of people in the world with its unique microfinance model. Microfinance provides a stepping stone for someone who needs that opportunity” said Sir Iqbal Sacranie, Chair for international development agency Muslim Aid.

Microfinance offers small loans and grants to individuals to develop businesses in poorer countries who are unable to apply for conventional loans which are asset based and require high interest payments.

An event titled ‘Microfinance in the Islamic world’ was held by the All- Party Parliamentary Group on Microfinance/Micro credit on the 9th July 2008 at the House of Commons. It focused on the compatibility of microfinance programmes with Islamic financial principles and their impact on the Muslim community. Microfinance practitioners, academics and NGOs were invited.

“Islamic banking techniques, which share many of the same principles as microfinance and are similar in lending practices, could offer an alternative to thousands of entrepreneurial poor who are currently not accessing traditional microfinance loans due to fear of breaching religious beliefs” said Microfinance Officer Abyan Ahmad for Muslim Aid.

The approach of Muslim Aid is to provide loans which are tailored to the individual and are interest free. The organisation is working in 70 countries around the world providing emergency relief and long term development projects. Its Microfinance programmes operate in countries such as Bangladesh, Somalia, Pakistan, Cambodia, Indonesia, Sri Lanka and Mexico.