Islamic Microfinance Challenge Seeks Innovative Approaches to Reaching Unbanked Muslims

WASHINGTON, 25 November 2013 – CGAP (Consultative Group to Assist the Poor), the Islamic Development Bank, Al Baraka Banking Group, and Triple Jump today announced the launch of the second Islamic Microfinance Challenge, a global contest that invites applications from providers of Sharia-compliant microfinance products. The Challenge is also supported by the German Ministry of International Cooperation and Development, through the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.

The first Islamic Microfinance Challenge, held in 2010, was won by Yemen’s Al Amal Bank. This year’s contest is entitled, “Islamic Microfinance Challenge 2013: Beyond Murabaha.”

Through a $100,000 grant award, the Islamic Microfinance Challenge hopes not only to spur innovation, but also to help scale up the application of Sharia-compliant products by financial institutions already serving large numbers of poor.

The number of Sharia-compliant microfinance providers has nearly doubled in recent years, and their treach has quadrupled. But that reach is still relatively small – just over 1 million of the estimated 650 million Muslims living on less than $2 a day.

That, in part, is why this year’s Challenge is inviting applications exclusively from Islamic financial services providers with a track record of reaching clients and existing Sharia-compliant products that they hope to take to scale.

To enter the Challenge, please download and submit this application. Email your entry to IslamicMFChallenge@CGAP.org

For media inquiries, please contact:

Sue Pleming, CGAP
Head, Knowledge Products, Web and Communications
spleming@worldbank.org
202-473-3136  

About CGAP
CGAP is an independent policy and research center, housed at the World Bank, dedicated to advancing financial access for the world’s poor. It is supported by over 30 development agencies and private foundations who share a common mission to alleviate poverty. Learn more at http://www.cgap.org.

CGAP Senior Microfinance Specialist Mayada El-Zoghbi said:
“Islamic finance is already high on the policy agendas of many governments. But can Sharia-compliant financial services address the needs of millions of observant Muslims who are currently unbanked? That is the question that guides this year’s Challenge, which seeks to spark innovation in an Islamic microfinance market marked by growing demand and an as-yet-narrow product offering—much of it anchored in the ‘cost-plus- markup’ product murabaha.”

About the Islamic Development Bank
The Islamic Development Bank is a multilateral development financing institution located in Jeddah, Saudi Arabia. It was founded in 1973 by the Finance Ministers at the first Organization of the Islamic Conference. Learn more at http://www.isdb.org.

Islamic Development Bank Vice President – Finance Dr. Abdul Aziz Al Hinai said:
“Development of the Islamic microfinance sector is a high priority for the Islamic Development Bank, and we are proud to be a part of this important initiative. I feel that the noble vision of Islamic finance would not be complete without simultaneously developing Islamic microfinance, to ensure broader financial inclusion which would lead to job creation and poverty alleviation.”

About Al Baraka Banking Group
Al Baraka Banking Group Headquartered in in Manama, Bahrain, Al Baraka Banking Group offers retail, corporate and investment banking and treasury services strictly in accordance with the principles of Sharia through its network of subsidiary banks and representative offices in over 15 countries. Learn more at http://www.albaraka.com.

President and Chief Executive of Al Baraka Banking Group Adnan Ahmed Yousif said:
“We are proud to be a partner for the Islamic Microfinance Challenge, which is primarily geared towards authenticity and innovation in Islamic microfinance, the values that we at Al Baraka hold very close to our hearts. Initiatives like the Challenge will encourage the best creativity needed for Islamic microfinance to scale-up and reach out to the utterly underserved in our communities. We look forward to welcoming the winner for this year.”

About Triple Jump
Triple Jump is a responsible investment manager based in Amsterdam, the Netherlands. Triple Jump manages and advises investment funds that focus on improving livelihoods at the bottom of the pyramid. Learn more at http://www.triplejump.eu.

Triple Jump Senior Investment Officer Hoda Salman said:
“With proportionately higher levels of poverty among Muslim populations, it is increasingly imperative to develop tools and strategies that support or complement governments’ development policies. Islamic microfinance is one such tool, catering for a significant niche market. We hope that innovative ideas received through this Challenge can also contribute to financial inclusion in the microfinance industry generally and worldwide. This would be in line with Triple Jump’s objective to spark innovation in financial products and services, which is needed to further the finance frontier and address poverty.”

SOURCE: CGAP.ORG