Australian Development Gateway

The Australian Development Gateway (ADG) strives to support members of the development community in their efforts to reduce poverty and enhance sustainable development in the Asia Pacific region. The site has been created with participation from members of government, private, academia and non-government organisations. User feedback mechanisms have been incorporated to guide future directions of the site. The site is optimised for low bandwidth access to enable the widest participation throughout the Asia Pacific region.

Skip to content

ADG channels:

Information by sector: Enterprise Development

Sub navigation

ADG TOOLBOX

Concepts and Approaches

Towards Islamic microfinance: a primer

This article gives an overview of the basic principles of Islamic finance. It explains that financial services must comply with Islamic legal principles, therefore outlawing: interest, profits from immoral activities, selling something you don't own, and sales contracts that aren't clear to both parties.

The articles includes the following:
- How these principles apply to the development of the Islamic microfinance sector
- Provides details of several typical Islamic banking structures
- Islam compliant products most relevant to microfinance
- How Islamic finance view issues of gender
- How the Islamic finance industry is developing

It concludes in stating that the challenge is to recognise the common ground in human development to bring the religious establishment and the microfinance sector together. This could include reducing scepticism towards the authenticity of product compliance and that the Islamic finance industry could do more to adapt its products to meet the needs of the poor, the target clients of microfinance.

 

Footer: