The second Islamic Microfinance Challenge, a contest that encourages the design and application of microfinance products that are complaint with Islamic law (Sharia), is now accepting applications from Islamic financial services providers that offer Sharia-compliant products that are not based on the “murabaha” concept of “cost plus markup” [1]. Sharia prohibits the charging of interest on loans. The contest, themed “Beyond Murabaha” for 2014, is sponsored by CGAP (Consultative Group to Assist the Poor), a US-based nonprofit policy and research center that aims to facilitate financial access to poor people; Islamic Development Bank (ISDB), a Saudi Arabia-based multilateral development financial institution; Al Baraka Banking Group, a Baharain-based banking services group; and Triple Jump, a Netherlands-based provider of fund management and advisory services in microfinance. The contest is also supported by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, the German Agency for Technical Cooperation. The winner of the contest will be awarded a grant of USD 100,000. The Al Amal Bank, a microfinance bank in Yemen, won the first iteration of the contest, which was held in 2010.
The deadline for submitting applications is January 31, 2014, and the application form can be found at the following address: http://www.cgap.org/sites/default/files/islamic_mf_challenge_1.pdf
By Nisha Koul, Research Associate
About CGAP (Consultative Group to Assist the Poor): CGAP (Consultative Group to Assist the Poor) is a US-based nonprofit policy and research center dedicated to increasing financial access to poor people worldwide. CGAP is supported by approximately 40 development agencies and private foundations. Its mission is to provide market intelligence; promote standards; and offer advisory services to governments, microfinance providers, donors and investors. CGAP reported a budget of USD 22.5 million for the fiscal year ending June 2012. CGAP is co-located with the offices of the World Bank Group in Washington DC.
About Islamic Development Bank (ISDB): The Islamic Development Bank (ISDB) is a Saudi Arabia-based development financial institution that formally began operations on October 20, 1975. The bank aims to foster the economic development and social progress of its 56 member countries as well as Muslim communities in non-member countries, in accordance with the principles of Islamic Law (Sharia). As of 2012, ISDB has total assets of USD 15.9 billion.
About Al Baraka Banking Group: The Al Baraka Banking Group, based in Bahrain, offers financial services in accordance with Islamic law (Sharia). As of 2013, it reported total assets of USD 19 billion and subsidiary branches in 15 countries.
About Triple Jump: Triple Jump, founded in 2006, supports the expansion of microfinance institutions (MFIs) through the provision of capital and advisory services. Triple Jump was established by the NOTS Foundation, a Dutch development organization; Oxfam Novib, a Dutch organization for international cooperation and development; and ASN Bank, a “sustainability-driven” Dutch bank. Its shares are divided among these organizations and Triple Jump’s management team. Triple Jump is comprised of Triple Jump Fund Management (TJFM) and Triple Jump Advisory Services (TJAS). TJFM provides its clients with four investment options: hard and local currency loans, equity, guarantees and subordinated loans. TJAS is an independent foundation that provides consulting services and technical assistance to tier-3 and tier-4 MFIs. Triple Jump manages five microfinance investment funds, with total assets approximately equivalent to USD 473 million as of December 31, 2012. Its investments span 132 MFIs in 60 emerging markets in Latin America, Eastern Europe, Africa and Asia.
About Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH: Founded in 1975, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH is an agency of the German government. As of 2013, it operates in 130 countries in an effort to promote sustainable development by providing financial advisory services and funding. For fiscal year 2012, GIZ conducted business valued at EUR 2.1 billion (USD 2.9 billion).
Sources and Additional Resources:
[1] CGAP News, “Islamic Microfinance Challenge 2013,” http://www.cgap.org/news/islamic-microfinance-challenge-2013
MicroCapital Story, August 8, 2013, “World Council of Credit Unions Publishes Islamic Operations Manual for Shariah-compliant Credit Unions,” https://www.microcapital.org/microcapital-brief-world-council-of-credit-unions-publishes-islamic-operations-manual-for-shariah-compliant-credit-unions/
MicroCapital Story, May 23, 2011, “Islamic Microfinance Can Spur Development, Argues Khan from Care International UK,” https://www.microcapital.org/microcapital-brief-islamic-microfinance-can-spur-development-argues-khan-from-care-international-uk/
MicroCapital Story, March 27, 2011, “CGAP Launches Islamic Microfinance Blog Series Featuring Finalists of Global Islamic Microfinance Challenge 2010: Al Amal of Yemen, Tanzania ecoVolunteerism, Bisma of Indonesia and Tameer, CWCD of Pakistan,” https://www.microcapital.org/microcapital-brief-cgap-launches-islamic-microfinance-blog-series-featuring-finalists-of-global-islamic-microfinance-challenge-2010-al-amal-of-yemen-tanzania-ecovolunteerism-bisma-of-indonesia-and/
MicroCapital Story, February 18, 2011, “Al Amal Bank of Yemen Wins Islamic Microfinance Challenge 2010,” https://www.microcapital.org/microcapital-brief-al-amal-bank-of-yemen-wins-islamic-microfinance-challenge-2010/
MicroCapital Universe Profile, CGAP (Consultative Group to Assist the Poor): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CGAP+%28Consultative+Group+to+Assist+the+Poor%29
MicroCapital Universe Profile, Islamic Development Bank (ISDB): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Islamic+Development+Bank+%28ISDB%29
MicroCapital Universe Profile, Al Baraka Banking Group: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Al+Baraka+Banking+Group
MicroCapital Universe Profile, Triple Jump: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Triple+Jump
MicroCapital Universe Profile, Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Deutsche+Gesellschaft+f%C3%BCr+Technische+Zusammenarbeit+GmbH+%28GTZ%29
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