Interview with Abed, loan officer specialized in Islamic loans in ACAD

In order to provide our members with more interesting details about the recent partnership implemented with the Microfinance Institution ACAD (Arab Center for Agricultural Development) in Palestinian Territories; here is a great interview made by Elsa Wardé from our Operations Team introducing Abed AlRahem Melhem, one of the best local agent in ACAD. Smiling, energetic and ambitious, Abood (his nickname) explains his experience and the particularity of Islamic loans, with which he is specifically in charge in the agency of Jenin.

My name is Abed AlRahem Melhem, I’m 25 years old, I’m working as a loan officer in Jenin branch. After studying accounting in the university of Nabrus, I joined ACAD in July 2011.

I’m working with three other loan officers and I work especially on Islamic loans but sometimes I deal with other kind of microloans.

Look, here in the Palestinian Territories, it is very difficult to find a job. Although microfinance is not my specialization, when such opportunity arises you say "this is an opportunity to start a new life!"(He smiles). Today I am very happy to work with ACAD! Plus I don't know if you saw on our website but I am one of the best employees in the company, I am currently the employee of the month since July 2012.

Yes I did thanks to ACAD, not specifically about Islamic loans but more about financial analysis, microfinance and production chain. Thanks to that I better understood the different stages of production.

I’ve got the best portfolio among ACAD employees: 162 clients with a portfolio of 385 000 USD.

120 of them are Islamic loans. All of our Islamic loans are related to income-generating activities that's what I like about my job, it’s not consumption loans, we give a true support to our clients!

Yes, according to the Coran it does not seem logical to pay more than the amount paid out.
We work on the principle of Murabaha. ACAD have to obtain the desired product for the contractor. He must then reimburse ACA who purchase this product with an "interest rate" agreed in advance by both parties.

Let’s take an example to clear it up: a client wish to buy three sheeps to develop his activity. ACAD is going to go buy those three sheeps for the client, then we will sell to him by applying a margin. This margin related to the service ACAD provided for the client corresponds to an interest rate when we compared it to other more conventional loans.*

No, Islamic loans concern only projects of entrepreneurs who have income generating activities. We try to help these people through these loans!

We receive many projects about grocery/supermarkets ideas for example. By the way, I don’t know if I already told you but both men and women can get an Islamic loan.

These loans are mainly requested in the sectors of agriculture, industry and trade. In general we accept all types of projects except constructions of houses for example, those projects require a lot of time, loans are longer to pay, we do not receive a return on the loan very quickly.

Similarly, Islamic loans do not apply to vehicles, because of accident risks and the lender can sell it whenever he wants. Finally, we do not make loans for the purchase of a phone, the depreciation for these products is too quick.

The entrepreneur’s project has to be less than 10 000 us dollars, have a maximum of 6 employees involved in the project and then to be considered vulnerable according to the scale of poverty in the country.

I’m really happy to work with you at MicroWorld.org and I hope very soon to come to Paris to visit your country and to meet lenders! (He laughs)

*Additional informations:

Islam prohibits charging interest on loans of money, it is the riba. Indeed, the Koran rule states that the purchase, sale and trade are lawful, contrary to the interest or usury. So new solutions were found such as Murabaha.