What future for microfinance in Islamic countries like Yemen ?

A microfinance study made at Yemen try to find solutions about the obstacles of the market on islamic countries.

Center of Islamic Banking and Economics (CIBE) intiated a market study in islamic countries on behalf of Yemen Microfinance Network (YMN) in Yemen.

This study has begun in Yemen's capital Sanaa, including Taiz, Adan and Almoukla. Then Islamic microfinance products have been examinated and make possible now the creation of new products in line with the existing ones.

The study's goal is that a maximum of people have access to microfinance facilities and services to reduce poverty. YMN Managing Director, Najah Al-Mugahed, explaines that the size of the microfinance market in Yemen is about 1 million people but only 80 000 people are using those services which represent only 8% of the size of the market.

The main reasons of this percentage are :
- The absence of a range of financial products
- The domination of the "Murabaha" in Islamic microfinance sector(the financial institution expressly mentions the cost it has incurred on the commodities for sale and sells it to another person by adding some profit or mark-up thereon which is known to the buyer)
- The high interest rates

These barriers are obstacles in the expansion of microfinance industry. An action plan will be prepared through this research study to strengthen the Yemen's microfinance sector.

YMN Chairman and CEO of Alamal Microfinance Bank, Saleh Al-Lai, proclaimed that Yemen's islamic microfinance market is very promising and want to make it stronger in the next few years thanks to this study, so that Yemen could get a distinguished level through Islamic microfinance.

Source : Daily Times

This article is part of the special report: