Mohammed S. Al-Lai, Building a Successful Business Model for Islamic Microfinance


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Mohammed S. Al-Lai, Building a Successful Business Model for Islamic Microfinance

  1. 1. Islamic Microfinance Al-Amal Microfinance Bank Experience2011 Global Microcredit SummitCommissioned Workshop PaperNovember 14-17, 2011 – Valladolid, SpainByMohammed AlaiCEO
  2. 2. AL-Amal Microfinance Background  AL-Amal Microfinance Bank is the 1st MF In the MENA Region Its starts its operation in 2009.  11 MFI in Yemen Microfinance, 2 Banks, 5 Program and 4 Institutions.  AMB is the first Institution in the MENA offering Islamic Microfinance Financial Services as a licensed Bank.  AMB become the largest MFI in Yemen after almost 2.5 years.  AMB monopolizes 25% of Yemen Microfinance Market.  The winner of Islamic Microfinance Challenge 2010.  The winner of Most innovative Microfinance Product .The 1st Microfinance Bank in the MENA Region
  3. 3. Al-Amal Microfinance Experience Why ( Islamic Microfinance Services) IFS ? Market Research Results Needs  400,000-1000,000 households in Yemen requiring access to micro credit , 40% of this needs prefer Islamic Microfinance services .  Limitation of Current MFI to met the needs.  Conservatism of Yemeni People . Regulatory  Allowance for Establishing IMFIs by Yemeni Regulations. Financial Services Credit Saving Insurance Murabha Current Account Takaful (Home Insurance) Mudharbh ( Deposit) Saving & Deposit Ijarah Investment FundThe 1st Microfinance Bank in the MENA Region
  4. 4. Al-Amal Microfinance Experience Ijarah Product AMB is the first MFI in the MENA offers such Model Purpose of Design  New Target Category for New Activity ( startups & fixed assets financing)  Social Impact  Reducing the Credit Risk Activity  Fixed Assets ( Fixed Capital ) . Ijarah Methodology Process  Periodically leasing and ownership in the end  Less Guarantees required by clients. Leasing contract with Periodically Payment  Compliant with Islamic Sharia. Client AMB Ijarah is in the Pilot Phase Ownership Contract in the end of periodThe 1st Microfinance Bank in the MENA Region
  5. 5. AMB Initiatives against the Challenges Challenge Type AMB Initiative High cost AMB diversify its products. Lack of Islamic Microfinance Diversify Methodologies Models AMB is offering Murahbha, Lack of funding resources Motharbah, and Ijarah . Lack of Risk Management AMB encouraging Voluntary Saving. Methodologies AMB offering Investment fund product Board of Sharia, BDS, Image of IF in general ,, religion society and Int and AMB is offering Takaful service local regulatory AMB still faces these changelessThe 1st Microfinance Bank in the MENA Region
  6. 6. AL-Amal Bank Microfinance Achievement 2010 Indictor %/NO Indicator %/NO No of Active client of Microfinance Social Indicarors 25% Market Ratio of Women 65% Active Portfolio of of Microfinance 22% Ratio of Youth 51% Market Ratio of Saving to loan portfolio Served client under poverty 200% 73% line Ratio of operating sustainability 53% No of job opportunities created 9,931 Rate of financial sustainability 30% No of beneficiaries 87,825 Rate of Repayment 99.99% Ratio of Written Off 0% Return of Assets 5.6%The 1st Microfinance Bank in the MENA Region
  7. 7. Recommendations Donors should be supported AMB to achieve big Success in IM to encourage the others institutions in Region such as :-  Funding the Portfolio .  Development New Methodologies.  BDS ( Consultant & training)  Government & Private support.  International & Regional support.The 1st Microfinance Bank in the MENA Region
  8. 8. Thank you Mohammed S.Al-lai CEO Al-Amal Microfinance Bank E-mail: mallai@alamalbank.comThe 1st Microfinance Bank in the MENA Region