3rd Global Islamic Microfinance Forum' 2013

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AlHuda-Centre of Islamic Banking and Economics (CIBE) is a well known name in Islamic Banking and Finance sector which focuses on training, awareness, advisory and publications on Islamic Banking & Finance in order to promote the industry. AlHuda CIBE has organized a successful Conference "3rd Global Islamic Microfinance Forum" held on 6th & 7th October, 2013 in Dubai. AlHuda CIBE is very much pleased to share the topics and presentations being held in the Forum.

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3rd Global Islamic Microfinance Forum' 2013

  1. 1. Innovation in Islamic M&SME’s banking Dr Atef El Shabrawy CEO of family bank, kingdom of Bahrain a.elshabrawy@familybankbh.com 1
  2. 2. Challenges in Muslim Societies 1. Explosion of demand for Islamic finance (Micro & small): 1. Increasing number of unemployed & fresh graduated 2. Exclusion of poor, (youth and women) from financial services 3. Financial services gap of small & micro finance 2. Threats facing MFI’s 1. Weight of microfinance Central Banks rules & regulations on MFI’s 2. Lack of governance & capabilities of MFI’s 3. Weak capabilities & competitiveness of micro entrepreneurs 1. Low skills and absence of proper training 2. Low value-added businesses (farmers, handcrafts, homemade, …). Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com 2
  3. 3. Example of M&SME’s finance in Bahrain Current situation > BD 20,000 Commercial Banks > BD >7000 SME Loans Bahrain Development Bank ≤ BD 5,000 Opportunities •Increasing welfare recipients •High unemployed women % •Large informal sector •No specialized finance •Need to have Islamic finance Microfinance Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com 3
  4. 4. Innovation in the creation of the model 1- Shareholders composition The partnership between government, NGO’s & private sector.. Paid-up capital: BB5m & allowed BD15m Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com 4
  5. 5. Innovation in the creation of the in model 2- The financial institution type Shk Issam Ishaq A specialized Islamic microfinance bank licensed by Central Bank of Bahrain Dr Osama Bahr Dr Mohamden Golam Sharia Advisory Board Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com 5
  6. 6. Innovation in the creation of the instution 3- The Target group 1. First time in business 1. Individuals receiving Government aid 2. Productive Families (home-based business) 3. Women/Unemployed youth & Handicapped 2. Small & Micro businesses (Startup’s) 3. NGO’s & Charity funds Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com • • • • Major challenges Fear of start Lack of incentives Lack of support Rigid services 6
  7. 7. Innovation in the creation of the instution 4- The Guiding principles • • • • • • • Islamic finance only Collateral Free finance No legal or formal entity required Low cots finance Target the Financially Disadvantaged Bank will go to the Poor Provide Non-financial services Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com • • • • Major challenges Lack of Collateral Lack of legal form Lack of guarantee Lack of experience 7
  8. 8. Innovation in the creation of the instution 5- The operational innovation • • • • • • • Partnership Tamkeen to subsidy the profit rate Partner with Remittance co. to use branches Partner with ministries to use their centers Partnership with NGO’s to deliver Partnership with collection company Partnership with BCCI to use business center facilities Partnership with a legal firm as CS Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com Major challenges • Delivery cost • Credit behavior • Cost of collection • Geographic coverage 8
  9. 9. Innovation in the creation of the instution 6- The Non-financial services innovation 1. 2. 3. 4. 5. 6. Pre-disbursement induction training Obligatory entrepreneurship training Monthly meetings, counseling Extensive marketing & sales supports Monthly awards for good customers Incubators and ministerial services links Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com Major challenges • Low skills • absence of training • Low value-added businesses 9
  10. 10. Innovation in the creation of the instution 7- The Social Innovation • Establish of “Idea Factory” to introduce creative business ideas • Organization of “Social Business Weeks” • Collaboration with Universities students to train clients • Collaboration with CocaCola to establish “Kiosks” for disabled Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com Major challenges • Lack of ideas • Social role • Impact on the bank 10
  11. 11. Partners NGO’s 11
  12. 12. Islamic Developed Products Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com 12
  13. 13. Achievements since March 2010 About 1700 members Grameen 1350 & MEF 350 active members Financed business sectors Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com 13
  14. 14. Achievements since March 2010 Number of created jobs No of clients 1200 4000 3500 1000 3000 800 2500 600 2000 1500 400 1000 200 500 0 1 2010 2 2011 3 0 2012 Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com 2010 2011 2012 2013 (Upto April) 14
  15. 15. Activities & participation.. Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com 15
  16. 16. Sample of supported businesses Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com 16
  17. 17. Copyright Atef El Shabrawy 2013 : elshabrawy@yahoo.com 17
  18. 18. ‫!‪Thank you for your attention‬‬ ‫قال هللا تعالى‬ ‫ُّ ُْ ُ ُُ ْ‬ ‫َ َ َ‬ ‫َو ُقل اع َم ُلوا َفس َي َرى الله َع َم َلكم َو َرسوله َوال ُم ْؤ ِم ُنون َوس ُت َر ُّدون ِإ َلى عَ‬ ‫ِ ْ ْ َ‬ ‫ا ِلم‬ ‫ِ‬ ‫ال َغ ْيب َوالش َهاد ِة َف ُي َن ّب ُئكم ب َما ُكنتم َت ْع َم ُل َ‬ ‫ْ ِ َّ َ ِ ُ ِ ُ ْ‬ ‫(التوبة : 501 )‬ ‫ون‬ ‫‪www.familybankbh.com‬‬ ‫81‬

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