The document discusses Islamic agriculture finance in Africa. It begins by explaining the importance of ethics in agricultural production and finance from an Islamic perspective. It then outlines why Islamic finance is important as it avoids interest and facilitates adherence to religious principles. The document discusses the importance of Islamic agricultural finance in covering production gaps and credit needs. It also reviews available Islamic agricultural finance products in Africa like Murabaha, Salam, and Ijarah. The document notes limiting factors such as a lack of Islamic banks and skills, but expresses optimism for the future outlook if efforts are made to strengthen the sector through strategies, investment, and cooperation across Africa.

1. Religiosity and threshold effect in social and financial
performance of microfinance institutions
Mohammad Ashraful Mobin

2. PRESENTED BY: MR. JAMIL HASSAN
MANAGING DIRECTOR/CEO
TIJARAH MFB LIMITED
BAUCHI, NIGERIA
AT: THE 6TH GLOBAL ISLAMIC MICROFINANCE FORUM – NAIROBI, KENYA
8-9TH NOVEMBER, 2016
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ISLAMIC AGRICULTURE FINANCE: AN IDEAL MECHANISM TO FULFILL THE ALL CROPS/FARMER NEEDS

3. OUTLINE:
 Introduction
 Why Islamic Finance
 Importance of Islamic Agriculture Finance
 Critical Areas in Agric Financing
 Availability of Islamic Agriculture Finance in Africa
 Islamic Agriculture Finance Product Offering
 Limiting Factors
 Future Outlook
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4. Introduction
“There is none amongst the Muslims who plants a tree or
sows seeds, and then a bird, or a person or an animal
eats from it, but is regarded as a charitable gift from
him.” --- Al Hadith narrated by Anas bin Malik (ra).
The need for enhanced ethics in the pursuit of agricultural
production is fundamental to ensuring the full
participation of Muslim farmers. Ethics, in the
provision of finance, land and human capital, would be
essential to the long-term success of the global effort
towards sustainable agriculture.
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5. Why Islamic Finance
It addresses the ethical problems
associated with interest
It facilitates adherence to the divine call
It makes for better profits
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6. Importance of Islamic Agriculture Finance
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Agricultural credit contributes to the development of
agriculture in 3 basic ways; cover input/output gaps in
production, credit rationing by banks due to imposition
of ceiling on return from agric loans by government,
augment inadequate farm savings. However, the dearth
of financial products that are in tandem with the
religious and social beliefs of the average Muslim farmer,
have precluded financial inclusion in not only agric, but
all facets of the rural economy of especially, Muslim
majority countries. While agricultural finance contributes
to the efficient use of factors of production and farm
investment in the agric sector, Islamic agriculture finance
could revolutionize the agric sector and guarantee
sustainable growth of the rural economy.

7. Critical Areas of Islamic Agriculture Finance
.Production
. Storage
. Processing
. Marketing
.Research and Development
.Bio-Fuel Development
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8. Availability of Islamic Agric Culture Finance in Africa
Many African countries practice some form of
Islamic agric finance; however, Sudan has the
most comprehensive Islamic Agric Finance
practice. Egypt, Ethiopia, Kenya, South Africa,
Gambia, Tunisia, Algeria, Tchad and Nigeria,
have demonstrated increasing commitment
and a growing appetite. Salaam and
Murabaha are the most active modes at the
moment.
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9. Islamic Agriculture Finance Product Offering
91
Murabaha A contract of sale where the sellerdiscloses the cost of goods and his profit, could
be used to purchase inputs in crop production
Salam a sale contract where the seller receives payment now for the supply of specificgoods
to the buyer at agreed future date, could be used to finance farming overhead and
augment working capital
Ijarah Is a contractwhere the owner of asset other than consumables,transfers its usufruct to
another person at an agreed rental for an agreed period, useful in financing farm
mechanizationor transportation
Istisna’a A contract of sale at an agreed price where the buyer places an order to manufacture,
assembleor constructthe agreed assetto be delivered in future, it could be to provide
farm infrastructure
Diminishing
Musharakah
A partnership where profits are shared as per agreed ratio and lossesare shared in the
proportion of capitalor investment,also for financing farm infrastructureand
machinery
Musawamah A sale based on bargain without reference to the originalcost of the asset
Musaqa’at A jointventure contract akin to Mudarabah, but only involvesinvestmentin economic

10. Limiting Factors to Islamic Agriculture Finance
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Limited number of Islamic banks and Takaful
operators
Fewer products on offer within the region
Large numbers of excluded Muslim populations
Difficulty in attracting foreign investment to the
region
Pervasive poverty amid high corruption perception
Inadequate operational, managerial and
jurisprudential skills

11. Future Outlook
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Need for a continental IBF strategy for Africa through sub-
regional initiatives
Focus on peculiar strengths of sub-regions and territories
Massive investment in the areas of enlightenment, advocacy and
capacity building
Deliberate effort at breaking barriers to foreign participation
Encourage, strengthen and deepen savings culture to build local
capital on the long-run
Improve local legislation to remove barriers to the entrenchment
of IBF in Africa
Encourage frequent engagement to facilitate convergence and
standardization.

12. THANK YOU
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13. AlHuda CIBE FZ LLE - U.A.E
P: + 971 56 9286664, + 971 55 938 99 00
AlHuda Center of Islamic Banking & Economics - Pakistan
Ph: (92-42) 35913096 - 98, Fax: (92-42) 35913056
Email: info@alhudacibe.com Website: www.alhudacibe.com