Heard of Islamic micro-banking? Us neither.
Having worked for Nextbillion and scoured news sources every day for two months, I’ve been surprised at how seldom any Middle-Eastern, BOP-activity makes the news, compared to, say, Bangladesh or Uganda. (Perhaps I am looking in the wrong places? If you know good SME/BOP-related news sites for the Middle East, please let me know!)
Intrigued by this dearth of news, I started digging for MFIs in the Middle East and suddenly remembered that usury is prohibited in Islam. No wonder one hears little about micro-credit in those regions (except for one MFI in Yemen)! And yet…Grameen Bank, which states nothing about conforming to Islamic lending practice, was founded in Bangladesh, a country that is 83% Muslim. Are Islamic usury laws now simply ignored or obsolete?
No. There are obviously international and Islamic banks operating that provide “mudabara,” “murabaha,” and “musharaka”-types of loans and financing. (Both the Bible and Torah prohibit “usury,” but have reinterpreted the term from its original meaning of “all” interest to “excessive” interest.)
It still does not make sense that, during this entire year of microcredit, the United Nations would sidestep the Muslim world rather than develop MFI initiatives compatible with Islamic law. All I found as evidence of the UN having addressed the subject was one short paper, which acknowledges that “Micro Islamic Financial Institutions are not widespread.”
The problem isn’t that there are no well-developed norms for Islamic lending practices. Hop to it.
Next issue: internet connectivity in the Middle East, and why are Iranians such big bloggers?
(Over the next two weeks I intend to update and amend this entry. Please feel free to point out the manifold errors and oversights.)