The Islamic MicroFinance Potential

The paper gives an introduction and brief history of microfinance, including Muhammad Yunus’s Grameen Bank. Then, several Islamic microfinance schemes are posited such as mudaraba, musharaka, murabaha, ijara, and qard hasan – each one with its own strengths and weaknesses. Thus far, Islamic microfinancing schemes have not been adopted by Muslim nations. The author cautions, however, that Islamic microfinancial schemes will require specialized skills to manage properly, in order to place them into effect to directly meet the needs of Muslim micro-entrepreneurs.