Partnership (Musharaka): A New Option for Financing Small Enterprises?

The importance and magnitude of small and micro-enterprises at a national as well as a multi-national level are discussed. It touches on the financing problems of this sector and proceeds to provide examples of micro-enterprises in Sudan that have dealt with this issue. Furthermore, the main Islamic financing methods that have been adopted in Sudan, such as murabaha, mudaraba and musharaka are highlighted. The article discusses the suitability of each method of financing for small enterprises and goes into further detail with regards to musharaka as it outlines the pros and cons of this method. It concludes by suggesting modifications to overcome musharaka’s shortcomings.