Islamic Microfinance -Yemen Experience

The author presents the important features of the murabaha, mudaraba and musharaka models of Islamic lending as applicable to microfinance. The presentation suggests that the mudaraba/ musharaka models have limited application and work best when the return on investment (ROI) for a particular loan can be accurately predicted. He indicates that microfinance is constrained in the Arab world because of cultural barriers and problems of accessibility and recommends promoting experiential learning while developing more tools for administering microfinance in order to promote it in the region.