Re-Thinking Leasing From An Islamic Perspective: the prospects of Islamic micro-leasing for poverty alleviation

Islam prohibits riba’ and prescribes alternative mechanisms for financing that are free from interest, the underlying rationale of this being the emphasis of the shari‘a on business practices that are ethical, moral, fair and aid towards promoting equality in society. The paper opens with a brief discussion of the basic modes of Islamic financing and subsequently carries out an appraisal of the basic principles and concept of leasing from an Islamic perspective. It contemplates how this mode of financing can be employed by Microfinance institutions to enable poor micro-entrepreneurs to gain access to the use of assets which otherwise have been unattainable. The paper examines the critical and vital nexus between the principles of Islamic financing, a micro-leasing model and the basic theory of microfinance whereby collateral-free facilities are provided to the destitute. It aims to establish how this model facilitates borrowers to start up micro-enterprises of their own and eventually