Islamic financing: How it can reduce poverty in Muslim world
LAHORE (APP): Islamic finance is not only an ideal tool of financial inclusion but it also addresses the poverty issue that is increasing in Muslim countries at a rapid pace and consequently, about half of the world's poverty has been confined to Muslims world which is definitely an alarming situation.
Al-Huda Centre of Islamic Banking and Economics (CIBE) Chief Executive Officer Zubair Mughal told APP here Sunday that amalgamation of interest in banking and finance industry is one of the major reasons behind this phenomenon and that's why Muslims hesitate to avail financial or microfinance products and remain excluded from financial access as interest is strictly prohibited in Islam.
"If we want to include these into the financial inclusion, then there is an immediate need to design such a financial product which will be according to the religious and social beliefs of Muslims," he added.
Mughal observed that if Islamic microfinance is not introduced to resolve poverty issues in the Muslim world then world's poverty will increase manifolds. He said that the total population of East Africa is about 157 million, out of which 35 to 40 per cent are Muslim. But unfortunately they are mostly financially excluded due to non-availability of Islamic financial products, he added.
To a question, he said that Islamic microfinance is a system that can be utilised /operated by Muslims or non-Muslims for social development and poverty alleviation. However, for Muslims, it has an extra benefit that it is according to their religious belief, but for non-Muslims it is an ideal mechanism to fulfil their financial needs. He said that poverty did not have any religion but could be addressed through different guidelines of Islam.
The CIBE also stressed the need for creating awareness, knowledge development and sharing the best practices of Islamic banking and finance with local financial market, so that Pakistan's Islamic financial market could be established on solid footing using Shariah and technical expertise.
He said that relevant quarters can approach the CIBE that is a well established name in the Islamic banking and finance industry for research, advisory and capacity building. The Centre, he added, is providing services not only in UAE/Pakistan but all over the world, and so far it served in more than 25 countries for development of Islamic banking and finance.