Learning Shari’a – compliant microfinance
Shari’a-compliant financing follows the doctrines of the Islamic moral and religious laws collectively called the Shari’a.
A learning tour on Shari’a Financing was held in Jakarta and Yogyakarta, Indonesia on April 22-30, 2018 Indonesia to learn solutions and approaches in providing sustainable livelihood and services to rural and poor Muslim communities in Mindanao.
Representatives from Peace and Equity Foundation (PEF) headed by Roberto Calingo, Mindanao microfinance institutions (MFI) partners of PEF, Center for Agriculture and Rural Development Mutually Reinforcing Institutions, and Bangsamoro Development Agency attended the five-day study program.
Dompet Dhuafa (DD), a 2016 Ramon Magsaysay Awardee for redefining the landscape of zakat-based philanthropy in Indonesia, facilitated the visits to cooperative sites and lending operations that are partners of DD. Apart from the learning tour, the team was also shown how DD’s social enterprise model of Shari’a-based microfinance strengthened Islamic cooperatives and microfinance systems in Indonesia such as the approach to distribute funds collected (e.g. zakat) in a sustainable way and improve access for the poor.
Since 2012, PEF invested PHP 20.5 million in Mudarabah (profit sharing) schemes with the current Shari’a partners and around PHP 2.0 million in grants for capacity-building, organizational development and knowledge-sharing for on-the-ground social development partners in Mindanao.
Although PEF and Shari’a partners have extended Shari’a-compliant financing to more communities with the right knowledge, system and capable staffing in Muslim Mindanao, there’s still a need to replicate and develop the existing Shari’a programs and to expand and sustain the outreach.
PEF hopes that through the learning program, MFI partners and other stakeholders in the Shari’a financing ecosystem will be equipped with ample skills and have a deeper understanding on building their own Shari’a programs.