In Muslim communities in Mindanao, PEF blazed the trail for Shari’ah-compliant Islamic financing, a culturally-responsive financing, which follows tenets of the Islamic moral and religious laws collectively called the Shari’ah. PEF started with a pilot project in 2012 and went on to projects with three community organizations in 2013 to provide Shari’ah-compliant financing to micro-entrepreneurs, corn and seaweed farmers.
To extend Shari’ah-compliant financing to more communities with the right knowledge, system and capable staffing, PEF supported capacity-building of Mindanao partners and its own staff, through a learning immersion program to the Baitul Maal wa Tamwil (BMT), in Indonesia, where they studied the foundations and the basics of Shari’ah-compliant financing operations including customer service orientation, contracting, internal control and risk management, and insurance.
PEF, moreover, worked with the Al-Qalam Institute (AQI) of Ateneo de Davao University to help set up the Shari’ah Council that will guide the implementation of Shari’ah-compliant financing projects. The Shari’ah Council’s role is to define the fatwa (a learned or legal opinion by a Muslim scholar-leader) that will guide the SE partners in their financing services. The Cordaid, an international development financing organization, is PEF’s strategic investment partner in this program.
The Shari’ah-compliant Islamic financing offers a culturally sensitive financing model for the Muslim communities in conflict-worn Mindanao. PEF and its partner, Al-Qalam Institute, have facilitated capacity-building, organizational development and knowledge-sharing for on-the-ground social development partners and have set them with firm footing on the road to self-reliance and an enduring peace.