KUALA LUMPUR, April 26 (Bernama) — Islamic microfinance represents an opportunity for Islamic finance to develop ethical yet profitable products, says Prime Minister Datuk Seri Najib Tun Razak.
He said at the same time, it can support social entrepreneurial activities, while investing over the long-term in social funds.
Najib, who is also the Finance Minister, said Islamic microfinance was about financial inclusion, entrepreneurship and risk sharing through partnership finance, an approach that conventional microfinance lacked.
He said this in his keynote address at the Global Donors Forum 2012 here Thursday.
“In recent years, some microfinance institutions have stepped in to service low-income Muslim customers and meet their need for products consistent with Islamic financial principles.
“This has led to the emergence of Islamic microfinance as a new market niche and it is now for us to build on it,” he added.
He said in spite of significant progress across all fronts, Islamic financial institutions have yet to succeed in making financial services widely accessible to the poor, in a move that could drive poverty down dramatically across the world.
Najib said at the heart of Islamic finance is the genuine philanthropic spirit that pervades both its giving and business practices, while holding the potential to transform the lives of billions of the poorest people globally.
“Quite simply, financial innovations geared towards empowering not dominating people, can revolutionise our world. So, the ultimate focus of Islamic finance should be its core value proposition and not just furthering assets,” he added.
He said governments alone cannot deliver the far-reaching social change that is needed, as it requires support from both civil society and the private sector, with Islamic finance having a special role to play in this regard.
Najib, the acting Minister for Women, Family and Community Development, said in this period of economic recovery, the social sector support for projects is indispensable in countering the adverse impact of the global crisis on the poor.
“As part of the process, I want to see Malaysia transform its faith-based giving into a robust agent of social change, for only an efficient zakat management system coupled to a strategic distribution approach, seems to be the right vehicle for converting recipients into givers,” he added.
The prime minister said the zakat and awqaf management system in Malaysia is subject to continuous improvement, and there is still much more that can be done in this regard.
“I am delighted to see this forum examining zakat, awqaf and Islamic microfinance as potential vehicles for advancing impact philanthropy and investing in the Muslim world,” he added.
The Global Donors Forum is an annual convening of the World Congress of Muslim Philanthropists to promote effective giving and forge strategic partnerships for high-impact social investment.
Najib said Muslim philanthropy faces a challenge, that is to build new models, while simultaneously refining the old and allying itself firmly with the developing era of social awakening and progress.
He said longstanding conflicts and the slow creep of extremism has created opportunities for some to question the very nature of the religion and portray it in a negative and frequently hostile light.
“Sadly, even Muslim philanthropy has not escaped suspicion, and this pressure and negative publicity, has at times limited its ability to face down global challenges while discouraging new donors from giving as well as making it harder for existing donors to give.
“It is time to re-examine the way we give, to blaze a trail towards high-impact philanthropy, while facilitating strategic partnerships among like-minded donors,” he added.
He also hoped the newly set-up Global Movement of Moderates Foundation can play an important part in fostering tolerance, understanding and at the same time, encourage a broader culture of giving.
Source : Bernama