KHARTOUM, August 5, 2014 – Where once there was barren land, the Bank of Khartoum invests in greenhouse projects and collaborates with cooperatives made up of Sudan’s poor, unemployed and recent graduates to farm new crops and create opportunities for cooperative members. For the Bank of Khartoum, offering Sharia-compliant financial products is a central element as part of these projects to reach small-scale farmers.
Sharia-compliant banking offers a profit-sharing model for its members, as it prohibits the acceptance of specific interest or fees for loans or money. This method of banking has made significant changes in the lives of its cooperative members. One man has used his farming profits so far to purchase three goats, a refrigerator, and a television for his family. A woman farmer made enough of a profit through her farming cooperative that she was able to contribute with her family to her wedding.
“Islamic banking is about how much you can contribute to the market, rather than being just an intermediary and taking a cut from the profit,” says Fadi Salim Al Faqih, CEO of the Bank of Khartoum.
For such Sharia-compliant products serving the poor, the Bank of Khartoum was recognized as one of three finalists in the Islamic Microfinance Challenge. The Consultative Group to Assist the Poor, CGAP, partnered with the Islamic Development Bank, Al Baraka Banking Group, and Triple Jump to sponsor this global contest aimed at spurring innovation and scaling up Islamic financial products. The idea behind the Islamic Microfinance Challenge is to encourage microfinance providers to broaden their range of Islamic microfinance products and, in doing so, find new ways to serve Muslim microfinance clients.
With an estimated 650 million Muslims living on less than $2 a day, examples like the Bank of Khartoum show that Islamic microfinance can play a key role in bringing the poor into the financial mainstream.
See videos of all three finalists of the Islamic Microfinance Challenge.