By Dr. Badr El Din A. Ibrahim
ABSTRACT
The purpose of this paper is to review the nature and practices of Islamic microfinance, and to investigate their challenges and future prospects. The methodology of this paper consists of critical review and examination of existing literature and experiences. The results indicate that Islamic microfinance witnessed few achievements. The experiments in the Islamic microfinance, with some exceptions, were based on a number of models and mechanisms and were not integrated into the financial system as same are undergoing the trials phase, being set up by donors or religious groups and have yet to develop like their conventional counterparts. For policy perspective the paper supports the governmental regulatory framework, and also the current efforts of the Mix Market Database on microfinance. Moreover, granting encouraging incentives, creation of sustainable model, expanding the use of technology services, ensuring the transparency of the Islamic microfinance institutions, broadening the products and guarantees basis, and creating qualified cadres are among the major polices recommended.
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