MICROCAPITAL BRIEF: AlHuda Center for Islamic Banking and Economics, VisionFund AzerCredit to Conduct Market Research in Advance of Possible Launch of Islamic Microfinance in Azerbaijan

The nonprofit AlHuda Center for Islamic Banking and Economics (CIBE) has signed an agreement with VisionFund AzerCredit, a non-bank financial institution in Azerbaijan and subsidiary of US-based NGO VisionFund International, to conduct market research in urban areas of Azerbaijan regarding the demand for Islamic microfinance. Islamic microfinance models comply with Islamic law, the Shariah, which prohibits interest payments and fees, by way of concepts such as joint venture and profit sharing.

For the year 2011, VisionFund AzerCredit reported to the US-based nonprofit Microfinance Information Exchange (MIX) that it does not accept deposits, but that it has total assets of USD 46.4 million, a gross loan portfolio of USD 41.5 million, approximately 47,200 active borrowers, a return on assets (ROA) of 5.66 percent and a return on equity (ROE) of 36.8 percent. As of 2013, VisionFund AzerCredit has a network of 56 branches in the country. VisionFund International operates a network of microfinance institutions in 36 countries as a subsidiary of US-based NGO World Vision, which brought in USD 2.8 billion in cash and in-kind gifts during 2011.

For 2011, 27 microfinance institutions (MFIs) in Azerbaijan reported to the US-based nonprofit Microfinance Information Exchange (MIX) total loans of USD 1.1 billion, approximately 386,000 active borrowers, deposits of USD 500 million and approximately 144,000 depositors. As of 2013, there are ten institutions providing Islamic finance services in Azerbaijan [1].

By Brendan Millan, Research Associate

About AlHuda Center for Islamic Banking and Economics (CIBE)

Located in Pakistan, AlHuda CIBE is a nonprofit organization that specializes in research, training, consulting in the Islamic microfinance industry. The organization also provides technical assistance in the area of Shariah law, organizes distance learning programs and publishes a monthly newsletter on Islamic microfinance. Financial information for Al Huda CIBE is not available.

About VisionFund AzerCredit

Founded in 1996, VisionFund AzerCredit, a subsidiary of VisionFund International, is a non-bank financial institution in Azerbaijan providing individual and group loans and grants to poor people through 56 branches. For the year 2011, VisionFund AzerCredit reported to the US-based nonprofit Microfinance Information Exchange (MIX) that it does not accept deposits, but that it has total assets of USD 46.4 million, a gross loan portfolio of USD 41.5 million, approximately 47,200 active borrowers, return on assets (ROA) of 5.66 percent and return on equity (ROE) of 36.8 percent.

About VisionFund International

VisionFund, a US-based nonprofit organization, offers financial services to families living in poverty in the developing world through a network of microfinance institutions in 36 countries in Eurasia, Africa, Latin America and the Caribbean. Its services include small loans and business training and support. VisionFund is part of US-based World Vision International, a Christian relief, development and advocacy organization. As of 2013, VisionFund has a loan portfolio of USD 390 million disbursed to 830,000 small businesses.

About World Vision International

World Vision is a US-based Christian humanitarian organization dedicated to working with children, families and their communities worldwide to reach their full potential by tackling the causes of poverty and injustice. World Vision serves poor people worldwide regardless of religion, race, ethnicity or gender. The organization operates microfinance institutions through its subsidiary VisionFund International. World Vision raised USD 2.79 billion in cash and in-kind gifts during 2011.

Sources and Additional Resources:

[1] AlHuda Centre of Islamic Banking and Economics: “Press Release: AlHuda CIBE will conduct a research study for Islamic Microfinance in Azerbaijan”, http://www.alhudacibe.com/pressrelease10.php

MicroCapital.org story, November 2, 2012, “Absolute Dual Return-Vision Microfinance Fund Invests $3.2m in FINCA Russia, AzerCredit of Azerbaijan, Bank Constanta of Georgia, Mikrofin of Bosnia and Herzegovina”, http://www.microcapital.org/microcapital-brief-absolute-dual-return-vision-microfinance-fund-invests-3-2m-in-finca-russia-azercredit-of-azerbaijan-bank-constanta-of-georgia-mikrofin-of-bosnia-and-herzegovina/

MicroCapital.org story, July 26, 2012, “AlHuda Centre of Islamic Banking and Economics of Pakistan Creates Centre of Excellence in Islamic Microfinance”, http://www.microcapital.org/microcapital-brief-alhuda-centre-of-islamic-banking-and-economics-of-pakistan-creates-centre-of-excellence-in-islamic-microfinance/

MicroCapital.org story, June 18, 2012, “AlHuda CIBE: Supply of Islamic Bankers Falls Short of Demand”, http://www.microcapital.org/microcapital-brief-alhuda-cibe-supply-of-islamic-bankers-falls-short-of-demand/

MicroCapital.org story, December 16, 2010, “AlHuda CIBE, NAYMET Sign MoU to Develop Islamic Microfinance Products in Pakistan”, http://www.microcapital.org/microcapital-brief-alhuda-cibe-naymet-sign-mou-to-develop-islamic-microfinance-products-in-pakistan-2/

MicroCapital Universe Profile: AlHuda Center for Islamic Banking and Economics (CIBE), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=AlHuda+CIBE

MicroCapital Universe Profile: VisionFund AzerCredit, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=VF+AzerCredit+LLC

MicroCapital Universe Profile: VisionFund International, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=VisionFund+International

MicroCapital Universe Profile: World Vision International, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=World+Vision

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