MICROCAPITAL BRIEF: Microfinance Institutions (MFIs) Providing Islamic Microfinance Services in Iraq Face Governance Constraints Relating to Shariah Law

T Keyzom Ngodup, co-founder and executive director at Ideas sYnergy, an Iraq-based consulting company, recently reported that there are currently six microfinance institutions (MFIs) providing Islamic microfinance services across the Anbar, Kirkuk, Ninewa and Tikrit regions of Iraq. One of these is Al-Takadum, which operates in the Anbar region, the others are not named.

According to Ms Ngodup, despite the rapid growth of Islamic microfinance in Iraq, it is constrained by the absence of central bank regulation pertaining to Islamic finance. As a result of the lack of regulation, Ms Ngodup states that each Islamic bank has its own Shariah board which leads to inconsistent Shariah compliance.

The six MFIs referenced reportedly serve 7,000 microenterprises, 14 percent of which are owned by women. It has also been reported that the aggregate Islamic microfinance portfolio grew at a rate of 68 percent in 2010, compared to the general microfinance industry growth rate of 36 percent [1].

As of February 2011, the Iraq Microfinance Industry network reports 12 members, including Al-Takadum, that report aggregate loans outstanding of USD 109 million [2].

By Medha Ravi, Research Associate

About Al-Takadum: Established in 2008 in Iraq, Al-Takadum is a nongovernmental organization (NGO) that provides Islamic microfinance services to micro- and small enterprises (MSEs) and individuals. Al-Takadum offers individual loans, group loans, home improvement loans and agricultural loans. Al-Takadum does not report to the US-based nonprofit Microfinance Information Exchange (MIX) and no other financial information is available on the organization.

Source and Resources:

[1] Iraq-Business News article , “Unlikely MSME Financiers Provide Islamic Microfinance for the Poor”, http://www.iraq-businessnews.com/2011/04/20/unlikely-msme-financiers-provide-islamic-microfinance-for-the-poor/

[2] Iraq Microfinance Industry, http://www.imfi.org/

MicroCapital.org story, January 17, 2008, “MICROCAPITAL STORY: Iraqi Microfinance Institution (MFI) Al-Takadum Opens Second Office in Fallujah”, https://www.microcapital.org/microcapital-story-iraqi-microfinance-institution-mfi-al-takadum-opens-second-office-in-fallujah/

MicroCapital.org story, September 13, 2010, “MICROCAPITAL BRIEF: Iraqi Microfinance Institutions (MFIs) Agree to Code of Ethics at Inaugural Iraqi Microfinance Industry Network Meeting”,  https://www.microcapital.org/microcapital-brief-iraqi-microfinance-institutions-mfis-agree-to-code-of-ethics-at-inaugural-iraqi-microfinance-industry-network-meeting-2/

MicroCapital Microfinance Universe Profile: Al-Takadum, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Al-Takadum

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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