Yemen’s Al-Qutaibi Islamic Bank for Microfinance recently launched its Vendor Finance Department to support farms and other small and medium-sized enterprises (SMEs) in acquiring technology to produce renewable energy as well as “climate-smart” farming tools such as “solar-fed irrigation systems, greenhouses, and tunnel farming tools.” The bank did this with support from the US Agency for International Development (AID) Economic Recovery and Livelihoods Program (ERLP).
Al-Qutaibi’s Deputy General Manager for Finance and Investment Affairs, Ayid Al-Momari, said, “With the acute spike in oil prices, green finance has become a necessity to support the agricultural sector…. In just three days after this launch, we have opened 1,200 new customer accounts – 25 businesses and the rest individual.”
Al-Qutaibi provides financial services in accordance with Shariah principles, which disallow charging interest. For example, in the case of murabaha, the seller and buyer of an asset agree on a cost plus a set markup for the buyer to pay over time.
Founded in 1961, USAID provides international economic and humanitarian assistance. It is active in areas such as economic growth, agriculture, trade, health, democracy, conflict prevention and humanitarian assistance. As of the financial year 2022, the agency had USD 36 billion in award obligations spanning 16,000 contracts.
By Ben Barba, Research Associate
Sources and Additional Resources
USAID press release
https://www.usaid.gov/yemen/news/mar-02-2023-new-affordable-lending-supports-economic-growth-clean-energy-sme-businesses-and-climate-smart-farmers
Al-Qutaibi homepage
https://qtbbank.com/
USAID homepage
https://www.usaid.gov/
USAID award figures
https://www.usaspending.gov/agency/agency-for-international-development?fy=2023
Previous MicroCapital story on Islamic finance
https://www.microcapital.org/microfinance-event-3rd-cis-islamic-banking-and-finance-forum-march-14-16-2023-tashkent-uzbekistan/
Previous MicroCapital story on murabaha
https://www.microcapital.org/microcapital-brief-bankislami-tpl-life-offering-shariah-compliant-hospitalization-funeral-coverage-for-covid-19-in-pakistan/
Previous MicroCapital story on USAID
https://www.microcapital.org/microcapital-brief-dfc-usaid-african-unions-auda-nepad-partner-to-expand-access-to-finance-for-msmes-in-tanzania-zambia-malawi-nigeria/
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