Experiments in Islamic Microfinance
By Mohamed El-Komi, Assistant Professor of Economics, American University in Cairo
Microfinance has been identified as an important tool in increasing the productivity of the poor and in aiding economic development in Africa. However, a large proportion of the poor are practicing Muslims, and are thus unable to take advantage of traditional microfinance contracts which involve the payment of interest. A recent paper examines islamic-compliant microfinance contracts, including those based on profit-and-loss sharing (PLS), and their compliance rates compared to interest-bearing contracts.