Islamic finance must strengthen its offer to SMEs
The Islamic finance offering for small and medium enterprises (SME) in the Maghreb doesn’t match the demand level, according to a report published by the International Finance Corporation (IFC).The Islamic finance offering for small and medium enterprises (SME) in the Maghreb doesn’t match the demand level, according to a report published by the International Finance Corporation (IFC).
Carried out in nine countries including Egypt, Morocco and Tunisia, the study suggests that 35 per cent of SMEs in the Middle East and North Africa
region won’t use traditional banking and financing systems because they are looking for solutions that are Sharia-compliant.
Only 17 per cent of Islamic banks in the region offer products aimed directly at SMEs, or 19 points less than traditional banks.
At the moment, Islamic finance focuses its offering on large corporations and individuals. However, the report also points out that the regulatory environment is to blame for the lack of Islamic finance products for SMEs.
The IFC estimates that this market represents $13.2 billion, not to mention the many SMEs likely to switch banks once an Islamic finance offering exists.
According to the IFC report, quoted by Gulfbusiness.com, “to tap the underlying potential, Islamic banks need to build capacity and develop Sharia-compliant products to cater to this emerging sector”.