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Khartoum, Sudan, 14 December, 2015: Sudan maintains one of the few wholly Islamic financial systems that also includes an extensive microfinance sector to present as a model for other African countries which are seeking to increase the share of Islamic finance in their economies in part to promote broad-based, inclusive economic development. The 2ndInternational Forum on Islamic finance (IFIF 2016) is an ambitious initiative seeking to address the fundamental question of how growth of Islamic finance in the African continent can be directed in a way to grow the bottom line, but also to support measurable social impact. IFIF is an innovative initiative by Middle East Global Advisors, an intelligence platform serving frontier & emerging markets, and the Bank of Khartoum, one of Africa’s largest lender and microfinance pioneer. Sudan, unlike other markets where Islamic banking exists today, Islamic banks must have microfinance units, a structure that can serve as a model for effectively expanding the social impact activities of Islamic banks.
Microfinance and wealth redistributive instruments
IFIF will take stock of how to improve the impact from the multitude of tools that can expand the social impact of Islamic finance and fully realize the industry’s true value proposition of benefiting society. These include awqaf, zakat, sadakah, qard al-hasan and other Islamic finance contracts. In doing so, the forum will debate how we can institutionalize the application of these instruments by involving the major Islamic finance players, clearly defining the framework for Cash Waqf without losing the charitable element. An emerging view is that the risk-sharing nature of many Islamic finance products can contribute to financial stability as well as providing individuals and businesses with a more equitable form of finance. Commenting on the how to bring these benefits to a wider segment of society, Fadi Salim Al Faqih, CEO of Bank of Khartoum said: “Islamic microfinance can complement the benefit of wealth distribution charitable instruments to bring the benefits of Islamic finance to not only affluent customers but also middle- and low-income people. This is important not just for expanding the industry’s customer base but also for the social mission embedded in Islamic finance”
Harnessing innovation for social impact It is becoming increasingly apparent that financial innovation is no longer just the preserve of the banking sector. Indeed, the innovation frontier is being shifted out much more in the technological side of the financial business that some banks are scrambling to keep on top of the latest technology. For those banks that are on the technological frontier, it is offering a new more cost effective way to reach customers. As such, it is becoming increasingly possible to broaden the market for Islamic banks from the wealthy and middle class down to the lower income segments of the population. Whether they are entrepreneurs seeking microfinance for their business, individuals without physical access to a branch being able to engage through mobile banking including mobile payment systems, or bringing SMEs into the mainstream financial system - inclusion is a way to build a market that is already here but is not being served by Islamic banks today. There is a unique opportunity to bring FinTech and Mobile payments to the unbanked populations in Africa where pioneers like MPESA have introduced the first generation of mobile payments. A major discussion point at IFIF is the pressing need for Islamic financial institutions to adopt these technologies where they don’t already and to build on them. The new financial technology will not just replace tasks performed manually as they have in the past. It will require forward thinking leadership to identify ways that technology can be embedded to not only reduce costs but become integrated in driving the value proposition to better serve customers. IFIF 2016 will take place on 9 and 10 February 2016 at the Al Salam Rotana Hotel, Khartoum. To learn more about the forum, please visit www.IFIF2016.com
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