Contact:
Jeanette Thomas,
jthomas1@cgap.org
+1 202 744-4829

February 15, 2011- Al Amal Microfinance Bank of Yemen has been awarded US$104,000 under the Islamic Microfinance Challenge 2010, a partnership launched to encourage the reach of Islamic financial services to micro-entrepreneurs.

CGAP, Deutsche Bank, Grameen-Jameel Pan Arab Microfinance, and Islamic Development Bank partnered to sponsor this global competition to uncover viable business models that provide microfinance products compatible with Islamic law, or Shariah. Sponsors received over 130 applications from 43 countries for this competition. Applicants included Islamic and conventional microfinance institutions (MFIs), multi-sector non-governmental organizations (NGOs), consultants, and academics.

A significant portion of the 2.7 billion people without access to finance often refuse financial products that do not conform to Islamic law, and are therefore at an even greater disadvantage than other low-income individuals seeking financing to fund their micro-businesses.

“The response to the Islamic Microfinance Challenge has been astonishing,” said Julia Assaad, General Manager of Grameen-Jameel Pan Arab Microfinance. “There is great demand for Islamic financing and a lot of enthusiasm among financial groups globally in meeting this demand. We are heartened by both the commitment and innovation we saw from applicants. We hope to see Islamic microfinance flourish in reaching low-income households.”

Al Amal Microfinance Bank is the first microfinance bank in the Arab world to offer only Shariah-compliant products. Operating for just over two years, the bank has 15,000 active borrowers and 20,000 savers, and has already captured over 25 percent of the Yemeni microfinance market. The bank’s menu of Islamic microfinance services include group and individual financing, project, corporate, and investment financing, savings, investment funds, and insurance.

Al Amal’s proposal for the competition was to pilot an Islamic leasing product. The bank plans to self-fund its leasing product by relying on its Islamic investment funds product. It expects to reach operational and financial sustainability by 2012. Al Amal will be recognized and awarded its US$104,000 prize funds during the annual Sanabel Conference in June.

“In its short life, Al Amal Microfinance Bank has already distinguished itself as a pioneering institution of Islamic microfinance,” said Henry Azzam, Deutsche Bank’s Chairman for the Middle East and North Africa. “Al Amal has found creative solutions to self-finance its banking activities and has demonstrated that micro-entrepreneurs can be reached with diverse Islamic finance tools on a large scale.”

The judges also named four runners-up, Tameer Microfinance Bank (Pakistan), Tanzania ecoVolunteerism (Tanzania), Bina Insan Sejahtera Mandiri-BISMA (Indonesia), and Center for Women’s Cooperative Development-CWCD (Pakistan). “Congratulations to these runners-up for submitting business ideas which strongly meet the combined criteria of sustainability, scalability, and innovation,” says Rabih Mattar, Microfinance Team Leader at the Islamic Development Bank. “These applicants have developed interesting ideas to cater to their local markets while remaining committed to Shariah principles. We look forward to hearing about their future pursuits.”

Sponsors of the Islamic Microfinance Challenge hope this competition serves as an impetus for deeper exploration of ways to serve the market. “Ultimately,” says Mohammed Khaled, the Middle East and North Africa representative at CGAP, “the conclusion of the Challenge marks not the end, but the beginning of a collaborative process to build this sector—as we develop business models, it is also critical that we develop training tools, performance ratios, and reporting standards for common use. Practitioners need to have an honest exchange of ideas on what works and what does not, while donors must encourage innovation by investing in new pilot projects.”

CGAP is an independent policy and research center dedicated to advancing financial access for the world's poor. It is supported by over 30 development agencies and private foundations who share a common mission to alleviate poverty. Housed at the World Bank, CGAP provides market intelligence, promotes standards, develops innovative solutions and offers advisory services to governments, microfinance providers, donors, and investors. More at http://www.cgap.org

Deutsche Bank is a leading global investment bank with a strong private clients franchise. A leader in Germany and Europe, the bank is continuously growing in North America, Asia and key emerging markets. With more than 100,000 employees in 74 countries, Deutsche Bank offers unparalleled financial services throughout the world. The bank competes to be the leading global provider of financial solutions for demanding clients creating exceptional value for its shareholders and people. http://www.db.com/

Grameen-Jameel was established in 2003 and incorporated in 2007 as a joint venture between Grameen Foundation and ALJ Foundation, a subsidiary of Abdul Latif Jameel Group. The company is the first social business in the Middle East and North Africa (MENA), focusing to alleviate poverty in the region through forming strategic partnerships with microfinance institutions (MFI) by providing financial support and technical assistance to help scale the microfinance sector. http://www.grameen-jameel.com/

Islamic Development Bank is an international financial institution which formally began operations on October 20, 1975. The purpose of the Bank is to foster the economic development and social progress of its (56) member countries, and Muslim communities in non-member countries, in accordance with the principles of Islamic Law. Since its inception, the IDB Group has provided project and trade financing for an amount of approximately US$ 64 billion. http://www.isdb.org