Moro NGO pilots Islamic micro-financing in Socsargen

From the MILF Website (Feb 4): Moro NGO pilots Islamic micro-financing in Socsargen

Kartiyakap, Inc., a Non-Government Organization comprised of Moro peace advocates pilots Shari’a compliant micro-financing in South Cotabato, Sarangani and General Santos City (Socsargen).The financing is geared to increase the income of targetbeneficiaries and to test the viability of profit-sharing or “Islamic” financing in the region and in the country in general.
“The absence of Islamic financing is one of the factors why many Muslim constituents in the country are not able to engage in entrepreneurship or small business.” WahidaAbtahi, President of Katiyakap disclosed.

She added that financing scheme offered by banks and lending firms in the Philippines is “interest-based,” and “therefore it is Haram (forbidden) because it is not complaint with Shari’ah (Islamic jurisprudence),” she explained.

“That is why many Muslims here do not avail the opportunity to become economically stable by starting with small business or any economic activity because the capitalization that is available is interest-based or usurious in nature” she elucidated.

The woman leader saidRibba (Arabic for interest) is “strictly forbidden” in Islam and any Muslim which engages in transaction that involves interest commits amajor sin.

Last year, Katiyakap obtained funding assistance of one million pesos from Peace and Equity Foundation (PEF) as seed capital to operationalize Islamic micro-financing.

PEF is an institution which promotes social enterprise in the Philippines. Some organizations and cooperatives have tapped the foundation for financial assistance. It believes that strengthening the grassroots or ground economy contributes a lot to economic stability of the country.

Abtahi claimed Katiyakap is very lucky being entrusted of such an amount and she considered it a “rare opportunity” for a Muslim organization.

“That is why we are very careful that beneficiaries who borrow or partner with us really have the will to pay back or else if we will end up bankrupt and the trust of funders towards the Muslims shall dwindle,” she revealed.

She further disclosed that some of the beneficiaries comes from their group since they are also in need and they want to make it sure there will high rate of paying back.

Katiyakap implementsMusharakah (profit-sharing), Murabaha (cost-plus or mark-up) and Ijara (rental scheme), business transactions that are allowed in Islam.

Part of the application process is attending seminar on Islamic values, orientation on Islamic financing and passing the screening and interview by the credit committee of Katiyakap. Moreover, the trustworthiness and honesty of the borrowers or partners is checked.

Abtahi said Katiyakap needs to establish good record so that other funding institutions shall trust other Muslim organizations which intend to facilitate Islamic micro-micro-financing to benefit the Muslims constituents.

The organization, which primarily engages in peace advocacy activities in support to the peace process, believes that while waiting for the peace pact to be signed by the government and MILF, stakeholders should also do something to alleviate the Moro communities from poverty.

“We look forward that this micro-financing project will succeed so that it will serve as learning experience for possible replication by any institutions, firms or even by the local government units,” Abtahi said.

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