The microfinance Roundtable on the regulatory and
Supervision onI slamic Microfinance: IRTI & SUST, 18-19/2014
Dr. Abd elrahman Elzahi Saaid
Senior Economist, IRTI/IDB
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Islamic microfinance is one of the essential
unconventional branch of lending that uses by Islamic
finacial institutions to mitigate the negative impact of the
extreme poverty.
Since finacing micro-borrowers and extremely poor
projects are highly risk, the need for efficient and
effective regulatory and supervision of microfinance
frame work is very important.
This research investigated Sudnese Islamic microfiance
regulatory and supervisory framewark.
The results of this research gives stromg policy
implications for both government of Sudan to carry on
some improvement in their experience of supervsion and
the users of Islamic microfiance
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Recently Sudanese economic has weakened.
The country economic growth was totally depending on
exporting crude oil
The country used to depend on mainly on agricultures
and livestock before the oil.
The game is over. Sudan loosed 75% of its oil revenue
due to the secession of the South in 2010.
In addition to that the internal and regional conflicts,
heightened political tensions, are continuing to effect the
economic growth which eventually leads to the high
unemployment and disadvantages among most of the
citizens.
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Sudan dominated the political instability from the
independence in 1956. Since then the country exposure
to three military cops.
All the civil governments that attempt to rule the used to
be the largest country in Africa were overthrown in an
overnight by the military even before implementing their
agendas.
Other factor contributed to the unemployment and
poverty is longest civil wars and the internal conflicts
across the regions.
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The Sudan has a histrory of high inflations
and strcutre economic disorder particularly
during the 1980th and the 1990th.
The country also among the poor and low
income and highly indebted countries.
Sudan economics growth was started to
improve shortly after had started exporting
the crude oil in 1999.
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Sudan government who aware of the dilemma
Has taken immediate policy priorities including
micro-financing business model
The country has complete transform the all the
conomics into Islamic system
Islamic microfinance is one of the essential
unconventional branches of lending
that use by Islamic financial institutions to
mitigate the negative impact of the extreme
poverty and unemployment
Sudan is the pioneer country that adopts Islamic
mirofinance among other Muslims countires.
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The Government of Sudan aware of the
challenges of the chronic poverty
Since 1989 the government has attempted many
initiatives to reduce it
Islamic financial infrastructure has witnessed
tremendous growth and improvement since
1989.
Economic Islamized
Islamic Banks increased
made enabling environment for Islamic
microfinance and its supportive intuitions such
as Waqf and Zakah to play their vital roles in
helping the poor in Sudan
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The new copital injected from the foreign
banks, might improve banking technology in
Sudan & Enhence skills and improving banks
outreach
More than three microfinance institutions
Central Bank of Sudan and the Ministry of
Finance and National Economy were jointly
established a National Agency for Insurance
and Finance of Export
Zakah collections and Waqf system was
revived to play their designed role effectively
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The establishment of the Islamic financial
institutions
followed adaptation of the Shariah law all
over the country in September 1984
availability of the natural resources such as
agriculture land and livestock in the areas of
disadvantages people
availability of the natural resources such as
agriculture land and livestock in the areas of
disadvantages people
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Despite of the favorable Islamic financial
system development in Sudan, Islamic
microfinance is not risk-free
Given the high rate of the poverty and the
recent separation of the rich South part of
Sudan, Sudanese economic has encountered
sever instability
high demand for Shari’ah fund due to the
uprising civil wars that lead to more
disadvantages on the countryside areas
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limited donors fund,
inability of the government to provide
sustainable micro-financing
The nature of Sudanese Islamic microfinance
model is involving more players, need to coordinate between them-selves.
an argent need for establishing effective and
electronic networking
Sudan is an extended country with wide and
undeveloped country side areas
weakness of the Sudanese basic
infrastructures
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Another big challenges facing Islamic
microfinance is the high tax.
capacity building need of the beneficiaries
The previous section shows that the Sudanese
government exerted more efforts to build
reseanable Islamic financial infrastures
through complete Islamization of the
economic
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The government was aware of the regulatory and supervision
challenges that might face the implementation of Islamic
microfinace.
the Central Banks of Sudan was empowered to play the role
of the regulatory and supervision for the microfiance in
addition to the orginal madated job.
CBOS role has become not only limited to the designing of
the monetary policies, and prudential regulation and
supervision and promoting the economic growth through
these policies, but also encouraged to play vital role in
developing a comprehensive financial system that include
Islamic microfinance business model.
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The CBOS policies and strageic to implemnt
Microfiance with fully supported by the
donoors. The CBOS and the World banks were
established what was called Sudan Multi
Donor Fund (MTDTF)
The CBOS effectively took this opportunity to
expand the base of the banking services,
prepare policies, control and supervision and
regulations for the development of inclusive
financial system that cater for micro-finance
producer
The Banking Supervision Department of the
CBOS together with a Sudanese consultancy
firm, were a pointed to lead
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Banking Supervision Department established
Micro Finance Unit to cater for promoting
microfinance through banks and non-banks
institutions.
The Micro Finance Unit also reuqired to play the
role of facilitator between Islamic microfiance
providers and government and non-government
technical resources
. Moreover, the Central Bank dirct the the
Sudanese banks to allocate 12%
Despite of the supportive environment from the
Government and its financial institutions,
polictical will as well as the multilatral institions
only moderate success were achieved
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The World Bank report No. IS10549 on April,
2013, the Sudanese microfince project made
moderate satisfactory progress towards
achieivng the proposed objectives
The amin development indicators used by the
world bank to measure the project were the
direct number of benficiaries, porfolio at risk
and the number of operating microfiance
providers
The number of benficiaries outreach during
the period from 2007 to 2013 were 490,000
devided between the comercial banks
(302000) and the microfiance providers
(189,000).
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The assessed the does not refer to the areas
of disadvanges people
Poverty in Sudan is deeply found in the rural
and paricularlt in the conflict fragile areas.
To achiece more accurate results weather the
model of any Microfinace has achieved its
objective or not, one might to test the
aspects of outreach
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This is a test encompasses both poverty to
microfiance and self-sustainablity approach
to assess the social benefits of microfinace
based on the aspects of the outreach
poverty approach that measure how well the
needs of the targeting poors are fullfil in the
short-term
self-sustainability approach which targeting
less-poor people (low-income worker) in
helping them in achieving long-run economic
sustainablity.
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The sudanese islamic microfiance model focus on reducing
poverty of the people on the rural and marginalized areas
as well as urban working poor (both)
The sustainabilty approach consists of:
Worth outreach to clients,
Cost outreach to clients, and
Breadth of outreach,
Length of outreach and
The scope of outreach
While poverty aproach to microfiance measures the depth
of outreach which is added vaue given to the clients in
relation to the goals of their society.
The depth outreach microfiance will check the community
ppriority to develop and solve certain problem
Thank
you