Islamic microfinance in Somalia: challenges, opportunities, and practices

• Main Authors: Adam, Abdirahman Abdillahi Farah, Saleh, Abdulmajid Obaid Hasan, Sharofiddin, Ashurov
• Format: Article
• Language: English
• Published: Usuli Faqih Research Centre PLT. 2024
• Subjects: BPH Islamic Economics
• Online Access: http://irep.iium.edu.my/113336/7/113336_Islamic%20microfinance%20in%20Somalia.pdf; http://irep.iium.edu.my/113336/; https://al-qanatir.com/aq/article/view/781

Somalia's pervasive financial exclusion (16% with formal accounts) caused by regulatory gaps, limited access, and low financial literacy compels investigation into Islamic microfinance as a potential solution. This research, employing an analytical descriptive approach to existing literature, aims to identify and analyze the challenges, opportunities, and practices of implementing Islamic microfinance in this politically unstable environment. While success stories like remittance companies converting to Islamic banks suggest promise for poverty reduction and income growth, the broader impact of Islamic microfinance necessitates a comprehensive approach. This study argues that a well-coordinated strategy with favourable legal frameworks, improved access to finance, and enhanced awareness among target communities is crucial. Furthermore, specialized financial products and educational programs are vital to empower Somalis and unlock the transformative potential of Islamic microfinance for poverty alleviation and economic development in Somalia.