World Islamic body OIC tabling recommendation to study new microfinancing models for women-run businesses
JAKARTA -The Organisation of Islamic Cooperation (OIC) will be tabling a recommendation to study new microfinancing models at next month’s seventh ministerial conference on the role of women in development in member states.
The recommendation comes from OIC’s Islamic Chamber of Commerce, Industry and Agriculture (ICCIA) that is keen to test new financing models for micro businesses run by Muslim women in member states.
The aim is to find a solution for inadequate financing facilities for female entrepreneurs, Attiya Nawazish Ali, ICCIA Assistant Secretary General told Salaam Gateway during the ICCIA 27th Board of Directors and 60th Financial Committee Meeting on Oct 23 in Jakarta.
Ali said women entrepreneurs in countries of the 57-member OIC use the formal financial sector a lot less than men due to legal and cultural barriers, inadequate legal frameworks, illiteracy, as well as lack of time or physical mobility.
“There is a success story of a family bank established in Sudan with capital of $35 million. The bank provides microfinancing on Shariah terms for start-ups, productive families, women and youth,” Ali told Salaam Gateway.
Sudan’s Family Bank has now expanded with around 40 branches throughout the country.
“It’s clear the ‘one gender fits all’ approach isn’t suitable for the unique characteristics of womenpreneurs,” added Ali.
INDONESIA
Indonesia’s minister of maritime and fishery, Susi Pudjiastuti, said Indonesian entrepreneurs still face barriers getting loans from formal financial institutions. These barriers include higher interest rates compared to loans from friends or family, not having collateral, as well as complex procedures and documents.
Currently, only 17 percent of the more than 86 million Indonesian women in the productive working age range of between 20 and 64 receive loans from the banking sector. The situation is not much different for men of the same demographic, only 18 percent of whom receive loans from the formal sector.
“In the past when I ran my fishery business, I needed an aircraft to deliver live fish, shrimp, and lobster on time because the best price for seafood is when you can sell them alive. It’s almost impossible to deliver the fish from Pangandaran in west Java to Jakarta without an aircraft as it took a day and the mortality of fish will bankrupt the business,” Pudjiastuti told Salaam Gateway.
“But it took me four years until I finally met bankers that understood that it was actually good business. They gave me $2 million loan at that time,” she said.
“For me, the biggest challenge as a businesswoman at that time was that nobody believed my business was good enough,” said the entrpreneur who went on to set up Susi Air that now operates more than 50 charter aircrafts.
She welcomes the idea of a family bank but also believes an affirmative policy should tackle issues related to extending financing for women in business.
She gave the example of an ongoing discussion at the ministry of maritime and fishery on whether the government will extend insurance coverage for women in the fishery profession.
The ministry of cooperatives and SMEs has also started a 100 billion Indonesian rupiah ($6.5 million) programme to extend very low interest rates of around 4.5 percent per annum to 4,000 entrepreneurs who can apply for loans of up to 25 million rupiah ($1,642).
The OIC’s seventh ministerial conference on the role of women in development in member states will run from Nov 30 to Dec 1 in Burkina Faso.
(Reporting by Yosi Winosa; Editing by Emmy Abdul Alim emmy.alim@refinitiv.com)
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