Case Study
Reaching the Unbanked with Sharia-Compliant Financial Products
Meeting the demand for faith-based financial services
3 pages
This paper describes the USAID-funded Agriculture Rural Investment and Enterprise Strengthening (ARIES) program in Afghanistan that is administered by the World Council of Credit Unions Afghanistan (WOCCU-A).For the past five years, WOCCU-A has worked to engage local Afghan populations to establish specialized credit unions that are locally owned and operate with principles compliant with Sharia law. WOCCU-A and the Islamic Investment and Finance Cooperative (IIFC), had to make some initial adjustments to gain community acceptance. These include:
- Renaming of credit unions as Islamic Investment and Finance Cooperatives to avoid use of the word 'credit', which is prohibited under Islamic law;
- Working directly with local leaders, tribal representatives (Shuras) and religious leaders to develop a values-based, community-owned business model founded on Islamic principles;
- Breaking WOCCU's five-member sector leader board of directors' structure to one that includes tribal leaders;
- Shura securitization of loans.
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