With more than 650 million Muslims living on less than US$2 a day, there is growing demand for a range of Sharia-compliant financial services, yet Islamic finance still represents less than 1% of total global microfinance outreach.

One of the key principles of Sharia-compliant finance is that money has no intrinsic value and cannot increase in worth on its own. There can be no element of interest in Sharia-compliant financial products, making the approach asset-based rather than debt-driven. Instead, risk and profit sharing is encouraged through equity participation in a business. As most traditional microfinance products are based on interest and fees, they are at odds with Sharia-compliant financial services and require that financial service providers develop a different set of products to be Sharia-compliant.

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