Islamic Microfinance for Poverty Alleviation

and Capacity Transfer (IMPACT)

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14 May 2016

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IDB has observed many innovations in Islamic Microfinance

globally

- IDB supported Projects

- IRTI studies

Recognition of OIC/IDB Management

- President of IDB called on experts in Islamic Finance to take

advantage of existing technologies and business approaches to

develop ‘Smart’ Islamic Microfinance

- Decision by OIC/IDB Leadership to develop a joint Islamic

Microfinance Program

Background of IMPACT

Structure of IMPACT

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The goal of the program is to create

a) a platform for experts to share and deepen the understanding on

the Islamic Microfinance models; as well as to

b) create tools and infrastructure in order to share best practices,

governance and standards.

5 IMPACT Pillars

1) Technology

2) Operations

3) Monitoring & Evaluation

4) Advocacy

5) Policy & Standards

By Working with partners and stakeholders

Technology Pillar

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Objective

The scope of the Technology Pillar includes, but is not limited to, the

development of an a one stop portal on Islamic Microfinance as well

as useful IT applications that will be useful for Islamic Microfinance

Institutions.

Scope

a) One- stop portal for all Islamic Microfinance Resources

b) Strategy Management tool for Business Planning and Monitoring

(for MFI management)

c) Loan/Financing Appraisal Application (for Loan officers)

d) Core banking Application for investment monitoring

e) Any other useful applications

Operations Pillar

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Objective

The objective of the Operations Pillar is to develop a comprehensive

toolkit that will enable microfinance institutions to practice Islamic

Microfinance. The toolkit will be made up of several components of

various manuals depending on the stage of proficiency in Islamic

Microfinance.

Scope

a) Strategy and Design

b) New Islamic Microfinance Product Development Guide

c) Implementation of Islamic Microfinance products manual

d) Conducting Trade with clients – Identifying business opportunities

in the value chain

e) Conducting Investments- Identifying business opportunities in the

value chain.

Monitoring & Evaluation Pillar

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Objective

The objectives of the M&E pillar is to develop a monitoring and

evaluation framework, including a rating system combining areas of

financial sustainability, governance, social performance as well as

qualitative and quantitative value-add indicators of Islamic

Microfinance.

Scope

a) Financial Performance

b) Standard practices of MFI to protect vulnerable clients

c) Value add measure of MFI

Advocacy Pillar

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Objective

This pillar aims to propose activities to promote the best practices of

Islamic Microfinance which is to deliver real value to the customer.

This can be done through capacity building in specific areas such as

Building Sustainable Business Models, Operational efficiency, Risk

management, Authenticity, Building Capacity, Product Diversity etc.

Scope

a) Conducting “Deep-dive” studies to generation and package best

practices in Islamic Microfinance

b) Develop a reference Islamic Microfinance training program and

training similar to the Boulder Microfinance Training conducted

annually by Boulder Training Institute

c) Conduct targeted workshops/seminars/conferences for policy

makers including regulatory bodies, government officials etc

d) Develop online course content for Islamic Microfinance

Policy & Standards Pillar

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Objective

The objective of the pillar is to develop an enabling environment that

will be conducive for Islamic Microfinance institutions to conduct

trade and investment with their clients. Polices and standards should

also be developed to client's interest in order to ensure that clients

are treated in a fair and equitable manner.

Scope

a) Developing the enabling environment for Islamic Microfinance

b) Develop governance standards

c) Support the Development of Micro-takaful Industry

d) Create platform for Policy Dialogue among Member Countries

Engagement with Experts

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- About 30 experts from 13 countries including Saudi Arabia, Egypt,

Pakistan, Bahrain, Kuwait, Morocco, Jordan, Malaysia, Sudan,

Indonesia, Palestine, Bangladesh and Singapore.

- Terms of reference for each pillar have been prepared and sent to

Experts

- Each pillar is led by OIC/IDC co-leads to discuss the following:

- a) Is the TOR relevant and comprehensive?

- b) How can IDB partner and work in achieving the deliverables?

- c) What is the required resources?

- Outcome: Report to OIC/IDB Management

Thank you