ISLAMIC MICROFINANCE CHALLENGE 2010 SEEKS NEW BUSINESS IDEAS

DUBAI, March 8 (Bernama) -- The Islamic microfinance industry has been
challenged to develop new ideas for business models in the "Islamic
Microfinance Challenge 2010: Innovating Sustainable, Scalable, and
Market-Driven Models".

The competition was initiated by CGAP, Deutsche Bank, Grameen-Jameel and
Islamic Development Bank.

"The competition will identify innovative product and business ideas that
fulfill both Islamic and good business criteria, and thus have the potential to
become self-sufficient and profitable," said Alexander Schuetz, Deutsche
Bank's managing director and chief operating officer for the Middle East and
North Africa.

The winner will get US$100,000 in grant funds to launch a pilot programme of
their proposed business which the organisers will showcase to garner further
support for the programme's growth and development.

In a statement, the organisers said Islamic microfinance had gained some
traction over the past few years, with a swift rise in the number of
institutions offering microfinance products in compliance with Islamic
principles.

But, according to them, the fundamental challenge for the Islamic
microfinance industry remained meeting client demand with affordable,
authentic, profitable, and market-driven products.

"While Islamic banking has been a successful model in the banking sector,
it has not proven to be scalable in the microfinance sector," according to
Julia Assaad, general manager of Grameen-Jameel Pan Arab Microfinance, the
first social business supporting the microfinance sector in the Arab world.

"It's therefore essential to develop syariah-compliant products which
better suit Islamic microfinance clients' needs," she said.

The Islamic finance industry has grown rapidly over the past 40 years, with
a current estimated market size of US$1.5 trillion.

A 2008 CGAP study estimated that 125 financial institutions had reached
only 380,000 clients with Islamic microfinance.

The statement said studies suggested that a much larger number of the
world's poor Muslims could benefit directly from access to Islamic
microfinance.

The Islamic Microfinance Challenge 2010 is open to the general public, with
a deadline for submitting the initial application by May 3, 2010.

Housed at the World Bank, CGAP is an independent policy and research centre
dedicated to advancing financial access for the world's poor.

Established in 2003 and incorporated in 2007 as a joint venture between
Grameen Foundation USA and Grow Well Limited, Grameen-Jameel is a social
business that aims to alleviate poverty in the Arab world through strategic
partnerships with microfinance institutions.

--BERNAMA