Dr Ali made the remarks while addressing the opening session of the Islamic Finance: Meeting Global Aspirations conference held in Kuwait City, Kuwait. The conference aims to prepare the ground for increasing financial inclusion and growth. Co-hosted by the Central Bank of Kuwait and the IMF Middle East Center for Economics & Finance, the conference provided an opportunity for global policy dialogue among high-level policymakers, regulators, conventional and Islamic standard setters, leading private and public sector financial institutions’ executives, and academics.
Dr Ahmad emphasised that Islamic finance encourages a fair socioeconomic system and can address financial inclusion via a two-pronged approach, namely using risk-sharing financing instruments as viable microfinance, and micro-takaful tools for individuals, micro-enterprises and SMEs; in addition to using Islamic redistributive instruments like zakah, waqf, sadaqah and qard-al-hasana to provide basic social safety nets such as food and shelter, to the very poor, helping them transition to economically active individuals.
Dr Ahmad further cautioned that “providing microfinance to individuals lacking entrepreneurial skills may lead to less than the desired outcomes”. “What is needed is an integrated finance-plus approach i.e. provision of financial services along with provision of related technical skills, regulatory support, assistance for product development and marketing, and increasing market access to SMEs’ products,” he said.
He further underlined the need to develop unique models for increasing access to finance for the SMEs, like creating dedicated SME-financing business units in Islamic banks, and developing the capital markets, Islamic equity and venture capital funds for SMEs.