Jul 07 2011
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IF drive for Afghanistan
However, Uncle Sam is stepping in to alleviate this situation (quite ironically too as Islamic finance is having such a hard time gaining a foothold in America) and bring (US dollar-sponsored) Islamic microfinance to the troubled state. With funding from the US Agency for International Development - commonly known as USAID - a Wisconsin-based umbrella organization, the World Council of Credit Unions (WOCCU) has set up 40 Islamic credit unions across Afghanistan. It is hoped that these Islamic investment and finance cooperatives will ultimately serve more than 70,000 people.
The WOCCU program has adapted the simple cooperative finance model used by many credit unions and sought a Fatwa from local scholars. The program has lent a cumulative $43.9m since 2005 - most of the capital being fronted by USAID. It has also attracted $3.5m in savings because bank accounts are not common and livestock is the most common means of savings.
The growth of western-sponsored credit unions and Islamic microfinance, has been concentrated in the volatile south and east of Afghanistan and came in response to strong local grassroots demand for Shari'ah-compliant financing. WOCCU is planning to open three more Islamic investment and finance cooperatives in the next year. However, it is also planning to close a number of IIFCs that are not financially self-sustainable as USAID funding is scheduled to end in December 2012.
© The Islamic Globe 2011
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