Microfinance and Poverty Reduction

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MICROFINANCE AND POVERTY REDUCTION IN INDIA

MICROFINANCE AND POVERTY REDUCTION IN INDIA

In India, many poverty alleviation programmes are implemented for poverty reduction but the desired results are yet not obtained. The outcome of this paper will help to understand the relationship between poverty alleviation and microfinance on one hand and on the other hand,. the outcome of this paper will also throw light on impact of poverty alleviation programmes on poverty reduction through microfinance in India. Microfinance has become more widespread over the last couple decades, as it has been shown to be effective in alleviating conditions of poverty. Creating self employment opportunities is one way of attacking poverty and solving the problems of unemployment. There are over 24 crore people below the poverty line in our country and microfinance activities can give them a mean to climb out of poverty. Microfinance could be a solution to help them to extend their horizon and offer them social recognition and empowerment. The Scheme of Micro-finance has been found as an effective instrument for lifting the poor above the level of poverty by providing them increased self-employment opportunities and making them credit worth. The present study found that microfinance is an important factor for live a better life by increase per-capital income and reduce and lift up the population under poverty-line.
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Microfinance and Poverty Reduction in Ghana.  The Case of Central Region of Ghana

Microfinance and Poverty Reduction in Ghana. The Case of Central Region of Ghana

The study evaluated Microfinance as a tool for poverty reduction in Ghana using central region as a case study. A survey design involving quantitative, qualitative and participatory methods within the framework of impact assessment techniques was used. Simple random and stratified sampling methods were employed to select five Microfinance Institutions (MFIs) and one hundred microcredit beneficiaries. The study made use of both primary and secondary data. It was found out that though there are challenges microfinance has a positive impact on poverty reduction. Among the recommendations were that microfinance clients should be trained before and after disbursement of the loan; and also they should be effectively monitored. In addition to the above recommendations it was concluded that if the challenges facing the Microfinance sector (eg; inappropriate institutional arrangement, poor regulatory environment etc) are addressed microfinance will be a potent tool for poverty reduction not only in Ghana but all developing countries at large. Key Words: Micro Finance, Poverty Reduction, Poverty, Millennium Development Goals (MDGs), Microcredit
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MICROFINANCE AND POVERTY REDUCTION IN NIGERIA: A Critical Assessment

MICROFINANCE AND POVERTY REDUCTION IN NIGERIA: A Critical Assessment

Nonetheless, any poverty reduction programme must seek to address the inefficiency and inadequacies of financial markets since they rarely effectively discharge the expected functions. The credit policy for the poor involves many practical difficulties arising from the operations of financial institutions and the economic characteristics and financing needs of low-income households. For Example, commercial banking institutions require that borrowers have a stable source of income out of which principal and interest can be paid back according to the agreed terms. However, the income of many self-employed households is not stable. A huge number of micro loans are needed to serve the poor, but banking institutions prefer dealing with big loans in small numbers to minimize administration expenses. They also look for collateral with clear title-which many low-income households do not have. In addition, bankers tend to consider low income households a bad risk, imposing exceedingly high information monitoring costs on operation (Shastri, 2009). This paper therefore, will critically assess how the poor has been empowered through the operation of microfinance as a strategy for poverty reduction in Nigeria.
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Microfinance Interventions and Poverty Reduction among Entrepreneurs of Micro, Small and Medium Entreprises in Central Region of Ghana

Microfinance Interventions and Poverty Reduction among Entrepreneurs of Micro, Small and Medium Entreprises in Central Region of Ghana

This study sought to investigate the effect of microfinance interventions on poverty reduction from the perspective of microfinance clients who are entrepreneurs of micro small and medium enterprises in the Central Region of Ghana. The Specific Objectives of the study was to establish the effect of Microsavings on poverty reduction; determine the effect of access to credit schemes on poverty reduction and to determine the moderating effect of regulatory framework on the relationship between microfinance interventions and poverty reduction in Central Region of Ghana. Five hypotheses were formulated to cover each objective and each of them was operationalized into four sub-hypotheses. The study was underpinned by the financial intermediation theory, supply leading finance theory, theory of life cycle savings and investing, the welfarist theory and the institutionalist theory. The study adopted descriptive cross sectional research design methodologies with positivism as the research philosophy. Using cluster sampling techniques, a sample of size of 370 respondents who are entrepreneurs of micro small and medium enterprises were contacted. SPSS was used to analyse the data using cross tabulations and multiple regression analysis. Tests conducted included: Cronbach Alpha (0.642) normality and linearity using Shapiro-Wilk tests, histogram and P-P plots, multicollinearity using correlation matrix, Tolerance and VIF, and Levene’s test for homogeneity of variances. In line with the study objectives, the study found that microsavings had a statistically significant effect on growth in income and acquisition of business assets. It however had a relatively weak positive effect on consumption expenditure and a moderate effect on ability to educate children as poverty indicators. Similarly, Access to credit had
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The Impact of Microfinance on Poverty Reduction (A case study of Okara, Southern Punjab, Pakistan)

The Impact of Microfinance on Poverty Reduction (A case study of Okara, Southern Punjab, Pakistan)

This study will provide the solution for MFIs which can improve their microfinance services for poverty reduction. This study will spread the body of facts in the perspective field. This study will develop a model that will show the impact of Microfinance on poverty reduction and when poverty reduced then what will be the consequences. This model will be created from different studies. The future researchers would be able to take proper guidelines if they are to conduct any study in respective area.

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Microfinance Helps to Rural Women for Poverty Reduction in the District of Bogra, Bangladesh

Microfinance Helps to Rural Women for Poverty Reduction in the District of Bogra, Bangladesh

Abstract The primary objective of this study was to examine the role of microfinance programs in poverty reduction among the poor women in Bogra District. The study was based on data collected from a total of 400 microfinance beneficiaries, which was recruited using a simple random sampling in the year 2011. The study findings suggested that there was no significant relationship of microfinance on specific variables such as household income, education opportunities, employment, health, nutrition, sanitations facilities and women`s empowerment in the district of Bogra. Only housing status of microfinance beneficiaries had improved during their membership periods. This study proposed a poverty reduction model that includes various aspects including political and social policy reformulations; natural disaster management; employment opportunities;financial assistances; zakat and social safety nets; proper healthcare for the poor; education and knowledge institutions; technical or skills development training; vocational education; development infrastructure and shelter; women`s empowerment and capacity building; as well as women`s human rights and social justice in order to be more effective in understanding and finding solutions to mitigate poverty in general.
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Microfinance and the business of poverty reduction: Critical perspectives from rural Bangladesh

Microfinance and the business of poverty reduction: Critical perspectives from rural Bangladesh

reduction and empowerment of poor populations suggests that market based initiatives directed at impoverished communities can leverage their social capital to develop capabilities that could lift them out of poverty (Ansari et al., 2012). Our study identifies the boundary conditions of social capital creation through market based initiatives by highlighting processes whereby social capital can be undermined by market-based measures like microfinance. Third, our study contributes to the literature on building inclusive markets by recounting narratives from voices that tend to be excluded in the debate on inclusive growth at the institutional level. NGOs are key actors that fill the ‘institutional voids’ in rural areas of developing countries (Mair et al., 2012) and our study complements emerging research in the area by problematizing the role of NGOs as institutional agents of poverty alleviation (Khan et al., 2010). In the sections that follow we discuss the emergence of microfinance and examine its theoretical basis as a poverty reduction strategy. We then describe our ethnographic study of communities in three Bangladeshi villages and analyze their experiences of microfinance. We conclude by discussing implications of our findings and providing directions for future research.
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Achieving Poverty Reduction Through Microfinance: Evidences From the Philippines

Achieving Poverty Reduction Through Microfinance: Evidences From the Philippines

In terms of global poverty, the new figures from the World Bank shows that global poverty reduction since 1981 has not been deep rooted and far reaching. Using the $1.25 yardstick about 1.21 billion people are living below the poverty line while 1.91 billion people are living below $2 a day by 2015. (World Bank 2012) Given that the reduction in global poverty has been rather sluggish, even the promoters of microfinance do not disagree that microfinance alone is not enough to reduce poverty. Therefore, “microfinance is not the solution to global poverty, but neither is health, or education, economic growth. There is no one single solution to global poverty. The solution must include a broad array of empowering interventions and microfinance, when targeted to the very poor and effectively run, is one powerfule tool” (Daley-Harris 2007:1) Even the main proponent of this idea Muhammad Yunus agrees that “microcredit is not a miracle cure that can eliminate poverty in one fell swoop. But it can end poverty for many and reduce its severity for others. Combined with other innovative programs that unleash people’s potential, microcredit is an essential tool in our search for a poverty free world” (Yunus 2007:1)
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Achieving Long-Term Poverty Reduction and Institutional Sustainability in Microfinance through the Dynamic User-Focussed Approach

Achieving Long-Term Poverty Reduction and Institutional Sustainability in Microfinance through the Dynamic User-Focussed Approach

How do poverty-oriented MFIs fare when they prioritise the sustainability of their institutions? While literature on the trade-off between poverty reduction and institutional sustainability from meta- and macro-level analysis indicate positive and complementary outcomes when MFIs endeavour to achieve both objectives, very little comprehensive information exists at the programme or micro-level. In contributing to knowledge in this field, this paper assessed the poverty outcomes of an explicitly poverty-driven MFI pursuing institutional sustainability in a rural community in Ghana. While this micro-level paper does not have conclusive evidence on the issue of trade-off between the two objectives, findings of this paper indicate that there were significant adverse poverty outcomes when MFIs prioritise sustainability. This paper proposes an alternative strategy to achieving both poverty reduction and institutional sustainability: the dynamic user-focussed approach. This approach entails three strategies: constructing a hierarchy of objectives, involving and tracking users with the view of making them less poor. The import of this approach is that if MFIs concentrate on reducing poverty, they are likely to experience improved and sustained repayment rates, and also offer larger and more profitable loans. This should enable microfinance institutions experience long-term sustainability. It is important to note that concentrating on poverty reduction should not preclude MFIs acting in a business-like manner, following sound financial practice, being efficient and exhibiting financial discipline.
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Microfinance and the Interaction of Macroeconomic Factors in Poverty Reduction

Microfinance and the Interaction of Macroeconomic Factors in Poverty Reduction

Microfinance has developed in Albania; this is noted by the presence of microfinance institutions that have contributed to poverty reduction and economic development in general and agricultural development in particular. Some of the institutions that can be mentioned are: Albanian Savings and Credit Union, “Besa” Foundation, the FFZM, First Financial Company, etc. Precisely the loan is the necessary instrument of the agriculture funding, to promote, develop and increase it, and more effective compared to grants. Lending to the agricultural sector in the portfolio of bank loans represents the least credit sector compared to other sectors, benefiting around 2% of the total loan portfolio, extended to the Albanian economy. Given the need of the agricultural sector for financing or credit, today there are financial institutions that provide financial services to the agricultural sector, such as microfinance institutions that offer credit, but nowadays many banks of the second level are promoting and competing with each other in terms of new service of microfinance / credit of the agricultural sector.
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Unimaid Microfinance Bank, Agent Of Poverty Reduction In Borno

Unimaid Microfinance Bank, Agent Of Poverty Reduction In Borno

The poor man cannot gain access to obtain loan or credit facilities from the commercial banks despite the fact that collateral condition is prerequisite, the need for large financial deposit and must be a current account holder with a motive of profit charging higher interest rate. However, the microfinance Abstract: This study examines Microfinance Bank as agent of poverty reduction in Maiduguri, Nigeria. One way to tackle poverty is to increase participation by empowering the poor/vulnerable through access to microcredit/microloans. There is great consensus amongst economist that microfinance bank/institutions reduce the number of poor households and many part of the world. A household accessing microcredit is likely going to export out poverty. Until the channel through which microfinance affect poor household and individual is clearly understood in Maiduguri, poverty will continue to threaten people and poverty will stay. The objective of this study analyzed income of microfinance loan beneficiaries and Microfinance reducing poverty in Unimad Microfinance, Bono State. The data for this study was elucidated through the use of structured questionnaire, the questionnaire was administered to 300 registered Unimaid Microfinance bank loan beneficiaries and all the 300 questionnaires were duly filled and returned. The respondents were selected through simple random sampling techniques of Unimaid Microfinance Bank loan beneficiaries at that particular time. The finding shows that Microfinance bank contribute to income of beneficiaries’ base on their level of size of business, Microfinance loan has significant effect on the reducing poverty level of beneficiaries. The study recommends proliferation of Microfinance institutions within the state for non benefiting members of the community to benefits microloan in order to boast the economic activity within the state and Government should solicit collaborative partnership with other nongovernmental organization to fashion out possible ways on how to tackle poverty in addition of existing microfinance institutions and other non financial institutions. This will create a window for growth and development of the economy as a result of more job opportunities and increased flow of money circulation in the economy.
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Great expectations: microfinance and poverty reduction in Asia and Latin America

Great expectations: microfinance and poverty reduction in Asia and Latin America

Banegas et al (2002) look at the operations of two MFIs in Ecuador (Banco Solidario) and Bolivia (Caja los Andes) utilizing the CGAP poverty index noted above to establish outreach and a logit regression model (where being a client and taking a loan gives a dependent variable of 1.0 and being a non-client a dependent variable of zero) that links participation in a program with income changes and poverty scores. It is found that for both institutions taking a loan is associated with increases in income. However income change is measured not by the size of monetary values but by a simple scoring system (1 for income decrease, 2 for unchanged income and 3 for income increase). The relation with poverty varies since in the case of Banco Solidario lower poverty is associated with a greater probability of taking a loan and in the case of Caja los Andes with a higher probability. On the other hand Banco Solidario has a greater depth of outreach as 75% of its clients belonged to the lower and intermediate groups as defined by the CGAP poverty score, as compared with 48% for Caja los Andes. Again it seems therefore it is the better-off amongst the poor who are benefiting. Limitations of this analysis are the crudity of some of the indicators, for example for income change, and the way in which a control group of non-clients are selected; that is from households in the same locality that have micro-enterprises in the same sector as the borrowers and which have not had a loan from a formal sector institution. This simply ignores the issue of self-selection bias and does not control for factors like education and skills.
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Microfinance as a strategy for poverty reduction in Nigeria: Empirical investigation

Microfinance as a strategy for poverty reduction in Nigeria: Empirical investigation

of employment and low wages in the informal sector. A number of indicators have been used to measure poverty. Maxwell (1999) why examining poverty indices, named Physical Quality Life Index as what was developed and used in the 1970s for information on life expectancy, infant mortality rate and literacy and the UNDP has incorporated it in its measurement of poverty. Income is usually used to measure poverty in most countries, the United Nations uses the $1 per day poverty line to measure poverty, this measurement according Ravallion, the $1 per day measurement is outdated, and the World Bank uses it ‘to measure global poverty by the standards of what poverty means in poor countries’ (Ravallion 2002). Although, in developing countries the poor used lack of having food to consume to measure their poverty line. While a lot of authors are debating and giving different approaches to poverty measurement. Schwartzman (1997) analyzing the research done by a group of experts to study the statistical consequence of the World Summits of the United Nations on Population and Development. Cairo, (1994) measured on Social Development. Copenhagen conference 1995 measured poverty level in terms of household or dwelling. Ajakaiye and Adeyeye (1999) note that poverty measurement is undertaken to measure the standard of living among the poor. Microfinance institutions have been one of the policies being put in place to alleviate poverty. In subsequent chapters of the study, the impact of microfinance will be known if it has been able to reduce poverty and empower people especially the poor.
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Microfinance and Household Poverty Reduction: Empirical Evidence from Rural Pakistan

Microfinance and Household Poverty Reduction: Empirical Evidence from Rural Pakistan

The multidimensional aspects of poverty are particularly relevant to Pakistan. The poor in Pakistan not only have low levels of income, they also lack access to basic services such as clean drinking water, adequate sanitation, proper education, financial services, employment opportunities, efficient markets and sufficient and timely health facilities (World Bank, 2007). Despite considerable efforts through various poverty-alleviation programmes, widespread social and economic poverty remains a core problem in Pakistan as its economy is based predominantly on agriculture. Almost 65% of the population resides in rural areas and is directly or indirectly linked to agriculture (World Bank, 2002; Central Intelligence Agency, 2010). The FAO (2009) estimates that around 66% of the population of Pakistan relies on agriculture for its livelihood. Consequently, the poor are overwhelmingly concentrated in rural areas, where the poverty headcount is 27%, more than double that in urban areas. Furthermore, 80% of the total population in poverty live in rural areas (International Monetary Fund, 2010). According to 2007 – 2008 estimates, 22.3% of the country’s population lives below the poverty line, with another 20.5% living in vulnerable conditions (Haq, 2008).
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Microfinance as an Instrument in Financing the Rural Sector with an Impact on Poverty Reduction and Economic Development: Albanian Case

Microfinance as an Instrument in Financing the Rural Sector with an Impact on Poverty Reduction and Economic Development: Albanian Case

The development of the agricultural sector in market economy conditions, required and requires financial support to carry out necessary investments. Demand for loans from the agricultural sector has been and is high (Salko, 2013). Individual farmers require access to credit in order to purchase inputs and equipment, to meet the expenses for the establishment of greenhouses, processing factories of agricultural products and livestock, building vineyards or fruit trees etc. For meeting the demand for loans in the rural sector, there are three main providers of financing; Banking System, Financial Institutions of Microfinance (FIM) and various donor projects.The small size of the farmers economies, means that providers of funding for them, grant microcredits but their average amount has had growing evolution over more than last two decades. Now, the average amount allocated to an farmer economy ranges from 20,000 to 50,000 All in the first years of transition, in 300,000 to 2,000,000 ALL in recent years, reflecting the demand for the realization of investments in order for these economies to reach markets .
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IMPACT OF MICROFINANCE ON POVERTY ALLEVIATION IN ONDO STATE, NIGERIA

IMPACT OF MICROFINANCE ON POVERTY ALLEVIATION IN ONDO STATE, NIGERIA

Theoretically, several other channels through which microfinance assists the poor have been properly articulated in the literature (Little, et al. 2003, Hulme 2000, Binswanger and Khandker 1995 and Chowdhury, 2009). However, the role of microfinance in reducing poverty has been disputed in the literature. DFID (2009) asserts that international microfinance experience shows that micro credit is not a suitable tool to assist the chronically poor. Hickson (2001) submits that most microfinance institutions have a long way to go in reaching the extremely poor so as to effectively achieve the goal of poverty alleviation. Srinivas (2004) argues that microfinance facilitate the diversion of valuable aid money from untested and non-viable microfinance programs- away from vital programs on health, education that are in dire need of such funds. Asides, some other critics of microfinance have contended that poor people are bad borrower, especially women; or that microfinance is not profitable 2 . In short, conflicting views surround microfinance and its effectiveness at reducing poverty in the less developed economies (LDCs). This has led to several empirical studies on microfinance and poverty reduction in the developing economies.
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Socio economic Perspective of Microfinance as a poverty reduction tool

Socio economic Perspective of Microfinance as a poverty reduction tool

Microfinance is a hot topic in the present development debates and is defined as “provision of financial services to the underprivileged class of the world’. In developing countries the major reason of poverty is the lack to the access to credit in both rural and urban slums .High interest rates charged by the local money lenders and the formal proceedings majorly leave the poor class with no credit in rural and sub- urban areas respectively. Apart from credit accessibility there are various other social services offered by the microfinance institutions which help their members combating poverty and several other related adversities of their lives. Facilities of micro credits, micro savings, micro insurance, trainings and micro remittances help individuals to break the vicious circle of poverty and services such as investment in health and education smooth out the progress of social development.
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Poverty reduction strategies in Nigeria: Rescuing the youth through microfinance loans

Poverty reduction strategies in Nigeria: Rescuing the youth through microfinance loans

Not only is poverty a curse to the bulk of the masses, it is now evidently clear that the rich cannot live in peace when there are people who have no hope of a meal no matter its quality. Poverty and feelings of deprivation with their attendant consequences have become grave challenges to the Nigerian government. The Nigerian people have responded with apathy, feelings of hopelessness, beastie behaviours, arson, acts of terrorism, dropping out of school, and return to undesirable pagan practices such as orgies etc. This situation and the general uncertainty that hangs over the horizon of a large number of Nigerians and particularly the young people and the others that have been forcefully conscripted into the ever increasing army of the poor can be attributed to a number of factors that have persisted as important policy challenges. Some of the major factors responsible for the uncertainty and the low response of poverty can be located in the very structure of production and nature of growth which unfortunately seem to be left more to chance rather than strategic planning. Importantly too, is the bourgeoning corruption that has come to characterize every fabric of our national life. That Nigeria continuous to occupy a leading position as one of world’s most corrupt countries is not news at all.
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The Impact of Microfinance on Poverty Reduction Amongst Farmers in Ghana

The Impact of Microfinance on Poverty Reduction Amongst Farmers in Ghana

The over-arching regulatory and policy framework that provides the overall policy dynamics for development and economic growth in Ghana is documented in the country’s medium-term national development policy framework – Ghana Shared Growth and Development Agenda 2010 to 2013 (MOFEP, 2012). At the heart of the country’s second medium-term Private Sector Development Strategy (PSDS 2) is the desire to develop a well-functioning and vibrant private sector that promotes job creation and improves livelihood for the people. Thus, to achieve this objective requires effective financial systems that invariably promote financial inclusion, growth and encourage innovation. The government’s initiatives in relation to the financial sector policies aimed at poverty alleviation and economic development, focus on two thematic areas namely; financial sector strategies for long-term shared economic growth and; improved access to finance in the Ghanaian financial landscape (MOFEP, 2012). The government recognised the vital role of the shared economic growth policy in the fight against extreme poverty in Ghana. Thus, to achieve shared economic growth, there is the need to intensify the resource mobilisation drive for the banking system, ensure availability of medium-long-term financing, develop risk management strategies and encourage acquisition of finance through a mix of debt and equity sources of financing. According to the Ministry of Finance and Economic Planning (MOFEP), “if the provision of the mainstream financial services in Ghana is to improve as to quantity and quality, more competition and a greater presence of strong profitable and efficient financial institutions are needed” (MOFEP, 2012:7). It is thus significant to note that, efforts to create healthy competition in the financial system may not necessarily help the microfinance sub-sector that extends financial and nonfinancial services to the poor and underserved of the market. Given the operations of the microfinance institutions, there is the need to develop a sustained policy that ensures the growth and performance of the sector.
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Islamic Microfinance System and Poverty Alleviation in Somaliland

Islamic Microfinance System and Poverty Alleviation in Somaliland

Islamic Microfinance which involves -compliant way of financing and providing credit without collateral or any property for guarantee to the marginally poor (too poor to have access to banks) for their business, is one of the most popular tools employed as part of a poverty reduction strategy, empowering and increasing the productivity of poor, giving social benefits to them in a sustainable way, and aiding economic development. However, in Somaliland it still remains fairly the same effect over the years due to misconceptions in -compliance, the institutions lagging behind and the like. This study determined the role of the Islamic microfinance in poverty alleviation efforts in Somaliland and how this role can be enhanced. It was intended to establish and recommend Islamic microfinance and its principles that could raise poverty reduction and economic development in the country. This was in view of the fact that conventional microfinance that charges the prohibited interest cannot be used by and for the Somaliland population which are 100% Muslims.
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