The Role of Islamic Micro-Finance in Enhancing Human Development in Muslim Countries

Abstract

Human development and human welfare are important ends in Islamic economic development, and hence the need to focus on a broader approach, in evaluating the condition of people in society. In Muslim societies, poverty is still pervasive partly due to the poor have been excluded from the financial system. The main objective of this study is to explore the conceptual framework on the role of Islamic micro-finance in improving human development. The methodology of this study is based on analysis of relevant documents. The findings of the study indicate that Islamic micro-finance is a growing market niche with a comprehensive approach towards human empowerment, increased income and well-being. The income generated by the clients is utilized to improve health conditions and the educational level of children. Zakat and Awqaf institutions are regaining their momentum towards socio-economic relevance. These institutions are requisite for generating community assets, productive capacity building, wealth creation and knowledge and skills that will enhance the technical standing of entrepreneurs. This approach towards financial inclusion could bring improvements in human capital development, education and skills development, better provision of physical capital and wider access to micro-credit for the productive poor.