Islamic microfinance is one of the essential unconventional branch of lending that uses by Islamic microfinanceproviders for financial and social inclusion to provide financial support for low-income people as well as theextremely poor. Through the in-bodied social inclusion tools, Islamic microfinance can best used to mitigate thenegative impact of the extreme poverty. Since financing micro-borrowers and extremely poor are highly risk, theneed for efficient and effective regulatory and supervision of microfinance frame work is very important. Thisresearch investigated Sudanese Islamic microfinance regulatory and supervisory framework. Despite of theexerted efforts by Sudanese government through providing favorable climate and the establishment of Islamicfinancial intuitions and establishing structured microfinance framework, the results showed that Sudanesemicrofinance regulatory framework is not providing best outreach. Despite the continuous increasing of theceiling portfolio by the regulatory authority until reached 12% from 4% since the first issued rules in 2006, theactually utilization is insignificant at the end of the year 2013. This might be due to several reasons such as badbasic infrastructures, ineffective follow up by the regulator of the microfinance providers, Islamic microfinancedeliberately ignoring the rural areas clients’ because of the high risk, the framework lack of the building capacitytools for clients as well as for the microfinance providers staff. The results of this research gives strong policyimplications for both to Islamic microfinance regulator and providers to carry on real revision and evaluation forthe efficiency and effectiveness of the current operated microfinance frame work in Sudan. These results mightbe useful for Islamic microfinance regulators and providers in Muslims countries and interested providers in theWest the benefit from the nullified factors that render the regulatory framework ineffective.
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