Author: Oyesanya O. Sodiq

Publisher:

Published: 2014

Total Pages:

ISBN-13:

The plethora of poverty in many parts of the Third World, Less Developed Countries (LDCs), despite quite spectacular economic growth, has spawned interests in the scourge in academic and policy-making circles. In the recent years, international consensus has emerged to focus development goals on poverty alleviation. Governments have agreed to formulate and implement anti-poverty plans that would set time-bound goals and targets for the substantial reduction of poverty. Hence, programmes and institutions that provide credit and savings facilities have been promoted by governments, international development organizations, local non-governmental organizations and grassroots bodies as an indispensable strategy for alleviating poverty in Less Developed Countries (LDCs) and increasingly also within poor communities of Industrially Advanced Countries (IACs). Microfinance initiative therefore, is widely acclaimed as a new innovative approach to alleviate poverty. Through many a financial and social intermediation service, the poor who were denied access to mainstream banking services are now able to benefit from various financial products and services. Today, there are more than 7000 micro-lending institutions providing loans to more than 25 million poor individuals across the world, their vast majority being women. Thus, the concern over credit provision and finance accessibility to the poor and the vulnerable is inevitably relative to Islamic financial intermediaries that espouse greater socio-economic responsibilities-social justice, equitable distribution of income and wealth and economic development. The statistical indices however, show that the existing microfinance institutions in Nigeria serve less than one million people out of forty million being the potential number that needs the services. And paradoxically, the operators of these institutions charge interest-rate as high as up to 36%-42% for lending. This further aggravates the ubiquitous inequalities in the distribution of wealth and income. Also, the aggregate micro-credit facility in Nigeria account for about 0.2% of the GDP; and is less than 1% of total credit in the economy. Nigeria being a country with a Muslim majority represents a potential for Islamic Microfinance especially that most Muslims reject the conventional interest-based micro financing. Therefore, the paper is aimed at a critical analysis of poverty alleviation strategies of Al-Hayat Relief Foundation.