Microfinance from the Perspective of Islamic Economics and its Importance for Afghanistan

Abstract

In Afghanistan, Islamic microfinance stands as a pivotal solution in combating poverty and fostering socio-economic development. This integral financial mechanism extends essential financial services and modest loans to economically vulnerable segments and small enterprises. Its multifaceted approach incorporates diverse strategies including profit-sharing partnerships like Musharakah, Mudaraba, Muzarah, and Musaqah, as well as sale and debt-based contracts such as Murabaha, Salam, Ijarah, deferred and installment payment contracts, Istisna'a, and Tawarruq. Moreover, it integrates righteousness and charity-based models such as Qard-al-hassan, Zakat, Waqf, Hiba, Takaful, and Wasyyah.

Setting itself apart from traditional microfinance, Islamic microfinance staunchly opposes usurious practices and deceit, prioritizing Islamic principles that emphasize moral virtues like honesty and sincerity in individuals. These ethical benchmarks, deeply rooted in Islamic jurisprudence, are considered fundamental across various domains, spanning from economic affairs to matters of governance.