Empowering the poor through Islamic microfinance : experience of the bank of khartoum in value chain project financing in Sudan

الملخص EN

This paper highlights the work done by Bank of Khartoum to embody the spirit of Islamic Finance in its operations.

While doing so, the bank has developed an innovative methodology of conducting microfinance (Solidarity and Value Chain Project Group Financing).

Instead of providing small loans, which defines the microfinance industry, Bank of Khartoum ventured further in empowering the poor by doing business with them.

By sharing risks and profits with the poor, Bank of Khartoum is helping thousands of vulnerable people in Sudan to earn a better living by generating jobs.

It currently has a growing portfolio of more than 100,000 business partners/clients.

Large projects were developed involving hundreds and in some cases thousands of poor beneficiaries with each investment amounting up to USD 3 million.

This methodology was found to be more sustainable (IRR about 20% per annum) and more effective in alleviating poverty (each beneficiary received more income by sharing the venture’s profits and being co-owners of the venture).

By being a real partner of operating these businesses, Bank of Khartoum has developed its expertise in the area of agriculture and livestock development.

Like any large professionally run business, the Bank of Khartoum helps poor farmers to run the business, while developing their capacity to assume the ownership of the business over a period of time.