A Comparative Analysis of the Programmes and Operations of Non-Formal Islamic Micro-Finance Institutions in Ogun State, Nigeria

Abstract

This paper examined the programmes and operations of non-formal Islamic microfinance organisations in Ogun State, Nigeria, Al-Hayat Relief Foundation and As-Salam Development Foundation. It investigated how the two organisations have fared in improving the standards of living of Muslims in the State. The paper also highlighted the areas where and how the two organisations could collaborate for greater improvements. Data were collected through participant observations and interview with Management Boards of the two organisations. Findings revealed that the maximum amount loanable in Al-Hayat Relief Foundation is ₦1,000,000.00, while it is ₦2,500,000.00 in As-Salam Development Foundation. Although a special interest-free loan of ₦20,000.00 is operated by Al-Hayat Relief Foundation alone to assist the poorest members of the Foundation commence micro-business. Also, Ṣadaqah has been fully institutionalised in both Foundations with method of collection, mode of disbursement, fund utilisation, target beneficiaries, assessment/feedback mechanisms constituting the differences between them. Findings further indicated that micro-takāful (micro-Islamic insurance) programme is operated by Al-Hayat Relief Foundation alone. As-Salam Development Foundation promoted economic empowerment through procurement of tricycles (popularly called Keke Napep) for members and non-members using the murābaḥah financing model, while the establishment of a unit microfinance bank, Al-Hayat Microfinance Bank Limited, by Al-Hayat Relief Foundation, is unparalleled. The paper concludes that both organisations could be veritable platforms for stimulating sustainable economic growth and development among Muslims in Nigeria. In order to achieve this, the study recommended strong organisational partnership and collaboration in order to further promote financial inclusion at the informal sector in the State.