Shariah- Compliant Credit Surety Funds: The Lasting Solution to Poverty in Mindanao

Abstract

The root cause of insurgency in Mindanao that has allowed armed groups to perpetrate is the lack of economic opportunities. A combination of peace deals and the promotion of access to finance, in accordance with its culture and religion, is the way to build a lasting peace in communities destroyed by years of armed conflict.Mindanao, a Muslim- predominant island, represents 24 percent of the Philippines’ population, yet there are no Islamic financial products offered by any domestic institution. The recently enacted “Philippines’ Credit Surety Fund (CSF) Cooperative Act of 2015” offers an alternative financing arrangement for those Micro, Small and Medium Enterprises (MSMEs) experiencing difficulty in financing. The purpose of this study was to determine the possibility of creating Shariah- compliant CSFs for Mindanao MSMEs and its opportunities and challenges, and investigate the existing Shariah screening methodology for financial products and services.The pursuit of financial inclusion in Mindanao by employing Islamic finance should be considered as one of the key drivers for its economic growth since it is challenging to pursue peace and growth if the large sector of the society is financially and economically excluded. Increasing access to financial services, encouraging financial education and safeguarding consumer protection especially of those in an informal and underserved economy should be done by financial service providers and support institutions. With the right combination of financial inclusion initiatives, it is possible for the Mindanao to achieve peace and economic growth.



Author Information
Ma. Josephine Therese Emily Teves, Kyoto University, Japan

Paper Information
Conference: ACERP2018
Stream: Religion - Religion and Peace Studies

This paper is part of the ACERP2018 Conference Proceedings (View)
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