According to recent reports, Islamic banking and finance has crossed the Rs7tr mark in asset size in Pakistan, demonstrating a significant growth in the country’s Islamic finance sector. In addition, the global Islamic finance industry is nearing the $3 trillion mark, indicating a significant demand for Shariah-compliant financing and investment opportunities.
Pakistan has seen a rise in the number of women entrepreneurs in recent years, with women-led startups and enterprises playing a significant role in the country’s economic development. However, women entrepreneurs in Pakistan face several challenges, including limited access to finance, cultural values and family requirements, and a lack of knowledge about business management and banking.
Islamic finance offers a unique opportunity for women entrepreneurs in Pakistan, providing an ethical and equitable form of financing that aligns with Islamic principles. This financing option can significantly influence the country’s economic development, as women entrepreneurs require capital to start and grow their businesses.However, the World Bank reports that only seven per cent of women in Pakistan have access to formal financial services, representing a significant barrier to women entrepreneurs who require capital to start and grow their businesses. One of the reasons for this lack of access is the unwillingness of faith-sensitive customers to engage in interest-based financing offered by conventional banks.
To address this issue, the government of Pakistan launched a gender finance policy in 2018 to increase women’s access to finance, aiming to increase the percentage of female customers to 25% by 2020 and 30% by 2025.Islamic finance can be crucial in addressing the financing needs of women entrepreneurs in Pakistan. This financing option’s unique feature is its emphasis on social justice and ethical conduct, making it a suitable option for women entrepreneurs looking for financing opportunities that align with their values and principles.
Islamic banks in Pakistan, with the support of the government and the State Bank of Pakistan, are now offering small ticket collateral-free financing under the youth financing scheme to support and provide financing for women entrepreneurs. Additionally, several Shariah-compliant Islamic Refinance and Guarantee schemes are available specifically for women entrepreneurs, providing them with the necessary financing opportunities to meet the credit needs of their businesses.
Islamic banks in Pakistan are also providing a range of products to meet the diverse financing requirements of their customers, including short-term, long-term, and trade financing. They offer a range of products and services designed exclusively for women, including savings and investment accounts, personal and home financing, and Islamic credit cards.To further support women entrepreneurs, holding regular seminars, workshops, and training sessions specifically designed for their needs can help them develop their skills and knowledge about finance and business.
In conclusion, Islamic finance offers significant opportunities for women entrepreneurs in Pakistan, providing them with the necessary financing options and products to address their business and financing needs. As the government of Pakistan continues to support women entrepreneurs through various policies, the growth of the Islamic finance industry in Pakistan is expected to continue, contributing significantly to the country’s economic development.