Beyond Financial Inclusion and Social Justice: A Call for Interfaith Microfinance Collaboration Between Christian and Muslims Organizations
By Long Le, Norma Saad, and Mustafa Omar Mohamed
Microfinance institutions with strong social missions, as compared to commercially oriented microfinance institutions, remain the model to reach and provide better access to financial services to the poorest customers (Cull et al. 2009; Moon 2009; Marshall and Keough 2004; Morduch 2000). Taking advantage of subsidies, socially oriented microfinance institutions, in general, are delivering on their missions. At the same time, however, they are expected to bring about socio-economic impacts large enough to justify and ensure the continued subsidized support. Within the socially oriented microfinance sector, faith-based organizations are addressing the challenges of providing sound practices on ethical finance and co-creation of value – such as an environment for profit and loss sharing as well as for borrowers to become private providers in microfinance services – without losing notable efficiency loses (Saad et al. 2013; CRS 2013; Sama 2009). Moreover, though critics often exaggerated the negative role of subsidies, it is subsidized funds that have also allowed Christian and Islamic microfinance institutions to be proponents of encouraging peace-building, reconciliation and conflict resolution through social capital enhancement in the post-conflict recovery in Iraq, Nigeria, Eastern Europe, and Southeast Asia (Gunter 2009; EMU 2014; Marino 2005; Clarke 2010).
In this proposed article, the authors, coming from different religious faiths and whose research involves both Christian-based and Islamic-based microfinance, are inspired by recent interfaith collaboration and partnership in building a “common world” (Volf and Muhammad 2010; Clarke 2010; Baum 2009). Such efforts have provided the groundwork for Orthodox, Muslim, Jewish and Christian microfinance institutions to work together in post-conflict rehabilitation areas. That is, and especially in the current debate of whether there is or isn’t a clash of two civilizations, interfaith partnership would serve as a “‘witness to, and symbol of, the power of cooperation across faiths and communities and by this cooperation, encourage people and organizations of all faiths to work together towards their common peaceful goals” (Clarke 2010). However, there are few partnerships between Christian and Islamic organizations in spite of the culturally plural circumstances in which humanitarian crises arise today. On the one hand, observers expect humanitarian crises to increase in frequency and ferocity where faith will be a salient feature of identity. On the other hand, such contemporary partnerships are believed to be difficult to nurture given the different traditions and interpretations of ethical finance and social justice within each faith (Clarke 2010). Notwithstanding, the authors’ task is not only to review but also to contribute to the literature by exploring and identifying essential conditions or ingredients needed for constructive interfaith partnerships in the context of today’s complex political and humanitarian crises.
In short, the authors will be utilizing a cosmopolitan ethics framework by Anthony Appiah (2006) to frame interfaith research or project collaboration that can give expression to multiple ideas of ethical finance and social justice, while developing common social goals through dialogue and discovery. For example, the authors are developing a more pristine environment for zero interest loans to Muslim clients in which service fee on conventional loans are replaced by mechanisms that are Shari’ah complaint. For example, clients are informed about the administrative cost of the micro-loan and Tabarru’ fund, then the clients decide the percentage of the principle amount (if any) that will be donated to Tabarru’ fund; contributors to Tabarru’ fund can also come from Zakat money paid by the staff of the Islamic microfinance institutions. Importantly, these mechanisms can be replicated by Christian microfinance institutions that have Muslim clients in which Tabarru’ fund can be replaced by a zero interest crowdfunded loans. Case studies have shown that a considerable percentage of Muslims in the Middle East have declined conventional loans because their Islamic beliefs prevent them from applying loans that have interest rates (Dutta et al. 2006; Karim et al. 2008). Thus, Christian-based or interfaith microfinance institutions working in areas that include Muslim population should develop zero interest loans in their product portfolio.
The need to develop cross-religious mechanisms is to further promote non-discriminatory approaches in which Christian and Muslim microfinance institutions can implement such methods in post-conflict rehabilitation areas. Here, case studies have found that some Christian-based microfinance institutions – able to enlarge the source of donations and diversify their personnel in order to work in diverse areas – are those who can adapt their faith to the local context (James 2009). Although Islamic microfinance institutions have always had Christian borrowers, who also prefer zero interest loans or lower administrative fee, some operative procedures might need to be adjusted in order to provide services to Christian borrowers in post-conflict recovery areas. As noted earlier, humanitarian crises in which faith is salient are expected to increase, but it also appears that violence and discrimination against religious groups by governments and rival faiths are also on the rise (Pew Research Centre 2014). By implication, perhaps what is needed are “researchers without borders” where qualified researchers could directly “aid” current interfaith peace programs and projects around the world. For example, a Christian church in northern Nigeria is helping a Muslim community whose schools were burnt down by Christians in the nearby area. The outreach has opened the door for an interfaith peace program. In fact, the Christian church is “looking at micro-finance, with no interest owed...maybe a Muslim does an internship or apprenticeship with a Christian welder, who could help them get started in their own business” (EMU 2014). Could such an interfaith peace project be further assisted by trained researchers? Overall, studies show that interfaith partnership requires high levels of individual skill and organizational commitment to generate inter-organizational knowledge, as well as identifying specific theological mandate for inter-religious collaboration (Clarke 2010).
In conclusion, if there’s a new frontier for microfinance, it may well be the ability of faith-based microfinance institutions to act as a catalyst for reconciliation and trust building in conflict-affected populations.