Developing Social Financial Resources Model for Islamic Microfinance to Reduce Unemployment Rate

Abstract

The Islamic microfinance institutions (IMFIs) are facing crucial challenges that sought to undermine their vital role in combating the unemployment rate. The most important of challenges is the scarcity of financial resources whereas previous studies revealed that most of Islamic microfinance institutions rely on one financial resource which is social fund for development and this negatively affected the ability of IMFIs in reach out the unemployed. This paper attempted to develop a social financial resource that will be expected to finance IMFIs. The qualitative method was applied in this paper and 11 experts of IMFIs were interviewed as well. The findings of this paper revealed that the waqf, zakat and crowdfunding are considered effective tools to reduce the unemployment rate through IMIFs as well as will be easy to implement. Moreover, it found that these resources will contribute to motivating micro-entrepreneurs to extend and develop their micro-enterprises in Yemen through IMFIs. On the other hand, this paper suggests that government, businessmen and IMFIs should establish foundation for waqf and zakat for purpose of financing IMFIs. It also suggest that businessmen and IMFIs should work together to collect fund through crowdfunding platform to finance IMFIs activities.