Market Study for IDB’s Islamic Microfinance Development Programme (MDP) – The Gambia

2016-06-30 - 2016-10-31

Narrative Description of Project: The objective of this study was to assess the existing microfinance sector in The Gambia and accordingly suggest a suitable intervention model for Islamic Development Bank in line with the objective of the Microfinance Development Programme (MDP). The objective of the MDP is to increase outreach of Islamic microfinance to reduce poverty through development of Islamic microfinance industry in IDB member countries. The scope of the work included: A comprehensive Islamic Microfinance Market Study, documenting: Overall Microfinance sector (legal, regulatory, market size, supply size, products, delivery systems); Key sector indicators; Contribution of MF and SMEs to main sectors of the economy. Recommendations for: Developing the enabling environment therefore strengthening the provision of Islamic microfinance. Selecting one of the following interventions: Convert an existing MFI into Islamic MFI or strengthen an existing MFI or establish a new Islamic MFI, indicating the banking and regulatory requirements and challenges for establishing the institution.
General research on the country economic structure, macroeconomic variables and their impact on the financial sector. Detailed enabling environment analysis, highlighting the role MF has had in the last years and the difficulties to implement the National Microfinance Policy. Detailed review of all the key stakeholders involved in the microfinance market (macro, meso level) In-depth appraisal of the policy level and the current analysis of the legal and regulatory environment, specifically regarding Islamic financial services. Quantitative and qualitative research of demand side, including analysis of key national statistics and primary research with clients (structured interviews and focus groups). Supply side analysis, including interviews and analysis of the 10 key FSPs. Data collection supply side: KPI, outreach, products and services offer, penetration of Islamic services, staff capacity. Estimation of effective demand of microfinance and SME finance market in the Gambia. Recommendations on three levels Macro level: Development of a corresponding legal, supervisory and regulatory framework, including the sanctioning of Islamic Finance Guidelines. Meso level: development of a support structure addressing the capacity and skills gaps of microfinance practitioners and stakeholders, including the development of a sector-wide training program focused on best practices in micro and Islamic finance. Micro level: the development of a two-pronged strategy: (i) Development of a 2-year project for a Greenfield Islamic MFI with IDB existing business partner AGIB; (ii) support for all FSPs interested in opening/strengthening IF windows through the meso level program.