Tawreeq Holdings’ Chief Executive Officer, Haitham Al Refaie, explains the potential of Sharia-compliant factoring in the MENA region and its capacity to evolve into a mainstream alternative system of finance.
Sharia-compliant factoring must adhere to Sharia principles, and offers an efficient working capital and liquidity solutions for the region’s SMEs at non-recourse basis. The aim is to sustain ethical and transparent trading practice, which will promote financial inclusion and fuel economic growth. In order to insure the complicity of these practices with Sharia law, Al Refaie explains the need to consult scholars and practitioners, as the industry is being established.
Despite the growth potential of the industry, Al Refaie points out the challenges to Sharia-compliant businesses across MENA: Lack of access to finance; availability of reliable credit rating agencies to help with risk assessment; enforceability of bankruptcy legislation, etc.
However, despite the challenges that the industry is faced with, there is great potential for the Islamic economy to grow as a result of government encouragement to support SMEs in the MENA region.
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