Interest-free finance

To acknowledge fund availability and people’s preferences in a community, a small survey was conducted in my community. In it, a group of shopkeepers was asked if they were interested in upgrading their businesses; most responded positively, and three types of funds were offered as options: interest-based, interest-free, and partnership-based funds. By rejecting the interest-based option, the shopkeepers mostly preferred interest-free and partnership-based funds. On the supply side, respondents also preferred interest-free and partnership-based funding when asked if they were willing to provide funds to authentic shopkeepers. This highlights a strong community preference for non-interest-based financial mechanisms.

Based on these findings, there could be three ways for enhancement. First, promote partnership funds, where shopkeepers and willing investors are connected through a platform and do business together. Secondly, encourage initiatives without interest funds, in which interest-free loan programmes are promoted and established through Islamic finance institutions or community funds. Lastly, making sure that funds are used for business upgrades by enforcing strong mechanisms to verify the financial needs of shopkeepers. We can initiate a more beneficial and productive financial environment for small businesses by matching funding mechanisms with the preferences of investors and shopkeepers.

Kareem Sadiq

Gwadar