Islamic financing of micro- and small enterprises and its impact to reduce the problem of unemployment and as an input to economic development

Abstract

This study introduced the importance of the Islamic financing formula and explained its characteristics and advantages in financing micro and small community projects and establishing and developing new ones to provide solutions to the challenging aspects of the Islamic financing system as a pillar and driver of the economic revival. The study discussed the concept of Islamic Financing projects and their essential role in economic development through their contribution to increasing financial income and adding value to local and national products. To reduce the problem of unemployment hindering the growth of a community and its adverse effects on the state entity in terms of economic, social, political and security stability by providing employment opportunities for the unemployed. The study also narrated the experiences of some countries that have implemented the Islamic financing system and how they have dealt with the economic development challenges. The study has implemented a descriptive approach. A set of findings were reached at the end of the study, among which is that Islamic finance has a diverse nature. It makes it able to finance various sectors of economic activities, especially micro and small projects, which are characterized by a set of characteristics, among which is to reduce the problem of unemployment as an entry point for economic development. The study also provides a set of recommendations, among which is to encourage the establishment of micro and small projects to solve the unemployment challenges, to establish a government agency in charge of the program, and also to develop plans, policies, strategies, and training programs for the success of the Islamic Finance system. Lastly, to grant them additional benefits and exemptions from taxes, customs duties, and other fees to motivate them and enhance their competitiveness.