Islamic Microfinance as a Source of Funding for Startups in Libya (Case Study: Namaa Finance)

Abstract

This study aims to explore the role of Islamic microfinance in supporting emerging projects and driving economic and social development, combining a theoretical framework with field research in the Libyan context. The research addresses the concept of Islamic microfinance, its origins, objectives, and diverse structures, focusing on its role in promoting financial inclusion and supporting low-income groups. The study also examines the nature of emerging projects and their importance in the economic engine and job creation.

The study employs a descriptive-analytical methodology, along with a case study of Namaa Finance, a subsidiary of Al Saray Bank for Trade and Investment. Field data was collected through a semi-structured interview with the branch manager of the institution in Misrata. The results show that Islamic microfinance effectively contributes to empowering entrepreneurs and expanding their projects by providing Sharia-compliant financing coupled with integrated non-financial services such as training, mentorship, and feasibility studies, thus enhancing the sustainability of these projects.

The results also indicate that the institution's reliance on the Murabaha structure has contributed to financing various activities in the commercial, service, agricultural, and industrial sectors, helping to reduce unemployment and improve income levels. Conversely, the study revealed challenges facing the sector, most notably a lack of in-depth understanding of Islamic finance, regulatory complexities, and economic and security fluctuations. The study concludes that microfinance is a promising development tool and recommends expanding the range of financial institutions, diversifying the financing methods used, and developing the legislative environment to support entrepreneurship in Libya.