Islamic finance at GroFin

Small and medium enterprises (SMEs) are widely regarded as the engines of economic growth of all countries. However, a study by the International Finance Corporation (IFC) has shown that around 35% of SMEs in MENA are excluded from the formal banking sector because they seek Sharia-compliant products that are not readily available in the market.

As an SME development financier that helps entrepreneurs and business owners start or grow their businesses, GroFin is committed to supporting the local economy and taking the entrepreneur experience to the next level by offering Islamic finance products to cater to this emerging sector, thereby supporting growth and economic development.

The GroFin Jordan office has already financed three clients through the new Islamic product and expects to cascade the Islamic product throughout the GroFin network by 2017.

Nature Murabahah Product

Murabahah is not a cash loan; it is a contract of sale of a specific commodity whereby the mark-up over the commodity is disclosed to the client.

This Shariah compliant product allows GroFin to extend financial services to a client by purchasing the commodity for and on behalf of a client at a fixed mark-up, which can be repaid under agreed terms and over an agreed period.

Murabahah is the most widely financing option in the world among all Islamic financing options. Murabahah cannot be used to fund working capital but only for the purchase of goods. However, the goods could be Sukuk and/or Shariah compliant bonds or securities in the stock market whereby the client can liquidate it on the spot and use the funds for his working capital needs.