KUALA LUMPUR: There is no doubt that the bottom 40 (B40) group and the asnaf community are finding it difficult to get a loan from any banking institution in Malaysia, making it challenging to find start-up capital and continue with their business survival post-pandemic.
Recognising the difficulties of the people, Bank Negara Malaysia (BNM) initiated the iTEKAD programme in 2020 to help low-income microentrepreneurs strengthen their financial management and business intelligence towards generating continuous income.
Bank Muamalat Malaysia Bhd was one of the first banks to respond to BNM’s call to start the iTEKAD programme, along with Bank Islam Malaysia Bhd and CIMB Islamic Bank Bhd.
Two iTEKAD Models
Bank Muamalat head of economics and social finance Dr Mohd Afzanizam Abdul Rashid said the bank has developed the iTEKAD programme based on two models, namely the iTEKAD Mawaddah and iTEKAD Mahabbah, which have so far benefited 777 asnaf and B40 entrepreneurs with a disbursement of RM6.5 million.
“The programme allows participants, consisting of asnaf and B40 micro-entrepreneurs, to have access to financing and to enable them to start or continue with business activities.
“This effort will indirectly encourage entrepreneurial activities among these groups. They will be given structured training to improve their skills and be guided to improve their business acumen and generate higher income sustainably,” he told Bernama.
The iTEKAD Mawaddah is a Sharia innovation that combines social financial instruments (zakat funds) and investment funds that are intended as financial assistance to help those who are eligible to apply.
It uses a Shariah-compliant limited investment account product based on the two-stage concept of Mudarabah, which is a contract between the capital provider (rabbul mal) and the entrepreneur (mudarib), Afzanizam explained.
“This programme is designed to help micro-entrepreneurs, especially among the B40 and asnaf communities affected by the COVID-19 pandemic, rise and rebuild their businesses, as well as support the efforts of the Malaysian government and BNM in helping these entrepreneurs be more viable,” he said.
Meanwhile, the iTEKAD Mahabbah involves the participants of the Pahang Micro Entrepreneur Financing Scheme (I-Push), which is a collaborative programme between the Pahang state government and Bank Muamalat.
The objectives and targets of iTEKAD Mahabbah are parallel with those of iTEKAD Mawaddah, which is to provide structured training assistance, business asset assistance, and financing.
“The difference between the two iTEKAD models is from the point of view of the provider of financing funds and Shariah contracts. Funding for iTEKAD Mawaddah comes from investors, while for iTEKAD Mahabbah it comes from the Pahang state government.
“The Shariah contract for iTEKAD Mawaddah is an investment with a percentage of profit sharing (mudarabah), and for iTEKAD Mahabbah it is a loan without profit or interest (qard),” he said.
25 participants, RM160k financing
Bank Muamalat said that through iTEKAD Mawaddah, it has so far had a total of 25 participants among the asnaf and B40 communities, with more than RM160,000 in financing.
Meanwhile, Bank Muamalat said the business asset grant from BNM and the Ministry of Finance stood at RM85,000. This grant fund still has RM41,253.31 remaining to be used for the new group later.
For the year 2023, Bank Muamalat is targeting funding for the Mawaddah iTEKAD programme of RM150,000, Afzanizam noted.
The Mawaddah iTEKAD programme has had four groups since its launch, where investment funds for the first group have been ongoing since Sept 22, 2021, with a total of 10 participants from Kuala Lumpur, Selangor, and Johor.
“A total of 10 participants from the first group and five participants from the second group have completed the one-year business venture period for each group.
“Eight participants managed to generate business results that are able to return investment funds and generate profits for investors,” he said.
Almost all iTEKAD participants have managed to maintain their businesses in addition to taking advantage of the structured training received throughout the iTEKAD programme, Afzanizam said.
“They improved their business management from an accounting point of view and also expanded their product marketing through online platforms such as Grab Food, Food Panda, Shopee Food, Facebook, Instagram, and Tik Tok,” he said.
Profit sharing under iTEKAD
The Mudarabah contract applied to the Mawaddah iTEKAD programme is structured through a two-stage framework.
According to Afzanizam, the first stage of Mudarabah will involve investors (Rabbul Mal 1) and the bank, while the second stage is between the bank (Rabbul Mal 2) and entrepreneurs.
“After the end of the investment period (for example, one year), the profit sharing ratio will be divided at a rate of 70 per cent to the entrepreneur and 30 per cent to the bank.
“At the next stage, the 30 per cent profit obtained by the bank is shared at a rate of 95 per cent to investors and five per cent to the bank,” he said.
Afzanizam said if entrepreneurs become unprofitable due to unforeseen and unavoidable circumstances (genuine loss), then they are only required to return all sales revenue achieved throughout the investment period and business.
However, if entrepreneurs are found to have suffered losses due to their own negligence, they are required to return all sales revenue achieved throughout the investment and business period and to repay all investment funds received at the beginning of the iTEKAD Mawaddah programme.
Helping entrepreneurs in agriculture
Bank Muamalat has expressed its desire to help asnaf and B40 entrepreneurs who run businesses based on farming or agriculture to reduce the country’s dependence on foreign agricultural products.
“Based on records and preliminary observations, this field is able to generate profits for entrepreneurs involved in parallel with the performance of profits in the field of food and beverage-based enterprises as well as services.
“In addition, this field is also able to create job opportunities for the asnaf and B40 groups, especially in rural areas, while increasing the country’s export income and reducing dependence on foreign agricultural products,” said Afzanizam.
In addition, Bank Muamalat is also planning to further develop the Mawaddah iTEKAD programme through collaboration with the State Islamic Religious Council and selected non-profit organisations. – BERNAMA
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