The SME sector comprises about 90% of businesses in Malaysia but contributes less than 35% of the country’s GDP.
Rizal Il-Ehzan Fadil Azim, Alliance Islamic BankSMEs emerge as key mechanisms for social upliftment and financial inclusion.
Environmental concerns have dominated the ESG policies of big global banks but regional and local lenders are increasingly turning their attention to urgent social challenges. In many developing economies, second-tier banks are at the forefront of efforts to support and uplift poor communities.
Alliance Islamic Bank, for example, is actively running an economic empowerment programme that has provided funding and training to 173 small businesses. Additionally, the bank manages the distribution of zakat contributions (tithes) to support micro entrepreneurs, ensuring that community members have access to essential resources for their growth. In Morocco, Bank of Africa has taught 5,000 entrepreneurs how to better manage their businesses while Odeabank in Turkey is helping a variety of SMEs improve their energy efficiency. All of these banks have identified SMEs as a key mechanism for social upliftment and financial inclusion.
The rise of purpose-driven banking, which promotes social well-being as well as the interests of traditional stakeholders, is shaping the development of financial services across much of the world. And it’s prompting banks in many countries to take another look at their ESG strategies and their business objectives.
“What we do is not purely for commercial reasons. It’s also for humanistic reasons, aimed at improving society, enhancing income levels and promoting the general welfare and wellbeing of the community.” Says Rizal IL-Ehzan Fadil Azim, CEO at Allaicen Islamic Berhad.
