Islamic crowdfunding-microfinance for financing small and medium-sized enterprises in Mali

Small and medium-sized enterprises (SMEs) have a great place in the Malian economy but they face significant challenges to access funds from financial institutions (FIs) to develop their businesses. Therefore, SMEs need an alternative model which enables them to access funds easily. This research proposes the Islamic Crowdfunding Microfinance (ICM) model to be an alternative model to conventional models. The ICM model aims to address financing problems for SMEs enabling them to access funds and expand and develop their enterprises. A mixed research approach (interview and questionnaire) has been adopted to accomplish the research's aims. The questionnaire was used to investigate challenges faced by SMEs in terms of financing accessibility and their intention toward using microfinance (MF) and crowdfunding (CF). The data was collected from 386 respondents and Stata was used to descriptively analyze the data. On the other hand, interviews with experts (academicians and practitioners) were carried out to investigate the ICM model in terms of suitability and applicability for financing Malian SMEs. The interview data were thematically analyzed. The descriptive results demonstrated that SMEs in Mali are discouraged to apply for funds because of a lack of collateral, high-interest rate, prohibition of interest in Islam, lack of relationship with banks, track record, and business plans. In addition, according to the majority of SMEs, access to funds from FIs is difficult due to the high-interest rate, collateral, lack of relationship with banks, long loan processing time, insufficient loan documents, business plans and track records. Further, MF and CF are accepted by Malian SMEs. Hence, they are ready to use the ICM model if it is available. The interview findings indicate that the ICM model is suitable and applicable for financing SMEs in Mali. All experts confirmed that the ICM model is appropriate for SMEs to access funds. Further, it gives a chance for MFIs to expand their financing activities. It is to make sure that the ICM model can be adapted to address financing problems for SMEs and hence create more jobs and minimize the unemployment rate. Keywords: Mali, SMEs, Crowdfunding, Microfinance, Islamic finance.