Nomou Jordan Fund offers Islamic Financing to SMEs

The Nomou Jordan Fund has been offering Islamic Financing facilities since 2015 to small and medium enterprises (SMEs) to meet the specific needs of Jordanian entrepreneurs for such Sharia-compliant products.

Understanding the importance of this interest free and fixed repayment product to SMEs in the MENA region, fund manager GroFin has obtained the requisite Shariah-Fatwa approval from the General Iftaa’ Department of Jordan to deal in the Islamic product. Entrepreneurs like Mr. Abdallah Nofal whose food processing business Retaj was in search of an Islamic finance solution to his working capital woes, have benefitted greatly from Nomou Jordan’s tailored offering.

Mr. Abdallah’s company, Retaj Company for Food Stuffs Supply, Distribution and Trade (‘Retaj’) is located in the area of Sahab in the outskirts of Amman. When Mr. Abdallah approached GroFin in 2016, he was looking for finance and support on a new trading strategy to import his raw materials. The GroFin Jordan team understood Mr. Abdallah’s specific needs and granted him a long term structured Murabahah facility with fixed and predictable repayments. The Murabahah facility was utilised to purchase additional stock of crude oil and finance a higher level of sales and receivables.

Over and above providing an Islamic finance facility of US$ 718,000, GroFin also provided Retaj with business support by helping to enhance the management accounts reporting system.

Retaj offers three types of vegetable oils – Corn, Sunflower and Soybean. And each type of oil comes in multiple sized bottles to cover all income brackets. Starting from 600 ml for small families and individual consumption, to a range of 1.3 litre – 18.0 litre large tin containers that are required by restaurants.

“Nomou’s Islamic finance facility met my specific needs for fixed Islamic Sharia-compliant repayments. GroFin’s funding and support has allowed me to improve my cash flow management as well as increase company sales in the local market.” says Mr. ABdallah.

The nature of the Islamic Finance product offered at Nomou is the Murabahah financing option, which is the most widely used among all Islamic financing options globally. Murabahah cannot typically be used to fund working capital and is used for purchasing goods. However, Nomou recognises that the assets 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. Accordingly, the Nomou Islamic Finance offering can be safely extended to financing working capital needs as well, allowing entrepreneurs greater flexibility in using funds for their particular requirements.

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 fund that helps entrepreneurs and business owners to start or grow their businesses, Nomou is committed to supporting the local economy and taking the entrepreneur experience to the next level. Offering Islamic finance products to cater to this emerging sector helps Nomou support growth and economic development in a relevant cultural context.

About Nomou Jordan

Nomou Jordan focuses on SMEs that are locally owned and managed, and prioritises governorate-based, women-owned, employment-intensive, as well as export-oriented businesses. These are mainly growing businesses as well as start-ups from different sectors (such as agriculture, health, education, energy, manufacturing, water and sanitation, among others) that are in need of long term risk capital, lack track record and/or sufficient collateral and are not adequately served by banks.

As at end of 2016, Nomou Jordan funded a total of US$ 14.1 million, supported more than 320 entrepreneurs, invested in 31 small and growing businesses, sustained over 2,400 jobs and impacted 12,120 livelihoods. The Nomou Fund is managed by specialist SME financier GroFin.

For more information on the Fund and how to apply for finance, please go to www.nomou-mena.com.

About GroFin

GroFin (the Fund Manager) provides an integrated solution of risk finance and value-adding business support to underserved entrepreneurs in Africa and the Middle East. An award-winning, international and multicultural company headquartered in Mauritius, GroFin has operations in 15 countries including the Nomou program countries that include Oman, Iraq, Jordan and Egypt.

For more information, please visit www.grofin.com