Micro finance industry is rapidly progressing industry because of its superior performance in poverty alleviation. It involves extending small loans, savings and other basic banking/financial services to the people who are currently financially excluded. Micro finance companies adopt key strategies in assisting people who are living in poverty to become financially independent (Littlefield and et. al., 2003). Thus, micro finance industry provides banking services to those who are either unemployed or do not have any other alternative to park or borrow money. It is not a new concept as such type of operations existed in 1700s also however, reach of this industry has increased round the world irrelevant of state of economies.
From undeveloped to developing countries, all have recognized the significance of micro finance industry for economic stability. Moreover, micro finance industry has benefited several people by providing extended small loans, savings and better financial services. Most of the existing researches have focused significance of micro finance in developing countries such as India, Pakistan and Bangladesh etc (Bayliss-McCulloch, 2009). In this dissertation, a study on developed nation is conducted for assessing the role of micro finance industry. United Arab Emirates (UAE) is considered for the identifying the relevance of Micro Finance Institutions (MFIs). It is one of the most developed economies in the Arab Gulf and has one of the world’s highest Gross Domestic Product (GDP) per capita (United Arab Emirates GDP Growth Rate, 2014). As the area of this study is too large therefore, specifically two companies of micro finance have selected i.e. Latham and Watkins (L&W) and Grameen-Jameel Micro finance Limited. L&W is a global law firm which is having around 2000 attorneys in 31 offices located in across various countries (Allard, 1993). Grameen-Jameel is one of the top service providers Micro Finance Institution in Dubai with a mission to enhance this sector’s stability and helping poor by providing catalytic financial and non financial services to the industry as a whole. Both of these above cited companies are serving their clients with an intimate understanding of their commercial needs (Jaffer, 1999).
The World Bank report stated that worldwide there are 2.5 billion people who are not financially included. Previous researchers have justified the role of MFIs in growth of undeveloped or developing nations but this study focuses on relevance of micro finance industry in stability of developed economies. Although UAE is a developed nation but there are some serious challenges such as managing through economic recovery with emphasis on finding new growth sources and assessing capital. Furthermore, UAE also needs to manage its cash flow effectively. These challenges need to be met to bring economic sustainability in Arab nations and other developed economies. MFIs can assist these countries to manage cash flows and overcome such problems. Therefore, role of micro finance is being evaluated in this manuscript in order to provide useful information to countries and MFIs. Supporting micro finance is critical issue which must be patronized in Arab nations as large number of population can be captured by MFIs (Dusuki, 2008). Due to integration of world, economic situations of economies are changing therefore, impact of MFIs and its contemporary effects on United Arab Emirates has been bring into the center for conducting this study.
There are various ideas for writing a manuscript and conducting the study for it but not always all ideas go in a correct way. There is a need to do feasibility study in order to assess relevance of the study. For this research, viability analysis has been conducted for identifying the worth of present dissertation. By doing feasibility study of this research, execution of this idea was found worth bearing. Therefore, justification of decisions taken at various level of this manuscript has been presented in this sub section.
The reason for selecting developed nations for studying the impact of MFIs was availability of only few studies in this field. Most of the researches have concluded the significance of micro finance in growth of developing nations. By doing this study, impact of micro finance on developed nations can also be assessed. UAE is considered for this study because it is found one of the most developed economies where per capita income is higher (Robinson, 2001). Some difficulties are faced by the country because of contemporary situation which can be resolved by promoting micro finance industry. Therefore, it is rationale decision to consider United Arab Emirates.
By studying the impacts of micro finance in UAE, its results and implications can be applied on other developed nations. As selected economy can be a representative for other developed nations. Furthermore, two major micro finance companies, Latham and Watkins (L&W) and Grameen-Jameel Micro finance Limited have been chosen to collect data and study thereon because the area of study is so wide that could not be completed in such a limited time. Micro finance institutions of UAE have been selected because the data from its employees can be collected by putting reasonable efforts. Thus, the study can be progressed with in this way to achieve the aims and objectives. A research must conclude some unknown facts or extend existing literature which can be done by doing this study. Thus, it is justifiable to go with this idea as reasonable decisions have been taken. This dissertation can assist developed countries to prepare a roadmap for promoting micro finance industry. In addition to it, this may also present fruit bearing recommendations to MFIs to pave their way for expanding the business in developed nations as well. Thus, adequate justifications have been presented which suggest that it is rational to complete this study with this title and idea.
A problem statement entails the direction and severity of an issue on which a study is based therefore key problem in conduction of this study is identified. The key issue in developed nations which cease their growth is inability to manage cash/money by all segments or groups of a society. Along with it, developed nations in contemporary scenario are facing difficulties in sustaining their growth because of significant number of people financially excluded.
In present era, this issue is very important because all types of economies in world are integrated. Poor performance of underdeveloped and developing countries may affect growth of developed nations. Micro finance industry can overcome this problem in order to minimize contemporary effect of global slowdown of economies (Hulme, 2000). Thus, above cited issue can be addressed by this study because it aims at identifying the solution to this problem. By conducting this research, developed economies can be served with a solution for alleviating poverty and financial exclusion. The above given issue can be met with by assessing the impact of micro finance industry on developed and hi-tech economies. Thus, by identifying the influence of micro finance in growth and sustainability of developed nations, the study can be made worth bearing. On the basis of above problem statement, aims and objectives of this manuscript have been identified.
This is an important section of the study because it attracts eyeballs of several viewers/audience who are interested in knowing crux of this dissertation. Aims for a study serve as ultimate focus of the dissertation around which it revolves. This is framed in such a way that it can present the reason for conducting this research in limited words. Objectives on the other hand are essential to breakout aim into key points by which it can be achieved. Objectives are essential to be framed because research objectives are supportive statement for reaching the ultimate goal (De Wit and Meyer, 2010). The aims and objectives of this manuscript are presented here under:
To investigate the impact of micro finance and its contemporary effect on UAE’s economy
On the basis of research objectives, relevant interrogative statements have been framed which serve as complementary to the goals of a study. Answering to these questions can help researcher to meet above mentioned objectives. Each objective may have one or more research questions for achieving it. Research questions corresponding to each objective have been listed here under:
It is essential to define scope of a study in order to provide the idea to readers regarding the boundaries of the manuscript. A dissertation without setting or identifying limits is useful for nothing. Readers/audiences are interested in associating specific area with the study therefore; scope of the present research study has been stated in the introductory part of this dissertation. The present study can be applied only on developing economies because representative country of the same i.e. UAE has been selected to assess impact of micro finance industry. Furthermore, only two companies, Latham and Watkins and Grameen-Jameel Micro finance limited have been selected to study because of limited resources. However, rational approach was employed for choosing the companies but the results may deviate from reality because of limited data. Moreover, the study cannot lead to valid for all developed economies because contemporary effects of micro finance are studies which vary across nations.
The structure of this dissertation is break down into various chapters in order to present it in more systematic manner. A total of five chapters are completed in this manuscript including introduction, literature review, research methodology, data analysis and conclusions & recommendations. A brief introduction of all the chapters is given under the following headings.
Under this chapter, a brief introduction of this dissertation is presented in which background is given to stimulate readers to go through entire manuscript. A justification of the study is also given in order to state the significance of present study. Research objectives have also presented in this chapter so that readers can understand the focus of the dissertation and scope of the study is also defined in this section.
On the basis of objectives, literature review is conducted which is stated in chapter -2 of this study. In this part, findings of existing researches are reviewed and critically analyzed to infer the conclusions based on qualitative data. Furthermore, the literature review is done on the basis of identified topic with in which the entire study revolves. Along with journals, books are also referred for reviewing the literature.
After reviewing the literature, methodology for this manuscript is defined by specifying the philosophy, approaches and methods used for conducting the research. In this section, data collection and sampling part is also covered. Moreover, research limitations because of data collection are prescribed in order to set limits of the study. In this chapter, ethical issues and resources required for applying methodology is also stated.
Data analysis is essential part for any dissertation because conclusions and recommendations are drawn on the basis of data analysis. The data is analyzed in two dimensions both qualitative and qualitative. Required tools and statistical tests are applied on the collected primary data. Moreover, the data so analyzed is interpreted for convenience of audience to infer abstract meaning in technical analysis.
This is the finishing chapter of this manuscript as entire study is concluded under this section of the study. On the basis of analysis of data, conclusions are inferred which are most important part of this dissertation. Furthermore, government in developed economies will also be given fruitful recommendations for sustainability. In addition to it, managerial implications are also presented in order to represent practical application of the conclusions derived from this research.
Review of literature is essential because it helps in understanding the area of study in depth. A critical evaluation is conducted of existing literature in order to make vivid insights over the above cited title of dissertation. Following headings have been identified under which the literature review is done as it limits the study in specific area. The below mentioned titles have been identified on the basis of objectives to the study which are deliberated here under:
Financial inclusion is directly connected with micro finance but gradually it has become a household term. The term financial inclusion refers to the delivery of banking services at affordable cost to poor segment of the society. Micro finance services are not only confined to poor and needy people but it also extends to small and middle size business entrepreneurs. Thus, it is related to basic finance and banking services to those who cannot avail such services from any other sources (Robinson, 2001). Allard, (1993) in their study revealed that micro finance industry has grown exponentially due to broad awareness regarding investment and financial needs of poor people (Allard, 1993).
Robinson, (2001) in his study stated the difference between the ordinary loan program and micro financing. He described that micro finance companies lend money with a mission to help the poor, women and helping the nation to alleviate poverty. Key promotional motive of MFIs is to support peer system as loan is offered to individuals who are in a group and the group members share the success and ideas for solving business and personal problems (Robinson, 20010. According to Bayliss-McCulloch, (2009) most of the people in UAE are not aware of the difference between major financial institutes and micro finance companies. However, micro finance programs differ between organizations and economies (Bayliss-McCulloch, 2009). There are two major orientations by which lending is performed; at individual level and group based lending.
In United Arab Emirates group based lending is more common however; there is a tendency of MFIs to focus on individual lending whereas non-profit organizations focus on group based lending. The concept of group based liability has become popular because of joint liability of borrowers for repayment (De Wit and Meyer, 2010). Many authors feel that MFIs must focus on group based lending because of its underlying mechanism of joint responsibility for loan. But individual lending is also essential because there are fewer formalities with flexibility. Thus, MFIs can be promoted in UAE by focusing on individual lending (United Arab Emirates GDP Growth Rate, 2014). MFIs product range varies from one economy to other based on the state of its development. In developing countries it is consisted of credit services and other conventional financial products such as savings and insurance. However, in developed countries like UAE, products have designed according to contemporary situations of economy. Beck and et. al., (2000) stated in his study that UAE is performing well when it comes to economic development measures such as growth in national income, Gross Domestic products and infrastructure development (Beck and et. al., 2000). Nonetheless, there are significant numbers of people who are poor and unemployed in UAE who can be covered by MFIs in developed countries. Therefore, these small credit institutions offer products for lending to the youth. Their key products are comprised of loans and advances for health, education, starting up a new business rather than saving and investment.
Easterby-Smith and et. al., (2008) in his study identified that a developed country is one which is economically developed with hi-tech industrial environment. United Arab Emirates is a developed economy because of adequate infrastructural services with higher income group majority (Easterby-Smith and et. al., 2008). The country has performed well which can be measured any of the economic parameter such as economic growth rate, financial investment, GDP per capita and sustainability (United Arab Emirates GDP Growth Rate, 2014). Jaffer, (1999) in his study also concluded the key points that explain the significance of micro finance in UAE such as creating a platform to inculcate habit of saving money, providing formal credit avenues and lugging gaps in public subsidies (Jaffer, 1999).
As per World Bank report, there are around 2.5 billion people who are financially excluded and availing informal credit with almost 80% of them are living in extreme poverty (Standard of living in the developing world, 2014). Hartungi, (2007) in his study revealed that in developing nations, it is surprising that micro finance industry has stretched the surface of poverty only in Bangladesh. Thus, in developed nations, relevance of micro finance industry is questionable. However, he also provided that the low performance of this sector in developing economies could be due to less infrastructure services (Hartungi, 2007). Mayoux, (2000) stated that a developing nation has balanced resources with good infrastructural services therefore; micro finance sector can provide long term sustainability to the economy of UAE (Mayoux, 2000). People in Dubai and other Arab segments, do not have saving habits that could create negative contemporary effect in the economy. Hulme, (2000) revealed in their research that the reason of global economic slowdown in developed economies such as US was witnessed because of more spending habits of people than to save the money (Hulme, 2000).This can be seen as contemporary effect of non-saving habits. Thus, micro finance industry can increase saving habits as most of the people from developing nations such as India and Bangladesh have.
Grabher, (1993) revealed in his study that unbanked population has been vulnerably and reluctantly dependent on informal channels of credit because of no other source of financing. In developed nations also there is informal credit dependency which can be eradicated through micro finance industry (Grabher, 1993). However, micro finance sector is not relevant for those people who want to source huge amount of finance. Furthermore, there are many people in UAE who prefer informal credit because of least documentation and formalities. Dusuki, (2008) concluded in his research that micro finance industry has not captured only a poor segment but many industrialists from different sectors such as oil and gas etc. Government of UAE can stimulate the growth of economy by promoting micro finance for financial inclusion (Dusuki, 2008).
Public subsidies and welfare programs are essentially promoted by government of any nation for achieving sustainability and becoming super power. Orozco, (2004) in his study argues in favor of micro finance for developed countries because it plugs the gap in public subsidies and welfare programs. He also revealed that a considerable sum of money that is meant for poor does not reach them in fact (Author). Although micro finance industry has various difficulties to cope up with existing financial system in UAE but their presence has significantly benefited for spurring leaks in public subsidies and welfare programs (Orozco, 2004).
Hulme and et. al., (1996) concluded in his study that microfinance involves extending small loans and other financial services thus; it is not only significant for developing and underdeveloped nations but economies like UAE are also taking advantage because of micro finance sector (Hulme and et. al., 1996). Contrary to it, De Wit and Meyer, (2010) presented different views regarding the importance of small financial services as he explored the fact that least developed countries have more growth opportunities because of presence of micro financing compared to most developed countries. He stated that developed nations have already access to banking services with better loan repayment rates and extending education. Therefore they might not get benefited and sometime, micro finance companies cannot cover the cost because of limited lower class people (De Wit and Meyer, 2010). However, Dubai and other developed economies have also obtained significance of micro finance sector in terms of improved health and welfare, sustainability and job creation (Harper, 2002).
Micro finance institutions (MFIs) are individual units of business which provide services similar to banking and financing to untapped market/customers. Mead and Liedholm, (1998) studied the contribution of MFIs in UAE and concluded that these institutions have affected the economy in positive way as household access to finance and micro and small &medium size enterprises became able to take advantages of formal credit facilities (Mead and Liedholm, 1998). Furthermore, these have also assisted developed countries to spur growth and reducing inequality. Arab world has highest population of unemployed youth & adults who have no option other than starting/opening up small & micro enterprise.
Major micro finance companies have revived the growth of economy. However, Dusuki, (2008) in his study concluded that micro finance institutions in United Arab Emirates are not contributing significantly in comparison to banking and other financial institutions. But there is a huge potential of growth of micro finance sector because of lenient policies (Dusuki, 2008). Today’s financial system is described and regulated as Muhammad Yunus (Nobel peace prize laureate) explained. He is one of the strongest profiles of micro finance in the world who is finder of Grameen Bank. Morduch, (2000) in their research revealed that Yunus had set his focus towards the contemporary challenges faced by economies such as UAE. Providing credit worthiness was his extreme focus and this way he presented microfinance as a new phenomenon
Morduch, 2000). Rankin, (2002) also revealed contribution of Grameen-Jameel, a micro finance institution in Dubai and other parts of Arab world. According to them, increased micro credit transactions by this MFI have led to a shift in industry and its modern trend towards the focus of commercial aspects of the same (Rankin, 2002). Although, Awogbenle and Iwuamadi, (2010) had presented distinguished view and asserted that there was no shift in the commercial aspect due to MFI has been witnessed in UAE (Awogbenle and Iwuamadi, 2010). Thus, there was an ongoing debate that micro finance companies such as Grameen-Jameel and L&W have leaded to commercialization whereas other argues that commercialization is essential aspect for MFIs in order to become financially viable.
Barth and et. al., (2009) in his study described the contribution of micro credit firms and asserted that MFIs have proven success in aiding the poorest not only in developing countries but also in industrialized nations. The worldwide reach of micro credit and financial services has mainly happened through replication of first program by self helping groups in Bangladesh, India and Bolivia (Barth and et. al., 2009). The reason for success of micro finance institutions in developing countries was the higher rate (up to 90%) of repayment rates. Although economic growth has been witnessed in UAE also as a result of expansion of MFIs but Hadjimanolis, (1999) argued in opposite to the above statements and found that commercialization tend to overtake the actual aim of MFIs i.e. helping the poorest. He further stated the reason behind it and explained that since the cost of lending money to poor was high and transaction cost was also high therefore, they failed in achieving their objective of serving the poor (Hadjimanolis, 1999).
Harper, (2002) further stressed and supported the authors who were in against of MFIs because according to the author, micro finance has not only missed the mark but it has created even more poverty in developed economies such as United Arab Emirates. However, a different approach can be implemented which suggests that sustainability and outreach, in the sense of serving the poorest can be compatible but not in all industrialized economies. There are certain factors and conditions which decide the success of MFIs thus, UAE’s current situations may be favorable for MFIs (Harper, 2002). Carpenter and Petersen, (2002) studied the economical differences between poor people in developing and developed countries which was reviewed in order to assess the role of MFIs in industrialized countries. They found lack of research for examining social and economical effects in developed economies by MFIs (Carpenter and Petersen, 2002). In developed countries like US, MFIs had not succeeded initially because of lack of social capital which resulted in high repayment rates in inner cities of US. The ambiguous knowledge about social and financial intermediation within micro finance companies is witnessed in US. However, in UAE the situation may vary and therefore, micro credit services have served a big portion of poor population. Micro finance institutions have provided their significant contribution as couple of decades ago when banks ignored the world’s poor population; many people were unable to borrow money at affordable price.
The contribution of MFIs in Dubai can be measured from two perspectives; MFIs and borrowers. According to Gibb and Li, (2003) outreach, sustainability and repayment rates can be reviewed in order to examine the contribution of MFIs in UAE. Outreach asserts the number of people actually captured by the institutions i.e. very poor people. By identifying the people captured by MFIs, their contribution can be identified. Along with it, sustainability can also be overviewed by micro finance institutions by assessing the ratio between the deposits and lending of these companies (Gibb and Li, 2003). There has been seen significant rise in the people who are transacting with micro finance institutions in UAE which shows that by the MFI prospective, there has been significant contribution of these small credit facilitating entities. Repayment rate indicate how much percentage of outstanding loan balance is paid on time by customers of MFIs. Hulme, (2000) revealed in his study that there has been significant contribution of MFIs which can also be judged by assessing repayment rate of particular company which is dealing in the same industry. He further stated that identifying repayment loan is simple and strict evidence for the success in contributing to the developed economies. These numbers are used by both L&W and Grameen-Jameel as a measurement of their contribution to the economy of UAE (Hulme, 2000).
Jaffer, (1999) studied the modern scenario of micro finance companies in UAE and asserted that leading organizations such as Grameen-Jameel and L&W are affecting the economy in positive way. Its contemporary effect can be seen as increasing contribution of micro finance industry in GDP of United Arab Emirates. He also explained the modern approach of MFIs which is based on group based lending. Furthermore, group based approach can be heeded as a method of micro finance institution to establish some kind of social collateral. Thus, presently micro credit companies are shaping the social dynamics in UAE (Jaffer, 1999).
According to Love, (2003) micro finance companies have led to design and educate customers/UAE population for financial sources and application. For supporting youth market, MFIs have planned various strategies to increase micro finance network. There are estimated 26% youth in United Arab Emirates who are unemployed (Love, 2003). This percentage is higher comparing to any other region in the world. Young people have only one option left to acquire income source i.e. to start their own business at micro level. Thus micro finance institutions are affecting employment rates and entrepreneurship in the above cited region.
Snow and Buss, (2001) identified the impact of MFIs on UAE’ economy and asserted that it has affected the country’s social capital by improving the economical situation of people. Share capital can be viewed as a measure for poor households by identifying the change in production through microfinance. However, there has been seen impact on UAE economy because of change in consumption activities as well. It generates a side effect of ultimate goal of MFIs and thus, these small credit facilitators have contributed to improve economical conditions of United Arab Emirates (Snow and Buss, 2001). Moreover, another aspect of social capital is women empowerment which has become most popular argument in favor of micro finance in today’s era. Women constitute majority of borrowers therefore, contribution of MFI can be seen as contemporary change in the women empowerment. However, Littlefield and et. al., (2003) provided views that are contrary to this statement and stated that women empowerment can be seen as a success factor of MFIs in developing countries as women in developing countries are considered as less creditworthy (Littlefield and et. al., 2003).
Micro finance activities in developed economies have been challenging because of social, economical and legal differences comparing to developing nations. Therefore, various problems faced by MFIs in commercialized countries. Pretes, (2002) stated that it is crucial to fully examine the difficulties faced by micro credit firms. The entry of such institutions requires the investigation of real future effects which is a difficult task. Micro finance business needs to focus on two major areas in developed nations; financial sustainability ad social impact in order to achieve their goal of alleviating poverty (Pretes, 2002). Zeller and Sharma, (2000) in his study identified that MFIs face difficulties in achieving financial sustainability as they are still highly dependent on donor subsidies. In UAE also only few institutions are there who have proven financially viable and profitable without donors (Zeller and Sharma, 2000). Other than this, competition is another element which ceased the growth of MFIs in UAE.
According to Helmsing, (2003) in their study explained the barriers to MFIs and asserted that competition is most crucial part. It has to compete with other traditional and commercial banks. There are also micro and macro challenges that are faced by self help groups and MFIs. Key macro challenges involve inaccessibility to poor people in UAE and capital inadequacy. Along with it, demand and supply gap in developed countries for micro credit is also a difficulty which MFIs are witnessing (Helmsing, 2003). Lack of women orientation in marketing and delivery of micro finance can also be heeded as key difficulty. Moreover, micro challenges involve inability to reduce high transaction cost and non availability of documentary evidence and collateral among poor people (Allard, 1993). However, these are key problems which are faced by every financial institution in serving poorest population. Microfinance companies in UAE have various problems such as business risk, lack of adequate knowledge, rigidity of existing norms, supervisory capacity and conflicts with competitors (Bingen and et. al., 2003). (Karlan and Zinman, (2008) centralized their study by focusing on major issues faced by micro finance companies in UAE and stated that indebtedness is major challenge in front of MFIs of developed nations as most of the clients fail to repay the amount that they had borrowed. Nevertheless, this issue can be resolved by MFIs through effective business plan (Karlan and Zinman, 2008).
Keeble, (1990) reviewed the challenges faced by MFIs to promote themselves in developed nations such as UAE. Sustainability and social impact can be seen as two major factors which cease MFIs to expand their business in developed nations (Keeble, 1990). In developed nations, small credits are required for consumption instead of production. UK and United States can be seen as most developed nations which have more consumption habits rather than saving. UAE also falls under the category of industrialized nation and saving habits are comparatively low than India and Bangladesh (Rogaly, 1996). Thus, these institutions have to adopt customized strategy for economy of United Arab Emirates. However, these institutions have adopted pro active approach in UAE and focused on unemployed youth. For covering other segments of demographics in United Arab Emirates, presently companies are striving and looking for better opportunities.
Heshmati, (2001) has presented the ways of eradicating the barriers of micro finance industry in United Arab Emirates. He suggested that micro finance companies need to identify right customers who do not have multiple loans because customers with multiple loans may become defaulters (Heshmati, 2001). Lack of regulation and absence of a strong credit bureau can make it easier to identify clients with multiple loans.
Claessens and Perotti, (2007) asserted in his study that among individual and group based lending, commercial MFIs focus on individual lending whereas non- profit micro finance organization give preference to group based lending. According to them, in group liability there is lesser risk as it creates incentives for all members pertaining to a particular group to screen and monitor each other. It also has lower transaction cost for MFIs as extensive screening cost can be avoided. However, it can be moral hazard for companies as some group members can take undue advantage of joint liability (Claessens and Perotti, 2007). On the other hand, individual liability is established by direct contact with borrowers that increases the flexibility of the loan structure. Nonetheless, micro finance companies need to monitor continuously in the case of individual borrowing by band and therefore higher cost is incurred by the MFIs.
Bayliss-McCulloch, (2009) concluded in their study that in order to promote micro finance in UAE; companies need to focus both segments. However, for commercial organization, individual financing is a better option. It can provide flexibility to customers which are more demanding in developed economies like UAE. By this way, MFIs can stimulate customers to transact with the company (Bayliss-McCulloch, 2009). Presently MFIs are focusing more on lending to the youth for establishing new business but by this way micro credit institutions cannot achieve their business activities. In order to achieve positive contemporary effects on economy of UAE, these companies need to serve non financial services such as education, business development and health advice (Islamic Microfinance should be Introduced Internationally, 2014). This would also assist the government to cover all people under insurance and financial services in order to eradicate poverty level (Ahlin and Jiang, 2008). Thus, MFIs should offer both financial and non financial services combined in order to get better response from customers and propel youth to be financially included.