This study examines financial structures adopted by Muslim immigrant entrepreneurs in Scotland and the challenges they face accessing state-driven financial support. It explores the effectiveness of different financing models, emphasising how religious values and moral concerns shape financial decisions. The study suggests that formal, top-down state support often clashes with strong religious sentiments, prompting entrepreneurs to seek morally aligned, informal financing alternatives. Focusing on Scotland, particularly cities like Aberdeen, Dundee, Edinburgh and Glasgow, the research highlights the financial integration challenges faced by Muslim immigrants, underscoring their entrepreneurial innovations rooted in religious obligations. The paper analyses financial services available to these entrepreneurs, including the Scottish Growth Scheme, and identifies gaps and opportunities within Scotland's financial landscape. Through in-depth interviews with 26 Muslim immigrant entrepreneurs, the findings reveal a dependence on informal financing sources and a reluctance to engage with conventional banks due to religious prohibitions. This study ultimately provides insight into how financial exclusion, coupled with moral and religious constraints, drives innovation and alternative financial practices amongst Scotland's Muslim immigrant entrepreneurs.
Policy Implications
- Develop government-backed zero-interest loans and other Shariah-compliant financing products to cater to the needs of Muslim entrepreneurs. This approach can address religious constraints against interest-bearing financial instruments, facilitating greater financial inclusion for Muslim immigrant entrepreneurs and reducing reliance on informal financing networks.
- Empower community-based financial support networks by strengthening the role of community-based financial initiatives such as mosque-led microfinance, rotating savings groups and community-based loans. Policies that encourage collaboration between Islamic institutions and government bodies can promote inclusive access to financing, foster community engagement and enhance the economic resilience of marginalised groups.
- Enhance financial education and awareness campaigns by implementing targeted educational initiatives to improve understanding of Islamic finance options and clarify misconceptions about available financial products. Partnerships with Islamic banks, community leaders and local business networks could play a crucial role in educating entrepreneurs about Shariah-compliant alternatives, their associated benefits and their limitations.
- Form a dedicated task force on inclusive financial practices by bringing together experts, community leaders and financial professionals. This task force will identify and address barriers faced by Muslim entrepreneurs. It will aim to develop culturally sensitive policies, create a supportive financial ecosystem and explore innovative financing models such as Musharakah (partnership) and Mudarabah (profit-sharing contracts). These models, aligned with Islamic principles, will foster economic growth and promote inclusivity within the financial sector.
Photo by Meruyert Gonullu