@AGROBiz July/August 2025 | Page 27

July-August. 2025 | @ AGROBiz

shared risk, can build trust and encourage broader participation.

When financial literacy is aligned with both practical needs and religious values, it becomes a powerful tool to help farmers improve their income, manage risks, and grow their businesses sustainably.

ISLAMIC PRINCIPLES

Islam encourages responsible and ethical financial behaviour, which closely aligns with the goals of sustainable agriculture. In Islam, wealth is considered a trust from Allah, and Muslims are reminded that they will be accountable for how they earn and spend their money. The Quran praises those who manage their finances with balance:

“ And those who, when they spend, are neither extravagant nor stingy, but follow a moderate path between the two.”( Quran, Al- Furqan, 25:67)

This teaching reflects the importance of careful budgeting and avoiding waste. Another saying of the Prophet( peace be upon him) warns against taking money with the intention of not repaying it, highlighting the importance of honouring one’ s debts.

For agropreneurs, these values promote good financial habits such as keeping records, borrowing wisely, and making repayments on time. Islamic finance also offers fair and ethical alternatives to conventional borrowing. It avoids interest( riba) and promotes risksharing through contracts like musharakah( joint investment) and mudarabah( profit-sharing).

These models are especially suitable for agriculture, where profits depend on the success of each harvest. In a musharakah partnership, for example, both the farmer and financier share the risks and returns based on agreed terms.

If there is a loss, both sides bear it fairly in proportion to their capital share. This approach helps reduce the financial burden on farmers and builds trust.

In Malaysia, some institutions already offer Islamic microfinance products such as qard al-hasan( interest-free loans) and microtakāful( Islamic insurance). However, many farmers are not aware of these halal options.

POLICY INTERVENTIONS

Improving financial literacy among small agropreneurs in Malaysia requires strong collaboration between government agencies, financial institutions, education providers and community leaders.

At the policy level, financial education should be included in agricultural training programmes and vocational courses. Malaysia previously introduced the National Strategy for Financial Literacy 2019-2023 to promote financial education across all life stages.

This strategy can serve as a foundation for designing targeted programmes that meet the specific needs of small agropreneurs, including topics like farm budgeting, digital payments, and halal finance.

Banks, cooperatives, and fintech companies also play an essential role. They can create user-friendly financial products that match the seasonal nature of farming. For example, mobile apps could include features like crop calendars, expense trackers, and zakat calculators.

Flexible loan repayment schedules that follow harvest seasons can also help ease financial stress for farmers. Financial counselling services should be made more accessible to help farmers make informed financial decisions.

Credit cooperatives can help bring financial services to rural areas. However, many face challenges such as poor management or unpaid loans. To strengthen their impact, cooperatives need proper training, better governance, and digital systems to manage their operations more efficiently.

Partnerships between the public and private sectors can also increase access to finance and education. For instance, collaboration between mobile operators, fintech startups and agricultural organisations could provide farmers with a combination of microcredit, insurance, and digital literacy training all in one package.

Capacity-building efforts should leverage existing community structures. Religious departments, mosques, and musollas can organise financial literacy sessions that combine Islamic values with practical financial skills.

Informal sharing, such as learning from peers in cooperatives or farmer field schools, can also effectively disseminate financial knowledge. At the same time, improving internet access and making smartphones more affordable are crucial steps to ensure that digital financial tools reach farmers in remote areas. Without a strong digital infrastructure, many rural communities will be left behind.

EQUITABLE AGROPRENEURSHIP

Strengthening financial and digital literacy among Malaysia’ s small agropreneurs is essential to improve their livelihoods and support the long-term growth of the agricultural sector.

When financial knowledge is combined with practical tools and guided by Islamic values, it can become a strong foundation for positive change. Looking ahead, support from the government, financial institutions, and local communities is necessary to provide targeted training, expand access to financing, and enhance digital infrastructure in rural areas.

These efforts can help build a more inclusive and resilient farming economy for the future. In the end, financial literacy is not just about handling money; it is about giving farmers the confidence to make informed decisions, grow their income, and build a better future for their families and communities.- @ AGROBiz