The background

Our research found that Muslim immigrant entrepreneurs in Norway face significant financial exclusion. Over 60% of surveyed Muslims in Norway agreed that interest-based loans are forbidden in Islam, and 78% of Muslim entrepreneurs in the country indicated they would use Islamic financial products if available. However, their lack of availability in Norway limits their access to banking services and restricts their ability to scale their businesses. As a result, many rely on informal financing from family, mosques, or community lending circles. While Norway has introduced labor integration programs, only 55% of immigrant participants in the Introduction Program find employment or educational opportunities, leaving nearly half without viable career paths – and turning to entrepreneurship. Even targeted programs for immigrant Muslim women (such as Jobbsjansen) result in only 44% of female participants finding full-time employment afterwards. Among immigrant entrepreneurs, 17% of business owners come from foreign-born backgrounds, with more than 44% of small retail businesses in Oslo being run by immigrants. However, female participation remains limited, as women receive only 38% of entrepreneurship opportunities compared to men.

Thus, the intersection of gender, migration, and entrepreneurship in Norway presents unique challenges and opportunities. Immigrant women, especially Muslim women, often turn to entrepreneurship due to labor market barriers such as credential recognition, language difficulties, and discrimination. However, financial exclusion remains a significant hurdle, as many Muslim entrepreneurs cannot access conventional bank loans due to Islamic prohibitions on interest (riba’). Without alternative financing mechanisms, they rely on informal sources such as family, mosques, and community lending groups, limiting business growth and integration into the formal economy.

Challenges facing muslim Immigrant women entrepreneurs in Norway

Financial Exclusion: Norway lacks Islamic banking services, making it difficult for Muslim entrepreneurs to obtain Islamic-, or Sharia-compliant financing. Without access to financial products that align with their religious beliefs, many Muslim women business owners are forced to either forego expansion opportunities or seek informal lending networks, which often lack stability and security and create new vulnerabilities. This exclusion affects individual business owners and also restricts broader economic growth and integration within Norway.

Workplace Discrimination and Cultural Barriers: Women face gendered labor norms, childcare respons-ibilities, and a lack of tailored support programs. Many Muslim immigrant women entrepreneurs struggle to balance their business ambitions with family duties,
as Norwegian labor policies often do not accommodate cultural differences in caregiving expectations, through for example, flexible work arrangements. Additionally, business development programs frequently fail to address the specific needs of female entrepreneurs, including how to tackle discrimination in the workplace, leaving them without critical resources including networking opportunities, mentorship, and sector-specific guidance.

Limited Access to Capital: Without collateral or credit history, Muslim immigrant women entrepreneurs struggle to secure loans from conventional banks. Many financial institutions require extensive documentation and creditworthiness assessments, which immigrant women may not be able to provide due to their recent arrival in Norway or limited financial track records. As a result, even if Muslim immigrant women entrepreneurs are willing to take a riba’-loan, they are often unable to secure the capital needed to start or grow their businesses, leading to economic stagnation or dependency on informal funding sources. Furthermore, our research has found that the lack of Islamic banking options disproportionately affects Muslim immigrant women entrepreneurs, as they are less likely than men to engage in non-Sharia-compliant financial practices, restricting their ability to expand their businesses

Policy Gaps: Existing labor market programs focus on labor market integration in wage employment rather than fostering entrepreneurship as a viable economic pathway, which reflects larger priorities in the Norwegian labor economy more generally. While Norway has introduced various initiatives aimed at integrating immigrants into the workforce, these programs largely emphasize integration into the existing labor market in employment rather than self-employment, and do so in a gender-blind way. This oversight fails to recognize the entrepreneurial potential of Muslim immigrant women and neglects the need for specialized training, financing, and regulatory support that could help them establish and sustain successful businesses.

Policy recommendations

1. Establish Islamic finance regulations:

The Norwegian government should explore legal and regulatory frameworks to accommodate Islamic financial institutions, or at a minimum Sharia-compliant financing windows, allowing the establishment of interest-free banking options. Introducing policies that support the development of Sharia-compliant banking would provide immigrant Muslim women entrepreneurs with access to formal financial systems, reducing their reliance on informal networks. This could be achieved through regulatory amendments, tax incentives for financial institutions offering Islamic products, and partnerships with international Islamic finance organizations. Such changes have been proposed in Norway’s history, however conservative political and societal pressures have disallowed their incorporation. The most recent non-Muslim country to undertake this has been the Philippines, who enacted the “Islamic Banking Act” in 2019 as a means to achieve financial inclusion, the bedrock for many of the United Nation’s Sustainable Development Goals.

2. Develop impact investment funds (IIFs):

Encouraging private and public sector partnerships and participation in IIFs that provide capital to social-impact businesses, espeically those owned by Muslim women, can bridge the financing gap. These funds operate on profit-and-loss sharing principles, allowing entrepreneurs to access capital without violating religious prohibitions on interest. Governments and private investors can collaborate to create dedicated funds that support businesses aligned with ethical and social responsibility standards, ensuring long-term sustainability and economic growth.

3. Integrate entrepreneurship support in labor programs:

Expanding the Introduction Program to include business development training and financial literacy courses tailored for immigrant women can foster entrepreneurship. By incorporating modules on business planning, market analysis, and access to alternative financing, Norway can equip Muslim immigrant women with the necessary skills to succeed as entrepreneurs. Additionally, mentorship programs connecting aspiring business owners with established entrepreneurs can enhance learning and networking opportunities.

4. Promote gender-inclusive policies:

Addressing barriers such as childcare, flexible working conditions, and targeted mentorship programs can enable more women to participate in entrepreneurship. The government should consider offering business grants and tax relief specifically for female-led enterprises, and ensuring that existing business support programs include a gender-sensitive approach. By promoting inclusivity, Norway can empower more women to contribute to the economy through entrepreneurial ventures.

5. Enhance financial literacy and awareness:

Developing outreach programs to educate Muslim entrepreneurs on alternative financing models such as PLS, cooperative financing, and Islamic microfinance is crucial. Many entrepreneurs remain unaware of the financing options available to them in Norway, and targeted awareness campaigns can bridge this knowledge gap. Government agencies, financial institutions, and community organizations should collaborate to provide workshops, resources, and advisory services tailored to the unique financial needs of Muslim business owners.

6. Encourage private sector collaboration:

Working with banks and investment firms to create hybrid financial products that cater to the needs of Muslim entrepreneurs can foster greater financial inclusion. By developing innovative solutions that merge conventional and Islamic financing principles, financial institutions can tap into a growing market while supporting the economic integration of Muslim immigrants. Norway can look to successful models in countries such as the UK and Malaysia, where Islamic finance is well integrated into the broader financial system.

Conclusion

Enhancing financial inclusion for Muslim immigrant women entrepreneurs in Norway is essential for fostering economic integration, gender equality, and social cohesion. By adopting a multi-pronged approach that includes regulatory reforms, financial innovation, and inclusive labor market policies, Norway can create an enabling environment for sustainable entrepreneurship by Muslim immigrant women. Implementing these recommendations will not only support economic participation among Muslim immigrant women but also contribute to a more diverse and resilient economy, which is ultimately in everyone’s best interest.

Further reading

“Islam and Entrepreneurship: The Role of Islamic Banking” – This paper examines how Islamic banking can provide access to Shariah-compliant financing for Muslim entrepreneurs. https://www.econstor.eu/bitstream/10419/273880/1/1823594417.pdf

“An Overview of Women Entrepreneurship from Islamic Perspective” – This review provides a general overview of concepts, motives, challenges, and the prospects of women entrepreneurship from an Islamic perspective. https://reads.spcrd.org/index.php/reads/article/download/285/268/517

“Muslim Feminists and Entrepreneurship at Times and in Contexts of Crisis” – This paper explores the coping strategies utilized by Muslim women entrepreneurs in the country-specific context of crises-laden Lebanon. https://onlinelibrary.wiley.com/doi/abs/10.1111/gwao.13018

“Catalyzing Social Entrepreneurship through Islamic Finance” – This publication discusses establishing a policy framework based on Islamic values to guide social entrepreneurship development. https://isdbinstitute.org/product/catalyzing-social-entrepreneurship-through-islamic-finance/?utm_source=chatgpt.com

“Women Entrepreneurship in Islamic Perspective: Driver for Social Change” – This study provides an overview of the concepts and dimensions of entrepreneurial women in the Islamic perspective, both as a social and spiritual driver for change. https://www.researchgate.net/publication/283496199_Women_Entrepreneurship_in_Islamic_Perspective_Driver_for_Social_Change

“The Influence of Cultural Constraints on Entrepreneurial Motivations” – This article explores the influence of cultural constraints on entrepreneurial motivations for women entrepreneurs of the Muslim faith. https://journals.sagepub.com/doi/10.1177/14657503231221691