Breaking barriers: How Muslim immigrant entrepreneurs in Norway navigate financial exclusion

Mohammed’s story

Mohammed, a 35-year-old Syrian refugee, arrived in Oslo in 2013 with his family. Determined to build a stable future, he worked tirelessly to open a small grocery store, pooling savings from his family and community members. For Mohammed, the business was more than just a means of income—it was a way to integrate into Norwegian society, provide employment to fellow immigrants, and contribute to his new home.

However, despite his efforts, Mohammed hit the “invisible ceiling.” He wanted to expand the store, hire more employees, and help his sister open a café. Yet, when he sought financing, he faced a daunting challenge: all formal business loans required interest payments (riba’), which Islam has prohibited. He approached his local mosque for guidance, but they had no structured financial alternatives. The local banks, unfamiliar with Islamic finance, saw him as too high a risk as a recently-arrived refugee with few assets. Without access to capital, Mohammed found himself stuck—unable to scale his business and fully integrate into Norwegian society.

Mohammed’s story is not unique in Norway or beyond. Many Muslim immigrant entrepreneurs in Norway experience financial exclusion, forcing them into informal – and potentially unregulated – financing and limiting their business growth. They struggle to gain traction in an economic environment that does not always recognize their financial constraints, cultural or religious sensitivities, or unique business models. This blog postexplores these challenges in greater depth and presents alternative perspectives that could reshape financial inclusion for immigrant entrepreneurs in Norway.

The landscape of Muslim entrepreneurship in Norway
Norway has a strong entrepreneurial culture, with thousands of new businesses registered annually. However, immigrant entrepreneurs face additional hurdles, particularly those from Muslim-majority backgrounds. The blocked mobility hypothesis suggests that systemic barriers in the labor market push immigrants toward self-employment, yet financial exclusion prevents them from scaling their businesses.

Muslim entrepreneurs in Norway frequently encounter difficulties accessing financing models that cohere with the principles of Islamic law, or are Sharia-compliant. Conventional banks, unfamiliar with Islamic finance, do not provide interest-free alternatives, leaving many business owners with limited options. As a result, many rely on personal savings, community donations, or mosque-based lending circles. While these informal financial networks provide an initial foundation, they are often insufficient for long-term business sustainability and growth.

Additionally, the Norwegian financial system does not always recognize or accommodate the religious sensitivities of Muslim entrepreneurs, complicating their decision-making process. Beyond financial exclusion, many immigrant entrepreneurs must navigate an economic landscape that demands proficiency in the Norwegian language, familiarity with local regulations, and strong business networks—all of which take time and resources to develop. These challenges are further exacerbated by regulatory barriers, such as bureaucratic processes for business registration and high rates of taxation, which can be particularly challenging for newcomers unfamiliar with the legal framework. Despite their efforts, Muslim entrepreneurs often find themselves in a financial limbo, unable to access the necessary resources to turn their businesses into sustainable enterprises.

Furthermore, socio-cultural factors play a significant role in shaping entrepreneurial success. Many, but certainly not all, Muslim immigrants originate from business-oriented cultures where entrepreneurship is deeply embedded within family structures and social networks. In Norway, the support structures available for immigrant entrepreneurs are not always well-developed, and government programs tend to focus on full-time and permanent employment rather than self-employment. This lack of targeted assistance leaves many Muslim entrepreneurs operating in the informal economy, struggling to transition into the mainstream financial system.

Islamic finance and profit-and-loss sharing as potential solutions
Islamic finance offers an alternative, interest-free model that aligns with religious principles while supporting economic growth. Two key Islamic financing methods that are readily available and could benefit Muslim entrepreneurs in Norway are Mudaraba and Musharaka. Mudaraba operates similarly to a venture capital model, where an investor provides the capital while the entrepreneur manages the business, with both parties sharing in the profits. Meanwhile, Musharaka follows a joint investment partnership approach, where all parties contribute capital and share profits and risks equitably. These models have been widely adopted in Muslim-majority countries – and many Muslim-minority countries throughout Europe – providing entrepreneurs with financial resources that do not conflict with their religious beliefs. However, many bankers and financiers in Norway do not know or understand that these methods are compatible, and the failure to put them to use has left many Muslim entrepreneurs without viable alternatives.

Another promising solution is the introduction of Impact Investment Funds (IIFs), which blend social impact goals with financial sustainability. These funds operate on principles of risk- and profit-sharing, aligning closely with the tenets of Islamic finance. By providing capital without the burden of interest, they offer Muslim entrepreneurs an ethical means of growing their businesses. Beyond financial benefits, such funds also encourage stronger partnerships between government entities, private investors, and financial institutions, fostering an ecosystem that is inclusive and economically viable. Countries such as the UK have successfully implemented Islamic finance regulations, proving that these models can work in European contexts. If Norway were to adopt similar measures, it could create new pathways for financial inclusion, enabling Muslim entrepreneurs to thrive without compromising their religious convictions.

Bridging the gap: The role of religious leadership
Another overlooked but crucial aspect is the role of religious leaders in guiding financial decision-making. Research indicates that many Muslim entrepreneurs turn to mosques and religious scholars for financial advice, yet these leaders often lack formal training in Islamic finance and entrepreneurship, and may be themselves new to the Norwegian context. The relationship between faith and finance is deeply embedded in the decision-making process of many Muslim business owners, and as such, imams and religious figures play a significant role in shaping their choices.

Despite their influence, many religious leaders are not necessarily equipped with the necessary financial and cultural literacy to provide sound guidance on complex business matters. This gap underscores the need for educational initiatives that train religious leaders in financial principles, both from an Islamic and a conventional perspective. If imams were to receive training in financial literacy, they could offer more effective support to Muslim entrepreneurs, helping them navigate the challenges of starting and expanding businesses within Norway’s financial framework.

Unlocking economic potential
Muslim immigrant entrepreneurs in Norway, like Mohammed, face significant barriers to financial inclusion. However, by expanding financial alternatives, strengthening the role of religious leaders, and fostering partnerships between financial institutions and capital providers with entrepreneurs, Norway can create an environment where immigrant entrepreneurs can thrive.

Incorporating Sharia-compliant financial models into Norway’s economic framework could significantly enhance inclusivity while fostering a more diverse and resilient economy. The success of such initiatives has already been demonstrated in other European countries, proving that there is a viable path forward. While these efforts require commitment from multiple stakeholders—including policymakers, financial institutions, and religious leaders—they present an opportunity to bridge the gap between financial accessibility and religious ethics.

As Norway moves forward, the economic integration of Muslim immigrant entrepreneurs will depend on the collective efforts of society to embrace alternative financing models that reflect the country’s multicultural realities. By fostering a financial landscape that accommodates diverse perspectives, Norway can set a precedent for economic empowerment and financial inclusion, ensuring that no entrepreneur is left behind due to their religious beliefs.

References:

• Brekke, T. (2018). "Halal Money: Financial Inclusion and Demand for Islamic Banking in Norway." Research & Politics, 5(1): 1-7.
• Brekke, T., & Larsen, M. (2020). Allah, Villa, Volvo: Muslim Professionals in the Nordic Countries and Their Financial Attitudes and Practices. Open Library of Humanities, 6(2), 5:1-34.
• Tameme, M., & Asutay, M. (2012). “An Empirical Inquiry into Marketing Islamic Mortgages in the UK.” International Journal of Bank Marketing, 30(3), 150-167.
• Tobin, S. (2024). Understanding and Supporting Female Immigrant Labour: Comparing the Cases of Jordan and Norway. Report for KOMPLEKS: Comprehensive Support for People in a Vulnerable Situation in the Polish Migration Management System. ICMPD.
• Vinogradov, E. (2008). Immigrant Entrepreneurship in Norway. PhD Thesis, Bodø Graduate School of Business.