Akhuwat – world’s largest
interest-free micro-finance organization
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| Akhuwat photo gallery |
The magic of Akhuwat, founded in 2001 in Pakistan by Dr.
Muhammad Amjad Saqib, lies not in interest rates but compassion, solidarity and
equality.
By Robin Gomes
Finance is a cutthroat world of lending, borrowing,
interest, credit, investment and whatnot. The dominating rules of demand and
supply, profit and loss can either make you or break you. That is why, in
this game, there are gainers and losers; perhaps more losers than gainers.
The idea of an institution that has grown into a giant, and
is still growing, simply by granting interest-free loans, certainly doesn’t fit
into the picture. Yes, this is exactly what the story of Akhuwat is
all about.
Based in Pakistan, Akhuwat is the largest interest-free
microfinance organization in the world based on the Islamic principle of
lending. Akhuwat, meaning fraternity in Arabic, has a vision of a
poverty-free society based on the principles of compassion and equity.
Its mission is to alleviate poverty by empowering socially
and economically marginalized segments of society through interest-free
microfinance and education.
The brain behind Akhuwat is Dr Muhammad Amjad Saqib, its
founder and executive director. For the past 19 years, the
micro-credit institution has grown and continues to grow: the facts and figures
say it all.
What began with a tiny loan of around USD 100, Akhuwat has
so far disbursed around $700 million to 3 million families in Pakistan.
It has a network of some 850 branches in approximately 400 cities in the
country. Currently, it has 1 million active borrowers.
Theirs is not a rags-to-riches story but one of grinding
poverty to smiles and hope. The photo-gallery is but a sample of the
transformation the Akhuwat is bringing about in Pakistan.
A giant’s humble beginning
Dr Saqib explains to Vatican News how it all began.
While working in a poverty alleviation programme in Pakistan, he came to learn
a lot about microfinance.
It was in 2001, that a poor widow in dire need of help
wanted to start a small enterprise to help her family survive. Dr Saqib
arranged $100 for her, with which she purchased two sewing machines.
Exactly six months later, she returned the entire amount,
proudly declaring that she and her family could now survive.
Since then, Akhuwat has never looked back. They have
been giving tiny loans ranging between $200 to $500.
A poor woman who has been helped by Akhuwat
Every minute one loan
“Every minute,” Dr Saqib proudly notes, “we give a loan to a
poor family to fight against poverty and come out of it.” A dedicated
workforce of about 6000 people is backed by a very efficient management
information system (MIS) and high-level technology.
But what really drives Akhuwat, he points out, is the hard
work of its employees who work with a lot of “passion and enthusiasm” in order
to “fight against poverty and bring qualitative changes in the lives of the
poor”.
Gross discrimination in loan policies
According to Akhuwat’s executive director, microfinancing is
one of the best strategies of poverty alleviation. However, the high rate
of “interest is detrimental because religion and faith do not allow taking an
interest”.
Besides, he finds great discrimination and inequality in
loan policies. It is unacceptable that a rich man can obtain a Mercedes
car at 10% interest, whereas a poor man is charged as much as 50% to eke out a
livelihood.
This, according to Dr Saqib, was “the biggest argument”
behind the launch of an interest-free loan programme.
‘Virtuous’ circle
The fund that Akhuwat began creating “was donated by many
people”, Akhuwat’s founder says. They “started identifying good people with
entrepreneurial skills and started giving” them interest-free loans.
These poor people had “the ability and skill to do business but what they
lacked was this basic capital”.
Once people are provided with capital to start their
business, they gradually pay back the principal. Akhuwat enhances the
amount to help them improve further.
This, Dr Saqib points out, “is how the whole circle
started”. “Instead of calling it a ‘vicious cycle’ we call it a ‘virtuous
cycle’.” “You are supporting somebody and he is also supporting somebody”
else.
As Akhuwat’s fund grew, the programme began expanding to
other Pakistani cities.
As an “organic organization”, Dr Saqib admits they have had
setbacks but they learnt from their mistakes and conducted action
research. This is why, he says, Akhuwat has today reached “this scale of
around 1 million active borrowers”.
Solidarity, a basic human instinct
The micro-finance organization is planning to expand
overseas, such as in the African continent. “This is because the spirit
of solidarity with the poor is universal.” Solidarity “is not confined to
any one faith”. The desire to “help each other”, Dr Saqib says, “is the
most basic human instinct”.
“There should be solidarity between the haves and
have-nots,” he insists. Instead of giving doles or charity, people should
be helped with some loan so that “they can realize their own potential”.
Akhuwat helps bring hope to families
Fraternity
“The literal meaning of Akhuwat,” Dr Saqib explains, “is
fraternity - solidarity with the poor, brotherhood and sisterhood”. “This
is the essence and meaning of this word.”
“Since we are developing a bond of solidarity with the poor,
this is our name, this is our mission, this is our vision as well. So
this is the embodiment and essence of what we do.”
The poor are trustworthy – not cheats
The world of lending and borrowing is fraught with risks and
dangers, but Akhuwat, which is based on a different principle, has an
altogether different story.
“One of our biggest achievements,” the founder claimed, “is
that our recovery percentage is above 99, which is amazing.”
“That proves our basic assumption that the poor are not
cheats. They are honest, they are credit-worthy, bank-worthy and
trustworthy. They just need a holding-hand, our compassion, love and care.”
“They are honest.”
Whenever the poor are given a loan, Dr Saqib, he said, they
are clearly made to realize that the help they are receiving is given by
someone, and when they repay it, “someone else will get the money”.
“So you are here to continue this chain of humanity and solidarity, so don’t
break this chain.”
The founder of Akhuwat says they “take the message
brilliantly, and they become part of the organization”. They make sure they are
not exploited by high interest rates. At the same time, they “also
realize it is their responsibility to continue this journey.” “This,” he says,
“is the virtuous cycle that we started and it should not
stop.”
Disadvantaged women and religious minorities
Another hallmark of Pakistan’s interest-free microfinance
institution is that in providing loans, “there is absolutely no discrimination
on the basis of caste, colour, creed, religion, political affiliation or
region”.
Akhuwat admits it has a soft corner for disadvantaged women,
because “we thought if we can help many such women, we can help the
families.”
“Women, religious minorities and the most disadvantaged”
need “more compassion”.
Dr Saqib explains that “if there is one loan and there are
two applicants, male and female, we prefer giving the loan to the
female”. “We believe that the social and economic empowerment of
the woman means the economic empowerment of the whole family.”
Inter-faith collaboration
Another positive aspect of Akhuwat is the fact they work
“through mosques, churches, temples and gurdwaras, so there is absolutely no
discrimination”.
“We believe that everybody is entitled to have his own
truth, his own faith and religion. We derive this inspiration from the Islamic
spirit but the message is for all humanity. We don’t discriminate on
religion or faith.”
Akhuwat prefers giving loans to women as well as to
“religious minorities who are usually discriminated against in society”. The
microcredit organization is convinced that “poverty cannot be eliminated if we
are not able to have an inclusive society”.
Akhuwat has helped this young man to set up a shop.
Inclusive society
While carrying out Akhuwat’s mission of solidarity and
compassion, Dr Saqib says, he comes across numerous cases that touch his
“soul and heart”. [BR6] “These people are a source of
inspiration for us.”
He spoke about a former drug addict who took a loan and is
“now earning a very decent amount and living a very peaceful life”. “Many
criminals who were previously involved in petty crimes came to us whom we trained
and inspired to be better human beings,” Dr Saqib recounts.
According to him, “this micro-finance is just a means to
achieve an end,” which is “a society based on justice and economic
empowerment”.
Each of the “3 million people or families that have taken
loans from us,” he says, has a unique story, “something touching to
share”. “Every day,” he says, “we meet somebody who really inspires
us.” He is surprised “how a small amount of money can make a big
difference.”
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